Bangalore’s Aravind KP, who became the first Indian rider to win a motocross championship abroad, said he was a prouder, better rider after his experience racing in Sri Lanka.
The Team TVS Racing ace added that he was overjoyed to have finished on top of the Sri Lanka Association of Racing Drivers and Riders (SLARDAR) championship 2011.
Bangalore boy Aravind, who fought off 21 riders, including teammates Santosh CS, HK Pradeep and 2010 UAM Asian champion from Japan Tomoya Suzuki for the title, won himself a fully-paid trip to watch the Dakar rally later this year. The TVS team participated in the Group MX for motocross bikes (125cc — 2T and up to 250cc — 4T). “It was a tremendous experience riding in Sri Lanka,” Aravind told TOI.
Kawasaki Ninjas Get a New Look
For all those who have been waiting to buy a Kawasaki Ninja, the wait might just get a little longer with the new 2012 editions expected soon
Kawasaki plans to bring their entire range in an all new look for 2012, right from their smaller Ninja 250R to their ZX-14R. While some bikes will just see minor changes in its looks, some others will see major upgrades in terms of styling, exhaust, paint scheme, chassis and more.
The new 2012 Baby Ninja will not see any major changes except for new paint schemes. The Ninja green will remain unchanged, but the black will see golden yellow stripes across the front fairing and under the rider’s seat. Similarly the red 250R, will also see a grey and white stripe across the fairing and the tank. Apart from the baby Ninja, the ZX-10R will also host some minor cosmetic upgrades in colour.
More changes will appear on the 2012 Ninja 650 than the new Ninja 250. The Ninja 650 will now host a new tubular steel chassis, a banana shaped twin-tube swing arm, a higher performance engine and a new exhaust system. On the cosmetic side of the bike, the single seat will be replaced with a split seat; a new adjustable windscreen will be installed and an all new front fairing design. The handle bars will now be 20mm wider while the seat height has been reduced for greater comfort while riding. A larger tank will be able to hold more fuel and the need for refueling every now and then will become obsolete.
The ZX-14R does not fall behind in the in terms of updates for 2012. A 4mm longer stroke and a reworked cylinder head assembly make the 1,441cc inline-four much more powerful than before. The new ZX gets a narrower aluminum monocoque chassis. The bike will also host an all new exhaust system with tapered and reshaped head pipes and a new muffler for low noise and emissions. The wheels will now be lighter by 1.3kgs over the previous generations of the bike for reduced unsprung weight resulting in better handling and maneuverability.
These new upgrades will soon be seen internationally in the Kawasaki range but it will take a while before these upgrades actually find their way to India. Even so, all those intending to buy any of the aforementioned products should wait to see the upgrades before actually booking any of these monsters.
Kawasaki plans to bring their entire range in an all new look for 2012, right from their smaller Ninja 250R to their ZX-14R. While some bikes will just see minor changes in its looks, some others will see major upgrades in terms of styling, exhaust, paint scheme, chassis and more.
The new 2012 Baby Ninja will not see any major changes except for new paint schemes. The Ninja green will remain unchanged, but the black will see golden yellow stripes across the front fairing and under the rider’s seat. Similarly the red 250R, will also see a grey and white stripe across the fairing and the tank. Apart from the baby Ninja, the ZX-10R will also host some minor cosmetic upgrades in colour.
More changes will appear on the 2012 Ninja 650 than the new Ninja 250. The Ninja 650 will now host a new tubular steel chassis, a banana shaped twin-tube swing arm, a higher performance engine and a new exhaust system. On the cosmetic side of the bike, the single seat will be replaced with a split seat; a new adjustable windscreen will be installed and an all new front fairing design. The handle bars will now be 20mm wider while the seat height has been reduced for greater comfort while riding. A larger tank will be able to hold more fuel and the need for refueling every now and then will become obsolete.
The ZX-14R does not fall behind in the in terms of updates for 2012. A 4mm longer stroke and a reworked cylinder head assembly make the 1,441cc inline-four much more powerful than before. The new ZX gets a narrower aluminum monocoque chassis. The bike will also host an all new exhaust system with tapered and reshaped head pipes and a new muffler for low noise and emissions. The wheels will now be lighter by 1.3kgs over the previous generations of the bike for reduced unsprung weight resulting in better handling and maneuverability.
These new upgrades will soon be seen internationally in the Kawasaki range but it will take a while before these upgrades actually find their way to India. Even so, all those intending to buy any of the aforementioned products should wait to see the upgrades before actually booking any of these monsters.
Auto component slowdown looms ahead
While component makers are beginning to brace themselves because of a drop in car sales, high inflation and interest rates are also stalling expansion plans.
With the automobile industry in the country reeling under the effects of a sudden slowdown in demand, leading component makers are either re-considering their capital expenditure plans or deferring it by months.
The development comes in the backdrop of passenger car sales declining by 1.36 per cent to 909,283 units between April and September this year. Sales in the domestic market in the first six months of the fiscal have been far below expectations, forcing industry body Society of Indian Automobile Manufacturers (SIAM) to revise growth projections for the passenger cars segment to 2-4 per cent from the earlier 10-12 per cent.
Chairman of the country’s leading car air-conditioner maker Subros Ramesh Suri said that the company has delayed its capex plans owing to a slowdown in car sales. The company does not want to keep “idle capacity” and hence has deferred plans of making an investment originally scheduled to have been infused in March this year. Subros supplies to a wide range of original equipment manufacturers (OEMs) including Maruti Suzuki, Tata Motors and Mahindra & Mahindra.
Harish Sheth, managing director, Setco Automotive echoes Suri’s thoughts : “After experiencing a tremendous growth last year, we are seeing an unprecedented slowdown in the industry. This is the reason why the industry is so wary of increasing capacity,” he said. He added that his firm is also going slow in its expansion plans. The component industry had grown by a whopping 34.2 per cent to record a turnover of $ 39.9 billion in the last financial year.
High levels of inflation and rising interest rates have tightened availability of liquidity in the economy. This has proved to be an added dampener to capacity expansion projects in the component industry. “Some auto component manufacturers are deferring investments in capacity expansion programmes because of high cost of funding. But the real concern is to make credit available to tier-II and tier- III suppliers. If they do not invest in capacity, over the long-term this would choke the supply chain,” said ACMA President Arvind Kapur.
What is also adding to the industry’s woes is the four-month long labour crisis at Maruti Suzuki. The company, which accounts for over 40 per cent of sales in the domestic auto industry, has around 250 suppliers. As much as 80 per cent of these vendors had set up manufacturing units in the Gurgaon-Manesar belt to cater to the company. With production severely disrupted at MSIL, the suppliers are now staring at losses ranging from 15 to 20 per cent of their annual earnings. Estimates suggest vendors supplying to MSIL have suffered revenue losses to the tune of Rs 1400 crore since the start of the standoff in June this year.
K Gopalakrishnan, Industrial Advisor, Chennai District Small Scale Industries Association (CDISSIA) says that there are 400 units in the Guindy industrial estate in Chennai—one of the oldest in the country—and another 1200 small units located in and around the Estate which work on projects assigned by the bigger 400 units. Units in these estates produce components worth Rs 1,000 crore. These units take on mostly aluminum casting-related works for the OEMs and other press shop works.
Off-take dropped by 10-15 per cent mainly due to the strike in Maruti and slowdown in the industry, according to Gopalakrishnan who says that besides the drop in off-take, payment time has also increased drastically to 120 days. He notes that as per the MSME Act, bill payment should not be more than 45 days. "If the units go and complain to the regulators, then next time they will be black listed by the OEMs".
Sluggish demand in the domestic market, in the meantime, has forced the component industry to moderate its growth projections to 12-15 per cent in the current year. Vinnie Mehta, executive director, Automotive Component Manufacturers Association (ACMA), says, “The slowdown in passenger vehicle sales is definitely a cause of concern. Suppliers catering solely to the passenger car segment are facing problems. But we are not considering reviewing our growth projections at present. Demand for two-wheelers, commercial vehicles and tractors continue to be healthy but overall the growth rate has moderated.”
Venu Srinivasan, managing director, Sundaram Clayton, a leading automobile components manufacturer and holding company of country's third largest two-wheeler manufacturer by sales, TVS Motor says that “next 18 months are very uncertain due to global scenario. Rising interest costs and fuel prices will put pressure on companies’ bottom lines. All sections of the auto industry will slowdown, however two-wheelers will buck the trend and see robust growth”.
Although commodity prices are showing a downtrend , says Srinivasan, “employee costs have increased by 12-15 per cent. Given these factors we can’t predict when slow down will hit and we to have cautious view on capital and cost control.”
If the slowdown persists, industry observers feel, there could be a rationalisation of workforce employed particularly by vendors catering to the passenger vehicle segment. The auto component industry employs about one million workers in the country, 40 per cent of whom are hired on ‘contract basis’. “These workers are likely to take a hit if business takes a turn for the worse”, said an industry source on condition of anonymity.
However, Lumax Industries, JBM Group and Sona Koyo still continue to remain optimistic. Senior executive director of the country’s largest head lamp maker Lumax Industries Deepak Jain said that component companies have to invest and scale up capacity with a three to four year horizon in mind. “The long-term growth projection still remains intact hence a temporary slowdown should not deter anyone,” Jain said. Lumax has lined up an investment of Rs 150 crore to set up three green field manufacturing units. Jay Bharat Maruti (JBM) too is investing Rs 500 crore this fiscal on expanding capacity across its existing capacities and setting up new facilities in Chennai, Sanand and Pant Nagar.
With the automobile industry in the country reeling under the effects of a sudden slowdown in demand, leading component makers are either re-considering their capital expenditure plans or deferring it by months.
The development comes in the backdrop of passenger car sales declining by 1.36 per cent to 909,283 units between April and September this year. Sales in the domestic market in the first six months of the fiscal have been far below expectations, forcing industry body Society of Indian Automobile Manufacturers (SIAM) to revise growth projections for the passenger cars segment to 2-4 per cent from the earlier 10-12 per cent.
Chairman of the country’s leading car air-conditioner maker Subros Ramesh Suri said that the company has delayed its capex plans owing to a slowdown in car sales. The company does not want to keep “idle capacity” and hence has deferred plans of making an investment originally scheduled to have been infused in March this year. Subros supplies to a wide range of original equipment manufacturers (OEMs) including Maruti Suzuki, Tata Motors and Mahindra & Mahindra.
Harish Sheth, managing director, Setco Automotive echoes Suri’s thoughts : “After experiencing a tremendous growth last year, we are seeing an unprecedented slowdown in the industry. This is the reason why the industry is so wary of increasing capacity,” he said. He added that his firm is also going slow in its expansion plans. The component industry had grown by a whopping 34.2 per cent to record a turnover of $ 39.9 billion in the last financial year.
High levels of inflation and rising interest rates have tightened availability of liquidity in the economy. This has proved to be an added dampener to capacity expansion projects in the component industry. “Some auto component manufacturers are deferring investments in capacity expansion programmes because of high cost of funding. But the real concern is to make credit available to tier-II and tier- III suppliers. If they do not invest in capacity, over the long-term this would choke the supply chain,” said ACMA President Arvind Kapur.
What is also adding to the industry’s woes is the four-month long labour crisis at Maruti Suzuki. The company, which accounts for over 40 per cent of sales in the domestic auto industry, has around 250 suppliers. As much as 80 per cent of these vendors had set up manufacturing units in the Gurgaon-Manesar belt to cater to the company. With production severely disrupted at MSIL, the suppliers are now staring at losses ranging from 15 to 20 per cent of their annual earnings. Estimates suggest vendors supplying to MSIL have suffered revenue losses to the tune of Rs 1400 crore since the start of the standoff in June this year.
K Gopalakrishnan, Industrial Advisor, Chennai District Small Scale Industries Association (CDISSIA) says that there are 400 units in the Guindy industrial estate in Chennai—one of the oldest in the country—and another 1200 small units located in and around the Estate which work on projects assigned by the bigger 400 units. Units in these estates produce components worth Rs 1,000 crore. These units take on mostly aluminum casting-related works for the OEMs and other press shop works.
Off-take dropped by 10-15 per cent mainly due to the strike in Maruti and slowdown in the industry, according to Gopalakrishnan who says that besides the drop in off-take, payment time has also increased drastically to 120 days. He notes that as per the MSME Act, bill payment should not be more than 45 days. "If the units go and complain to the regulators, then next time they will be black listed by the OEMs".
Sluggish demand in the domestic market, in the meantime, has forced the component industry to moderate its growth projections to 12-15 per cent in the current year. Vinnie Mehta, executive director, Automotive Component Manufacturers Association (ACMA), says, “The slowdown in passenger vehicle sales is definitely a cause of concern. Suppliers catering solely to the passenger car segment are facing problems. But we are not considering reviewing our growth projections at present. Demand for two-wheelers, commercial vehicles and tractors continue to be healthy but overall the growth rate has moderated.”
Venu Srinivasan, managing director, Sundaram Clayton, a leading automobile components manufacturer and holding company of country's third largest two-wheeler manufacturer by sales, TVS Motor says that “next 18 months are very uncertain due to global scenario. Rising interest costs and fuel prices will put pressure on companies’ bottom lines. All sections of the auto industry will slowdown, however two-wheelers will buck the trend and see robust growth”.
Although commodity prices are showing a downtrend , says Srinivasan, “employee costs have increased by 12-15 per cent. Given these factors we can’t predict when slow down will hit and we to have cautious view on capital and cost control.”
If the slowdown persists, industry observers feel, there could be a rationalisation of workforce employed particularly by vendors catering to the passenger vehicle segment. The auto component industry employs about one million workers in the country, 40 per cent of whom are hired on ‘contract basis’. “These workers are likely to take a hit if business takes a turn for the worse”, said an industry source on condition of anonymity.
However, Lumax Industries, JBM Group and Sona Koyo still continue to remain optimistic. Senior executive director of the country’s largest head lamp maker Lumax Industries Deepak Jain said that component companies have to invest and scale up capacity with a three to four year horizon in mind. “The long-term growth projection still remains intact hence a temporary slowdown should not deter anyone,” Jain said. Lumax has lined up an investment of Rs 150 crore to set up three green field manufacturing units. Jay Bharat Maruti (JBM) too is investing Rs 500 crore this fiscal on expanding capacity across its existing capacities and setting up new facilities in Chennai, Sanand and Pant Nagar.
Hero cuts capex by one-third; signals a slowdown in the industry
Hero MotoCorp Ltd will pare capital expenditure by a third to Rs.600 crore in the current fiscal, in an indication that the company expects a slowdown in sales.
“The capex for this fiscal will be around Rs.600 crore as the expenditure on the new plant will be coming in the next fiscal,” chief financial officer Ravi Sud said in a conference call with investors on Wednesday. “This amount will be spent mostly on capacity expansion and R&D (research and development) activities.”
India’s biggest motorcycle maker had in June said it has set aside Rs.900 crore for capex for the year ending March 2012, out of which it would spend some Rs.500 crore in building a fourth factory with a capacity to produce 750,000 units a year.
Hero now expects the fourth plant to start operation in the second half of the next fiscal, Sud said. The firm will expand capacity to seven million units in the current fiscal year from 5.4 million, mainly by expanding its facility at Haridwar in Uttarakhand and making it more efficient.
“With such kind of capacity, the company does not require another plant in the immediate future as its target for this fiscal is only six million units,” said Ajay Shethiya, an analyst with local brokerage Centrum Broking Pvt. Ltd.
In the six months to September, the company sold 3.07 million vehicles.
It had sold 2.9 million units in the same period last year, of a total of 5.4 million sold in the entire fiscal.
To achieve its target of six million units and the balance of 2.93 million units, it only needs sales to grow 2% over last year in the rest of the fiscal.
“The base effect will come in picture from October,” said Shethiya.
“While October can still see a good growth due to festive mood, in the following months the growth will slow down.”
The company on Tuesday posted a record net profit of Rs.580 crore in the fiscal second quarter.
Managing director and chief executive officer Pawan Munjal said on Tuesday that inflation and rising fuel costs may adversely affect consumer spending in coming months.
Hero MotoCorp sells every second motorcycle bought in the country. The two-wheeler industry is set to grow at a rate of 13-15% in the current fiscal year, according to an estimate by industry lobby group Society of Indian Automobile Manufacturers.
In the investors call, the company said its royalty payment to Honda Motor Co. Ltd has gone up to Rs.207 crore compared with Rs.180 crore paid in the quarter ended 30 June, which was largely because the yen rose by 10% against the US dollar.
“It is surprising that they did not expect the yen to appreciate. They are open and not hedged,” said Mahantesh Sabarad, auto analyst at Fortune Equity Brokers (India) Ltd. “It has caught many companies off-guard.”
The Hero scrip rose 4.13% at Rs.2,067 on BSE on Wednesday; the benchmark Sensex index gained 2.01% to 17,085 points.
“The capex for this fiscal will be around Rs.600 crore as the expenditure on the new plant will be coming in the next fiscal,” chief financial officer Ravi Sud said in a conference call with investors on Wednesday. “This amount will be spent mostly on capacity expansion and R&D (research and development) activities.”
India’s biggest motorcycle maker had in June said it has set aside Rs.900 crore for capex for the year ending March 2012, out of which it would spend some Rs.500 crore in building a fourth factory with a capacity to produce 750,000 units a year.
Hero now expects the fourth plant to start operation in the second half of the next fiscal, Sud said. The firm will expand capacity to seven million units in the current fiscal year from 5.4 million, mainly by expanding its facility at Haridwar in Uttarakhand and making it more efficient.
“With such kind of capacity, the company does not require another plant in the immediate future as its target for this fiscal is only six million units,” said Ajay Shethiya, an analyst with local brokerage Centrum Broking Pvt. Ltd.
In the six months to September, the company sold 3.07 million vehicles.
It had sold 2.9 million units in the same period last year, of a total of 5.4 million sold in the entire fiscal.
To achieve its target of six million units and the balance of 2.93 million units, it only needs sales to grow 2% over last year in the rest of the fiscal.
“The base effect will come in picture from October,” said Shethiya.
“While October can still see a good growth due to festive mood, in the following months the growth will slow down.”
The company on Tuesday posted a record net profit of Rs.580 crore in the fiscal second quarter.
Managing director and chief executive officer Pawan Munjal said on Tuesday that inflation and rising fuel costs may adversely affect consumer spending in coming months.
Hero MotoCorp sells every second motorcycle bought in the country. The two-wheeler industry is set to grow at a rate of 13-15% in the current fiscal year, according to an estimate by industry lobby group Society of Indian Automobile Manufacturers.
In the investors call, the company said its royalty payment to Honda Motor Co. Ltd has gone up to Rs.207 crore compared with Rs.180 crore paid in the quarter ended 30 June, which was largely because the yen rose by 10% against the US dollar.
“It is surprising that they did not expect the yen to appreciate. They are open and not hedged,” said Mahantesh Sabarad, auto analyst at Fortune Equity Brokers (India) Ltd. “It has caught many companies off-guard.”
The Hero scrip rose 4.13% at Rs.2,067 on BSE on Wednesday; the benchmark Sensex index gained 2.01% to 17,085 points.
Harley-Davidson profit falls after cheaper bikes cut into margins
Harley-Davidson Inc, the biggest US motorcycle maker, fell as much as 8.9% after profit margins fell with increased sales of lower-priced models and limited availability of pricier bikes. Third-quarter gross margin narrowed to 33.7% from 34.9% a year ago. Sharon Zackfia, an analyst with William Blair & Co., estimated gross margin of 36.8 percent in the quarter. That shift toward lower-priced bikes, such as the $8,000 SuperLow, lowered gross margin by $26.6 million, Harley said in a presentation on its Web site.
"Sales skewed more toward the Sportsters, and of all the possible reasons for a margin decline, mix shift is one of the more innocuous," Zackfia said in an interview.
The shift toward lower-priced bikes was a product of the reworking of the York, Pennsylvania, factory that makes the brand's high-end bikes. The plant is consolidating from four lines to one, and the new line isn't up to speed yet, so there were fewer of the pricey, high-margin motorcycles to sell.
The changes at York will be "largely complete" by the end of next year, Chief Financial Officer John Olin said in a conference call today. U.S. output will be limited until the end of 2013, he added.
Sales increased 13% to $1.23 billion, short of the $1.28 billion average of 13 analysts' estimates. Harley, the maker of the Fat Boy and VRod motorcycles, sells fewer bikes in the coldweather months. The company has reported quarterly losses in each of the last two fourth quarters, typically its slowest sales period. Net income in the three months ended Sept. 25 rose 107% to $183.6 million, or 78 cents a share, compared with $88.8 million, or 38 cents a share, a year earlier, Harley said today in a statement.
The average estimate of eight analysts surveyed by Bloomberg was 75 cents. "We are pleased with our sustained progress and we continue to realize strong momentum in the transformation our business," CEO Keith Wandell said in the statement.
Retail sales rose 5.4% in the US and 5.1% worldwide, the company said. The worldwide sales gain was the second consecutive quarter of increasing deliveries. Before the second quarter, the company last reported an increase in U.S. sales in the fourth quarter of 2006. The company reaffirmed its forecast of 228,000-235,000 motorcycle shipments this year.
"Sales skewed more toward the Sportsters, and of all the possible reasons for a margin decline, mix shift is one of the more innocuous," Zackfia said in an interview.
The shift toward lower-priced bikes was a product of the reworking of the York, Pennsylvania, factory that makes the brand's high-end bikes. The plant is consolidating from four lines to one, and the new line isn't up to speed yet, so there were fewer of the pricey, high-margin motorcycles to sell.
The changes at York will be "largely complete" by the end of next year, Chief Financial Officer John Olin said in a conference call today. U.S. output will be limited until the end of 2013, he added.
Sales increased 13% to $1.23 billion, short of the $1.28 billion average of 13 analysts' estimates. Harley, the maker of the Fat Boy and VRod motorcycles, sells fewer bikes in the coldweather months. The company has reported quarterly losses in each of the last two fourth quarters, typically its slowest sales period. Net income in the three months ended Sept. 25 rose 107% to $183.6 million, or 78 cents a share, compared with $88.8 million, or 38 cents a share, a year earlier, Harley said today in a statement.
The average estimate of eight analysts surveyed by Bloomberg was 75 cents. "We are pleased with our sustained progress and we continue to realize strong momentum in the transformation our business," CEO Keith Wandell said in the statement.
Retail sales rose 5.4% in the US and 5.1% worldwide, the company said. The worldwide sales gain was the second consecutive quarter of increasing deliveries. Before the second quarter, the company last reported an increase in U.S. sales in the fourth quarter of 2006. The company reaffirmed its forecast of 228,000-235,000 motorcycle shipments this year.
100 years on, TVS gets new lease of life.
For 100 years, Tamil Nadu-based TVS Group has been known for its strengths largely in the auto industry. It developed expertise in finance eventually. Even today, the prominent companies in the $4-billion group — TVS Motor, Sundaram Fasteners and Sundaram Finance — belong to auto and finance.
In all these years, TVS has been happy with its financial conservatism. Still, the group has managed to survive JV divorces, notably Suzuki's famous split with TVS Motor and sustain nearly three dozen offshoots. The group, however, has had its share of misses — particularly in IT.
Today, the accent on new is evident across spheres. Fourth generation family members are being inducted. Recently, Sudarshan Venu, 22, son of TVS Motor CMD Venu Srinivasan, was named on the Sundaram-Clayton board. He joined sister Lakshmi Venu. Sagging businesses like TVS Electronics too are getting a fresh look.
Chairman Gopal Srinivasan has hired a HP and Acer veteran as CEO. He plans to look beyond the company's mainstay, dotmatrix printers. There's one critical part to the 'new' theme — companies that the group has floated afresh in recent times. Here's a look at five new companies.
TVS Capital Funds
TVS Capital Funds was founded in September 2007 by Gopal Srini-100 Years on, TVS Gets New Lease of Life vasan, the younger brother of Venu Srinivasan. The venture also brought together TVS with the Shriram Group. TVS Capital manages the Rs 600-crore TVS Shriram Growth Fund I, which invests in consumer-driven themes such as retail and healthcare.
TVS Housing
TVS Housing is a 100% subsidiary of the Venu Srinivasan-owned TVS Motor Company. It will focus on low-cost and affordable housing. It plans to debut through a pilot lowincome housing project at Nanmangalam, near Sriperumbudur, 50 km from Chennai.
TVS Energy
TVS Energy is again a fully-owned arm of Venu Srinivasan's TVS Motor Company. The company started in 2010 with an investment of Rs 37.5 crore. It has also promoted two special purpose vehicles — TVS Wind Energy and TVS Wind Power.
TVS GMR Aviation Logistics
The tie-up is one-and-a-half years old but hasn't made been public until now. TVS Logistics, which R Dinesh runs, holds 51% stake. A GMR company holds the rest. The son of GMR Group chief GM Rao, Kiran Kumar Grandhi, is one of the directors in the board of the JV. The company wants to build a pan-national presence in aviation logistics, starting from Hyderabad. The JV is currently operating Aero Express, the bus service that connects the Hyderabad airport to all major locations in the city.
TVS Automobile Solutions
The company came into existence only early this year, but the broad offering has been there for a while. TVS Automobile was created by hiving off MyTVS from TVS & Sons. The company's focus is on two segments — 24X7 emergency services and car service.
In all these years, TVS has been happy with its financial conservatism. Still, the group has managed to survive JV divorces, notably Suzuki's famous split with TVS Motor and sustain nearly three dozen offshoots. The group, however, has had its share of misses — particularly in IT.
Today, the accent on new is evident across spheres. Fourth generation family members are being inducted. Recently, Sudarshan Venu, 22, son of TVS Motor CMD Venu Srinivasan, was named on the Sundaram-Clayton board. He joined sister Lakshmi Venu. Sagging businesses like TVS Electronics too are getting a fresh look.
Chairman Gopal Srinivasan has hired a HP and Acer veteran as CEO. He plans to look beyond the company's mainstay, dotmatrix printers. There's one critical part to the 'new' theme — companies that the group has floated afresh in recent times. Here's a look at five new companies.
TVS Capital Funds
TVS Capital Funds was founded in September 2007 by Gopal Srini-100 Years on, TVS Gets New Lease of Life vasan, the younger brother of Venu Srinivasan. The venture also brought together TVS with the Shriram Group. TVS Capital manages the Rs 600-crore TVS Shriram Growth Fund I, which invests in consumer-driven themes such as retail and healthcare.
TVS Housing
TVS Housing is a 100% subsidiary of the Venu Srinivasan-owned TVS Motor Company. It will focus on low-cost and affordable housing. It plans to debut through a pilot lowincome housing project at Nanmangalam, near Sriperumbudur, 50 km from Chennai.
TVS Energy
TVS Energy is again a fully-owned arm of Venu Srinivasan's TVS Motor Company. The company started in 2010 with an investment of Rs 37.5 crore. It has also promoted two special purpose vehicles — TVS Wind Energy and TVS Wind Power.
TVS GMR Aviation Logistics
The tie-up is one-and-a-half years old but hasn't made been public until now. TVS Logistics, which R Dinesh runs, holds 51% stake. A GMR company holds the rest. The son of GMR Group chief GM Rao, Kiran Kumar Grandhi, is one of the directors in the board of the JV. The company wants to build a pan-national presence in aviation logistics, starting from Hyderabad. The JV is currently operating Aero Express, the bus service that connects the Hyderabad airport to all major locations in the city.
TVS Automobile Solutions
The company came into existence only early this year, but the broad offering has been there for a while. TVS Automobile was created by hiving off MyTVS from TVS & Sons. The company's focus is on two segments — 24X7 emergency services and car service.
Hero MotoCorp eyes 7 million units by fiscal end
In order to cater to the growing demand for fuel-efficient two wheelers in a tough economic climate, market leader Hero MotoCorp is increasing output of its three plants in North India to around 7 million units by March, 2012.
A new fourth plant, previously expected to come up in the later part of this fiscal in South India, is now likely be commissioned by the second half of 2012-13. Around Rs 500 crore is expected to be invested in this new plant with a 1.5 million annual capacity over a phased manner.
“We’re working on de-bottlenecking and expanding our plants … they will work on three shifts from next year. After a couple of quarters we may have 7 million plus capacity. We’re producing 8,000 a day at Haridwar - the plan is to take this to 9,500 a day over the next 6 months,” Mr Ravi Sud, CFO, Hero MotoCorp said during an investor call on Wednesday.
“The fourth plant is expected to be commissioned by the third quarter or the beginning of the fourth quarter of next fiscal,” he added. With the new plant plans pushed back, the capital expenditure target for 2011-12 has been reduced to Rs 600 crore from Rs 900 crore.
At present, Hero MotoCorp has an installed annual production capacity of 6.1 million units across its three plants in Gurgaon, Dharuhera and Haridwar. Though last year it produced 5.4 million units, this year production has already being taken up to 6.4 million units a year.
“Our view is that the slowdown in auto sales, because of a global impact, will get resolved over the next few months. Two wheelers have been less impacted and rural is compensating the dip in urban sales - from 38 per cent in 2009, rural is now more than 46 per cent of our sales,” Mr Sud.
He added that commodities prices, which are now stabilising, are expected to come down over the next few months on a drop in demand from the US and Europe.
Global plans
As for its international plans, the two wheeler maker has shortlisted some “potential partners” for possible assembly and distribution. New markets where it has a “good understanding” include Latin America, Africa and South-east Asia. It is now preparing a roadmap for an entry strategy.
Hero MotoCorp shares at the BSE were up 4.13 per cent at Rs 2,066.90 on Wednesday.
A new fourth plant, previously expected to come up in the later part of this fiscal in South India, is now likely be commissioned by the second half of 2012-13. Around Rs 500 crore is expected to be invested in this new plant with a 1.5 million annual capacity over a phased manner.
“We’re working on de-bottlenecking and expanding our plants … they will work on three shifts from next year. After a couple of quarters we may have 7 million plus capacity. We’re producing 8,000 a day at Haridwar - the plan is to take this to 9,500 a day over the next 6 months,” Mr Ravi Sud, CFO, Hero MotoCorp said during an investor call on Wednesday.
“The fourth plant is expected to be commissioned by the third quarter or the beginning of the fourth quarter of next fiscal,” he added. With the new plant plans pushed back, the capital expenditure target for 2011-12 has been reduced to Rs 600 crore from Rs 900 crore.
At present, Hero MotoCorp has an installed annual production capacity of 6.1 million units across its three plants in Gurgaon, Dharuhera and Haridwar. Though last year it produced 5.4 million units, this year production has already being taken up to 6.4 million units a year.
“Our view is that the slowdown in auto sales, because of a global impact, will get resolved over the next few months. Two wheelers have been less impacted and rural is compensating the dip in urban sales - from 38 per cent in 2009, rural is now more than 46 per cent of our sales,” Mr Sud.
He added that commodities prices, which are now stabilising, are expected to come down over the next few months on a drop in demand from the US and Europe.
Global plans
As for its international plans, the two wheeler maker has shortlisted some “potential partners” for possible assembly and distribution. New markets where it has a “good understanding” include Latin America, Africa and South-east Asia. It is now preparing a roadmap for an entry strategy.
Hero MotoCorp shares at the BSE were up 4.13 per cent at Rs 2,066.90 on Wednesday.
First Hero branded bike at Rs.66,800
The country's largest two-wheeler maker Hero MotoCorp today said it will soon start selling the first 'Hero' branded bike to be launched after the break-up of Hero Honda last year -- 'Impulse' -- in the Indian market at Rs 66,800 (ex-Delhi showroom).
The company is positioning the new 150-cc bike as a dual purpose bike that can be used for both normal commuting as well as off-road adventure. It is using the ongoing India-England cricket series as a platform to promote the new bike.
"The Impulse is the first bike from us which will be sold only under the Hero brand. We have already started dispatches and it will soon be available at showrooms in metros and Tier-I cities," Hero MotoCorp Senior Vice-President (Marketing and Sales) Anil Dua said.
While announcing the new brand identity of the company in August this year in London, the company had introduced the bike 'Impulse' and a 110-cc scooter, 'Maestro', to be sold under the Hero brand. As per our agreement with Honda, this bike is with the support of their technology and we are not selling it under the Hero Honda brand," Dua said. On the pricing front, he said: "Considering the dual purpose of the bike and the features it has, this comes at a slight premium compared to other normal 150-cc bikes."
Hero MotoCorp's other 150-cc bikes include the Achiever, CBZ Extreme and Hunk, which are priced between Rs 55,925 and Rs 65,215 (ex-showroom Delhi). Dua said Hero MotoCorp is trying to create a new segment in the market with the Impulse. "We are not positioning this as a niche segment bike. We are targeting all the typical 150-cc bikers who have a desire to do off-road activities with their motorcycles."
Initially, the company will target metros and Tier-I cities in the first phase and then gradually reach out other smaller cities and towns for the new model, Dua said. To promote the Impulse, the firm, which is one of the sponsors of the ongoing India-England cricket series, is giving away the bike to a player who excels with both bat and ball in a match.
"The idea is to bring out the dual purpose of the bike," he said, adding that the company would also conduct test rides in different cities. "We are not looking at this bike as a niche product, but trying to have an extensive market reach," he said. Dua did not comment on the expected date for the market launch of the 'Maestro' scooter.
Hero MotoCorp had embarked on the journey to acquire a new brand name after the erstwhile joint venture partners in Hero Honda decided to part ways in December last year.
The company is positioning the new 150-cc bike as a dual purpose bike that can be used for both normal commuting as well as off-road adventure. It is using the ongoing India-England cricket series as a platform to promote the new bike.
"The Impulse is the first bike from us which will be sold only under the Hero brand. We have already started dispatches and it will soon be available at showrooms in metros and Tier-I cities," Hero MotoCorp Senior Vice-President (Marketing and Sales) Anil Dua said.
While announcing the new brand identity of the company in August this year in London, the company had introduced the bike 'Impulse' and a 110-cc scooter, 'Maestro', to be sold under the Hero brand. As per our agreement with Honda, this bike is with the support of their technology and we are not selling it under the Hero Honda brand," Dua said. On the pricing front, he said: "Considering the dual purpose of the bike and the features it has, this comes at a slight premium compared to other normal 150-cc bikes."
Hero MotoCorp's other 150-cc bikes include the Achiever, CBZ Extreme and Hunk, which are priced between Rs 55,925 and Rs 65,215 (ex-showroom Delhi). Dua said Hero MotoCorp is trying to create a new segment in the market with the Impulse. "We are not positioning this as a niche segment bike. We are targeting all the typical 150-cc bikers who have a desire to do off-road activities with their motorcycles."
Initially, the company will target metros and Tier-I cities in the first phase and then gradually reach out other smaller cities and towns for the new model, Dua said. To promote the Impulse, the firm, which is one of the sponsors of the ongoing India-England cricket series, is giving away the bike to a player who excels with both bat and ball in a match.
"The idea is to bring out the dual purpose of the bike," he said, adding that the company would also conduct test rides in different cities. "We are not looking at this bike as a niche product, but trying to have an extensive market reach," he said. Dua did not comment on the expected date for the market launch of the 'Maestro' scooter.
Hero MotoCorp had embarked on the journey to acquire a new brand name after the erstwhile joint venture partners in Hero Honda decided to part ways in December last year.
Hero MotoCorp to double production of scooters
The world's largest two-wheeler maker, Hero MotoCorp, primarily a bike manufacturer, is planning to double its production of scooters to grab a 25% share in the domestic market. The company, with an installed annual capacity of 6.4 million units across three plants, plans to ramp up the production of scooters to 6,00,000 units a year. The company currently produces scooters only at its Gurgaon plant.
Production will be stepped up from 8,000 units to 9,500 units at the Haridwar plant over the next six months, the company's CFO Ravi Sud said, and output will be raised at Gurgaon and Dharuhera manufacturing facilities as well. Sud said the company will enforce three shifts from next year to raise the annual output to 7 million units.
However, the company's fourth plant that was expected to come up by the end of this fiscal in south India is now likely to be commissioned only in the second half of the next fiscal. The company has outlined an initial investment of Rs 500 crore in the plant that is expected to add 1.5 million units to its annual capacity.
As much as 95% of the company's sales come from bikes, led by its Splendor and Passion brands. It sold 1.95 lakh units of its Pleasure model of scooters during the first six months of this fiscal.
Production will be stepped up from 8,000 units to 9,500 units at the Haridwar plant over the next six months, the company's CFO Ravi Sud said, and output will be raised at Gurgaon and Dharuhera manufacturing facilities as well. Sud said the company will enforce three shifts from next year to raise the annual output to 7 million units.
However, the company's fourth plant that was expected to come up by the end of this fiscal in south India is now likely to be commissioned only in the second half of the next fiscal. The company has outlined an initial investment of Rs 500 crore in the plant that is expected to add 1.5 million units to its annual capacity.
As much as 95% of the company's sales come from bikes, led by its Splendor and Passion brands. It sold 1.95 lakh units of its Pleasure model of scooters during the first six months of this fiscal.
Hero MotoCorp quarterly profit rises to a record
Hero MotoCorp Ltd, India’s largest motorcycle maker, posted a record quarterly profit in the three months ended 30 September, as sales received a boost at the expense of car manufacturers hurt by rising borrowing costs and fuel prices
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Net profit increased 19.38% from a year earlier to Rs. 604 crore in the fiscal second quarter, the company said on Tuesday. The profit was notched up on an increase of 28% in sales to Rs. 5,829.32 crore—another record.
Growth drivers: CEO Pawan Munjal says inflation and rising fuel costs may adversely affect consumer spending in the coming months.
The company beat expectations that it would post a Rs. 580 crore profit on a revenue of Rs. 5,800 crore, based on a Reuters poll of brokerage analysts.
Hero MotoCorp and rivals such as Bajaj Auto Ltd and TVS Motor Co. Ltd have reported higher sales growth, buoyed by the festive season, as increased loan rates and petrol prices, and an uncertain global economy force potential car buyers to lower their sights and buy motorcycles instead. Hero MotoCorp sold 1.54 million units in the last quarter, a 20% increase from a year earlier.
Bajaj Auto reported its highest-ever quarterly dispatches of 1.16 million units, an increase of 16.3%, in the three months to 30 September. TVS crossed the 600,000 mark for the first time.
The Indian car industry sold 1.36% fewer cars in the six months ended September compared with a year ago.
Hero MotoCorp’s earnings before interest, tax, depreciation and amortization (Ebitda), a measure of operating profitability, was Rs. 920 crore. Its Ebitda margin was 15.76%.
“The numbers are marginally better than our expectations,” said Nikhil Deshpande, a research analyst at PINC Research. “Raw material prices have come down sequentially—that has helped them to increase their margins.”
“This should remain at this level even during the next quarter as the growth is going to slow due to a higher base effect coming into play,” Deshpande said. “Overall, it is a good result.”
He said one factor to watch out for will be the impact of yen appreciation on royalty payments to former partner Honda Motor Co. Ltd, with which the Hero Group’s founders ended a nearly 25-year-old partnership in December by agreeing to buy out the Japanese company’s 26% stake in a joint venture.
Pawan Munjal, managing director and chief executive officer of Hero MotoCorp, said inflation and rising fuel costs may adversely affect consumer spending in the coming months. The higher base effect of last year will also come into play in the third quarter of this fiscal.
“However, we remain confident of carrying forward the buoyancy in our sales,” Munjal said in a statement. “We expect our retail volumes to peak during the festive month of October, and in anticipation of rising market demand for our products in the coming months, we have been augmenting capacity at our existing plants.”
The company has said it will spend Rs. 500 crore on a new plant that is expected to come up in Gujarat and at least Rs. 250 crore on expanding capacity at its existing plants in Gurgaon and Haridwar. The company has set aside Rs. 100 crore for a rebranding exercise this fiscal. In addition, it will spend 2.1-2.4% of revenue on advertising. It rolled out a new brand identity in August, following the break with Honda. The earnings announcement was the first since the name was changed from Hero Honda Motors Ltd.
Hero MotoCorp shares slid 0.41% to Rs. 1,984.85 on BSE on Tuesday as the benchmark Sensex index fell 1.63% to 16,748.29. The results were announced after markets closed.
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Net profit increased 19.38% from a year earlier to Rs. 604 crore in the fiscal second quarter, the company said on Tuesday. The profit was notched up on an increase of 28% in sales to Rs. 5,829.32 crore—another record.
Growth drivers: CEO Pawan Munjal says inflation and rising fuel costs may adversely affect consumer spending in the coming months.
The company beat expectations that it would post a Rs. 580 crore profit on a revenue of Rs. 5,800 crore, based on a Reuters poll of brokerage analysts.
Hero MotoCorp and rivals such as Bajaj Auto Ltd and TVS Motor Co. Ltd have reported higher sales growth, buoyed by the festive season, as increased loan rates and petrol prices, and an uncertain global economy force potential car buyers to lower their sights and buy motorcycles instead. Hero MotoCorp sold 1.54 million units in the last quarter, a 20% increase from a year earlier.
Bajaj Auto reported its highest-ever quarterly dispatches of 1.16 million units, an increase of 16.3%, in the three months to 30 September. TVS crossed the 600,000 mark for the first time.
The Indian car industry sold 1.36% fewer cars in the six months ended September compared with a year ago.
Hero MotoCorp’s earnings before interest, tax, depreciation and amortization (Ebitda), a measure of operating profitability, was Rs. 920 crore. Its Ebitda margin was 15.76%.
“The numbers are marginally better than our expectations,” said Nikhil Deshpande, a research analyst at PINC Research. “Raw material prices have come down sequentially—that has helped them to increase their margins.”
“This should remain at this level even during the next quarter as the growth is going to slow due to a higher base effect coming into play,” Deshpande said. “Overall, it is a good result.”
He said one factor to watch out for will be the impact of yen appreciation on royalty payments to former partner Honda Motor Co. Ltd, with which the Hero Group’s founders ended a nearly 25-year-old partnership in December by agreeing to buy out the Japanese company’s 26% stake in a joint venture.
Pawan Munjal, managing director and chief executive officer of Hero MotoCorp, said inflation and rising fuel costs may adversely affect consumer spending in the coming months. The higher base effect of last year will also come into play in the third quarter of this fiscal.
“However, we remain confident of carrying forward the buoyancy in our sales,” Munjal said in a statement. “We expect our retail volumes to peak during the festive month of October, and in anticipation of rising market demand for our products in the coming months, we have been augmenting capacity at our existing plants.”
The company has said it will spend Rs. 500 crore on a new plant that is expected to come up in Gujarat and at least Rs. 250 crore on expanding capacity at its existing plants in Gurgaon and Haridwar. The company has set aside Rs. 100 crore for a rebranding exercise this fiscal. In addition, it will spend 2.1-2.4% of revenue on advertising. It rolled out a new brand identity in August, following the break with Honda. The earnings announcement was the first since the name was changed from Hero Honda Motors Ltd.
Hero MotoCorp shares slid 0.41% to Rs. 1,984.85 on BSE on Tuesday as the benchmark Sensex index fell 1.63% to 16,748.29. The results were announced after markets closed.
We are now boringly predictable, says Rajiv Bajaj
“Bajaj Auto is becoming a boringly predictable company,” says Mr Rajiv Bajaj, Managing Director, reacting to the second quarter numbers released on Thursday.
As he puts it, there is no reason for surprises any longer with the ‘less is actually more' mantra working like a charm for many quarters now. The reference is to the brand strategy in motorcycles and three-wheelers where the Pulsar, Discover and RE have played a key role in boosting sales and profits.
Exports on par
With exports also growing at a rapid pace, Mr Bajaj believes the day is not too far off when the company's domestic and international business will be evenly balanced. “We are already nearing the 40 per cent mark in exports and are confident that this will only grow in the coming years,” he said.
This is an important part of the Bajaj Auto strategy to grow its motorcycle business beyond India. As part of the ‘less is more' credo, the company is steering clear of scooters for the moment and focusing on motorcycles in ASEAN, Latin America and even Europe with the KTM alliance. Likewise, the three-wheelers are also on a roll with Q2 export numbers up 44 per cent at 82,000 units.
Outlook bright
“We expect the second half of this fiscal to be as good, or even better, than the first,” Mr Bajaj said. To drive home the point, he cited the motorcycle business which grew eight per cent in the domestic market this quarter. The Pulsar also staged a revival and the company is now confident that the overall growth momentum in bikes will continue in the third and fourth quarters.
More importantly, the Discover product mix shows over 50 per cent of the market opting for the more expensive 125cc and 150cc options (against the Discover 100). From Bajaj Auto's point of view, this translates into better margins as the transition gains pace.
The momentum in exports is expected to increase and if the rupee continues at the 48-49 levels against the dollar; this is welcome news from the viewpoint of higher earnings for the second half. Mr Bajaj said the Centre's recent decision to incentivise exports (by one per cent) would result in another Rs 30 crore coming in during October-March 2012. Finally, commodity prices are expected to stay flat for the rest of the fiscal.
As he puts it, there is no reason for surprises any longer with the ‘less is actually more' mantra working like a charm for many quarters now. The reference is to the brand strategy in motorcycles and three-wheelers where the Pulsar, Discover and RE have played a key role in boosting sales and profits.
Exports on par
With exports also growing at a rapid pace, Mr Bajaj believes the day is not too far off when the company's domestic and international business will be evenly balanced. “We are already nearing the 40 per cent mark in exports and are confident that this will only grow in the coming years,” he said.
This is an important part of the Bajaj Auto strategy to grow its motorcycle business beyond India. As part of the ‘less is more' credo, the company is steering clear of scooters for the moment and focusing on motorcycles in ASEAN, Latin America and even Europe with the KTM alliance. Likewise, the three-wheelers are also on a roll with Q2 export numbers up 44 per cent at 82,000 units.
Outlook bright
“We expect the second half of this fiscal to be as good, or even better, than the first,” Mr Bajaj said. To drive home the point, he cited the motorcycle business which grew eight per cent in the domestic market this quarter. The Pulsar also staged a revival and the company is now confident that the overall growth momentum in bikes will continue in the third and fourth quarters.
More importantly, the Discover product mix shows over 50 per cent of the market opting for the more expensive 125cc and 150cc options (against the Discover 100). From Bajaj Auto's point of view, this translates into better margins as the transition gains pace.
The momentum in exports is expected to increase and if the rupee continues at the 48-49 levels against the dollar; this is welcome news from the viewpoint of higher earnings for the second half. Mr Bajaj said the Centre's recent decision to incentivise exports (by one per cent) would result in another Rs 30 crore coming in during October-March 2012. Finally, commodity prices are expected to stay flat for the rest of the fiscal.
Bajaj Auto Q2 net up 6% at Rs.726 cr
Bajaj Auto (BAL) reported a 6 per cent growth in net profit for the second quarter ended September 30, 2011, at Rs.726 crore against Rs.682 crore in the year-ago period.
However, according to the company, it has protected its future export realisations by entering into range forward contracts.
Accordingly, a mark-to-market loss of Rs.95 crore on valuation of the contracts is charged to the profit and loss account. This is purely notional and would get reversed on maturity of the underlying contract. The net profit includes a Rs.64-crore valuation loss and the net profit figure should be Rs.790 crore, a 16 per cent growth.
Sales were up 21 per cent at Rs.5,342 crore against Rs.4,426 crore and the operating profit was up 18 per cent at Rs.1,057 crore (Rs.897 crore). Exports too were at a record Rs.1,733 crore and the higher realisation from exports and rationalisation of spends on sales promotion boosted margins.
During the quarter, motorcycle sales achieved a record 1.027 million units. Commercial vehicles recorded highest ever sales of 1.36 lakh units, a growth of 17 per cent.
During the quarter, motorcycle exports grew 37 per cent to 3.42 lakh units while three-wheeler exports were up 44 per cent at 81,448 units. Total exports grew 38 per cent to 4.24 lakh units.
Addressing a press conference, Rajiv Bajaj, Managing Director, said, “Our guidance for the full year is a growth of 20 per cent in motorcycle sales and from 3.8 million sales last year that translates into 4.5 million units. We have done exactly half that in the first half. Out of the 4.5 million units for the full year, 35 per cent or 1.5 million units could be exports”.
The company is planning to launch an all-new avatar of its most successful product the Bajaj Pulsar early next year. Two-thirds of the company's bike sales come from the Pulsar and Discover. Mr. Bajaj said, “Pulsar was launched in November 2001 and on its 10{+t}{+h} anniversary, we will launch the new Pulsar with all new components”.
In-house technology
Mr. Bajaj said the company's R&D team had developed an all-new engine technology completely in-house. “It is the next step from the DTS-I and the new product will be available at affordable rates. It will be a first glimpse of what the future of Bajaj will be like and the technology will be used in all the new Pulsar bikes and maybe it could even be used in the Discover bikes”.
However, according to the company, it has protected its future export realisations by entering into range forward contracts.
Accordingly, a mark-to-market loss of Rs.95 crore on valuation of the contracts is charged to the profit and loss account. This is purely notional and would get reversed on maturity of the underlying contract. The net profit includes a Rs.64-crore valuation loss and the net profit figure should be Rs.790 crore, a 16 per cent growth.
Sales were up 21 per cent at Rs.5,342 crore against Rs.4,426 crore and the operating profit was up 18 per cent at Rs.1,057 crore (Rs.897 crore). Exports too were at a record Rs.1,733 crore and the higher realisation from exports and rationalisation of spends on sales promotion boosted margins.
During the quarter, motorcycle sales achieved a record 1.027 million units. Commercial vehicles recorded highest ever sales of 1.36 lakh units, a growth of 17 per cent.
During the quarter, motorcycle exports grew 37 per cent to 3.42 lakh units while three-wheeler exports were up 44 per cent at 81,448 units. Total exports grew 38 per cent to 4.24 lakh units.
Addressing a press conference, Rajiv Bajaj, Managing Director, said, “Our guidance for the full year is a growth of 20 per cent in motorcycle sales and from 3.8 million sales last year that translates into 4.5 million units. We have done exactly half that in the first half. Out of the 4.5 million units for the full year, 35 per cent or 1.5 million units could be exports”.
The company is planning to launch an all-new avatar of its most successful product the Bajaj Pulsar early next year. Two-thirds of the company's bike sales come from the Pulsar and Discover. Mr. Bajaj said, “Pulsar was launched in November 2001 and on its 10{+t}{+h} anniversary, we will launch the new Pulsar with all new components”.
In-house technology
Mr. Bajaj said the company's R&D team had developed an all-new engine technology completely in-house. “It is the next step from the DTS-I and the new product will be available at affordable rates. It will be a first glimpse of what the future of Bajaj will be like and the technology will be used in all the new Pulsar bikes and maybe it could even be used in the Discover bikes”.
No firecrackers in Auto co's Financials
Lacklustre demand in the second quarter, the onset of the festive season not withstanding, is expected to put pressure on the profitability of automotive companies, especially the car and sports utility vehicle manufacturers.
The industry buckled under a variety of pressures, including expensive lending rates impacting retail offtake, higher fuel prices, consistently higher input costs and labour trouble effecting output in certain cases.
Companies like Bajaj Auto and Mahindra & Mahindra (M&M) are expected to report healthy growth in their profits, driven by volume growth and better realisations. Others like Tata Motors and Maruti Suzuki may suffer due to a drop in sales.
“We expect a weak quarter for auto companies driven by the pressure of raw material cost. We expect Bajaj Auto, Hero Motocorp and M&M to report positive year-on-year earnings growth, while Ashok Leyland, Maruti Suzuki and Tata Motors are likely to report a decline in earnings,” Hitesh Goel from Kotak Institutional Equities said in a report.
Maruti Suzuki, India’s biggest car maker, is likely to post a 25-30 per cent drop in net profit for the quarter ended September 30, on the back of crippled supplies of its products amid a workers’ strike at its plant in Manesar, Haryana.
Maruti Suzuki, which will announce its results on October 29, is expected to post a net profit of Rs 415-430 crore, according to financial analysts tracking the company, with a topline fall of 15-17 per cent.
Tata Motors, India’s biggest vehicle maker by revenue, could report a fall in profits or flat growth in the second quarter. While volumes at Jaguar Land Rover (JLR) remained upbeat, sales of passenger vehicles in the domestic market took a hit.
The Mumbai-based automaker is expected to report a profit after tax in the range of Rs 1,950-2,030 crore for the reporting quarter on a consolidated basis, against Rs 2,209 crore in the same quarter a year ago.
“Stand-alone margins of Tata Motors are expected to decline due to losses in small car business. JLR margins would largely be flat quarter on quarter, as favourable currency counters weaker mix,” stated S Arun from Bank of America Merrill Lynch in a report.
SUV market leader M&M, whose all-diesel line-up benefited from the spurt in petrol prices, is expected to report industry-beating profits during the second quarter. The Mumbai-based company saw volume growth of 30 per cent in the second quarter last year at 178,848 units.
Similarly, Bajaj Auto, the country’s second-biggest two-wheeler manufacturer, posted double-digit volume growth during the reporting quarter. Analysts expect the Pune-based company’s profit to improve by 10-11 per cent on the back of better realisations on premium products and increase in prices.
Volumes of truck maker Ashok Leyland had come under pressure because of a larger slowdown in economic activities in the country. The Chennai-based company’s absence in the light truck segment impacted volumes growth, an area where rivals Tata Motors has established a strong presence.
Hero Motocorp (formerly Hero Honda), the country’s biggest two-wheeler maker, is likely to post 12-15 per cent growth in profit. The Delhi-based company too reported high double-digit growth for the period a year ago.
According to experts, the two-wheeler sector largely managed to avoid the broader demand weakening, as a majority of two-wheelers in the country are purchased on cash payment due to their lower ticket size. The two-wheeler sector is understood to be the last sector being affected by a slowdown phenomenon.
The industry buckled under a variety of pressures, including expensive lending rates impacting retail offtake, higher fuel prices, consistently higher input costs and labour trouble effecting output in certain cases.
Companies like Bajaj Auto and Mahindra & Mahindra (M&M) are expected to report healthy growth in their profits, driven by volume growth and better realisations. Others like Tata Motors and Maruti Suzuki may suffer due to a drop in sales.
“We expect a weak quarter for auto companies driven by the pressure of raw material cost. We expect Bajaj Auto, Hero Motocorp and M&M to report positive year-on-year earnings growth, while Ashok Leyland, Maruti Suzuki and Tata Motors are likely to report a decline in earnings,” Hitesh Goel from Kotak Institutional Equities said in a report.
Maruti Suzuki, India’s biggest car maker, is likely to post a 25-30 per cent drop in net profit for the quarter ended September 30, on the back of crippled supplies of its products amid a workers’ strike at its plant in Manesar, Haryana.
Maruti Suzuki, which will announce its results on October 29, is expected to post a net profit of Rs 415-430 crore, according to financial analysts tracking the company, with a topline fall of 15-17 per cent.
Tata Motors, India’s biggest vehicle maker by revenue, could report a fall in profits or flat growth in the second quarter. While volumes at Jaguar Land Rover (JLR) remained upbeat, sales of passenger vehicles in the domestic market took a hit.
The Mumbai-based automaker is expected to report a profit after tax in the range of Rs 1,950-2,030 crore for the reporting quarter on a consolidated basis, against Rs 2,209 crore in the same quarter a year ago.
“Stand-alone margins of Tata Motors are expected to decline due to losses in small car business. JLR margins would largely be flat quarter on quarter, as favourable currency counters weaker mix,” stated S Arun from Bank of America Merrill Lynch in a report.
SUV market leader M&M, whose all-diesel line-up benefited from the spurt in petrol prices, is expected to report industry-beating profits during the second quarter. The Mumbai-based company saw volume growth of 30 per cent in the second quarter last year at 178,848 units.
Similarly, Bajaj Auto, the country’s second-biggest two-wheeler manufacturer, posted double-digit volume growth during the reporting quarter. Analysts expect the Pune-based company’s profit to improve by 10-11 per cent on the back of better realisations on premium products and increase in prices.
Volumes of truck maker Ashok Leyland had come under pressure because of a larger slowdown in economic activities in the country. The Chennai-based company’s absence in the light truck segment impacted volumes growth, an area where rivals Tata Motors has established a strong presence.
Hero Motocorp (formerly Hero Honda), the country’s biggest two-wheeler maker, is likely to post 12-15 per cent growth in profit. The Delhi-based company too reported high double-digit growth for the period a year ago.
According to experts, the two-wheeler sector largely managed to avoid the broader demand weakening, as a majority of two-wheelers in the country are purchased on cash payment due to their lower ticket size. The two-wheeler sector is understood to be the last sector being affected by a slowdown phenomenon.
Exporters get rs 900-cr lift
The government on Thursday bolstered the special incentive package for exporters facing tough times in the US and EU markets with two new duty credit schemes. To promote market diversification, exports to 41 countries would be given 4% duty credit — as opposed to 3% now— under a new Special Focus Market Scheme. Another scheme covering 50 products in the areas of engineering, pharmaceuticals and chemicals would provide the exporters of these products an additional 1% duty credit.
The revenue foregone on account of these and other concessions announced on Thursday would be some R900 crore. With the 2% interest subvention for exporters’ rupee credit announced by the Reserve Bank of India on Tuesday, the total cost of the package for exporters could be around R1,700 crore, commerce secretary Rahul Khullar said.
“We are introducing a special focus market scheme. It will cover 41 countries — 12 from Latin America, 22 from Africa and seven from CIS countries,” commerce minister Anand Sharma said, announcing the annual review to the Foreign Trade Policy 2009-14. The scheme is applicable from October to March this fiscal.
India’s exports grew an impressive 52.1% to $160 billion in the first six months of the current fiscal, but signs of deceleration was evident in the last two months. Exports grew 36.3% in September, significantly slowing from a heady 82% in July.
“Times are still challenging. There is a very limp recovery in the US and virtually no recovery in Europe ... These two countries are having their own myriad problems at present. We have to ensure that markets in which we are engaged, the year-on-year growth should continue,” Sharma said.
The market-linked focus product scheme has been extended to the US and the EU as well.
FIEO president Ramu Deroa called the sops as early diwali gift for the exporter community and said that the incentives will help the trade grow.
Among the other incentives, the apparel sector has been given duty credit under Market Linked Focus Product Scheme (MLFPS) for export to the US and Europe. The 2% duty credit would be available to exports made during 2011-12. It has been decided to extend Market Linked Focus Product Scheme benefit for exports of agricultural tractors (over 1800 cc capacity) to Turkey.
The list of items under Focus Product Scheme has also been expanded to include 130 additional items mainly in the sectors of chemical, pharmaceutical, textiles, handicraft, engineering and electronics sector.
The revenue foregone on account of these and other concessions announced on Thursday would be some R900 crore. With the 2% interest subvention for exporters’ rupee credit announced by the Reserve Bank of India on Tuesday, the total cost of the package for exporters could be around R1,700 crore, commerce secretary Rahul Khullar said.
“We are introducing a special focus market scheme. It will cover 41 countries — 12 from Latin America, 22 from Africa and seven from CIS countries,” commerce minister Anand Sharma said, announcing the annual review to the Foreign Trade Policy 2009-14. The scheme is applicable from October to March this fiscal.
India’s exports grew an impressive 52.1% to $160 billion in the first six months of the current fiscal, but signs of deceleration was evident in the last two months. Exports grew 36.3% in September, significantly slowing from a heady 82% in July.
“Times are still challenging. There is a very limp recovery in the US and virtually no recovery in Europe ... These two countries are having their own myriad problems at present. We have to ensure that markets in which we are engaged, the year-on-year growth should continue,” Sharma said.
The market-linked focus product scheme has been extended to the US and the EU as well.
FIEO president Ramu Deroa called the sops as early diwali gift for the exporter community and said that the incentives will help the trade grow.
Among the other incentives, the apparel sector has been given duty credit under Market Linked Focus Product Scheme (MLFPS) for export to the US and Europe. The 2% duty credit would be available to exports made during 2011-12. It has been decided to extend Market Linked Focus Product Scheme benefit for exports of agricultural tractors (over 1800 cc capacity) to Turkey.
The list of items under Focus Product Scheme has also been expanded to include 130 additional items mainly in the sectors of chemical, pharmaceutical, textiles, handicraft, engineering and electronics sector.
IIP growth slows to 4.1%, rates & global woes bite
India’s industrial output grew at an anaemic pace of 4.1% in August, a notch slower than its expansion a year ago. Output as measured by the index of industrial production (IIP) grew slower as mining output contracted and overall demand and investment suffered thanks to high interest rates and a bleak global outlook. Economists said that despite the slippage, which is sure to reflect in GDP data for the July-September quarter, the Reserve Bank of India (RBI) is expected to focus on combating inflation, which was uncomfortably high at 9.78% in August, and raise benchmark lending rates by another 25 basis points on October 25.
India’s GDP grew 7.7% in April-June, the slowest pace in six quarters. The RBI, which has stuck to its 8% growth forecast for the fiscal, might pare down its estimate a bit. The September inflation rate is expected to be around the August figure, according to independent surveys, but the central bank’s optimism that the rate would ease to 7% by March is not shared by many as a weak rupee could inflate import costs.
The RBI will change its policy stance only if inflation eases and further rate hikes will depend on the price rise situation, said deputy governor Subir Gokarn. “It (further rate hike) depends on the inflation situation,” he said. “We raise rates not because it is an end in itself. To the extent we see the problem persisting, then there is a basis to raise rates, but if we see the problem is starting to ease off, then that would provide the basis for a change,” he added.
Finance minister Pranab Mukherjee said: “It is a bit disappointing and it may affect GDP in the second quarter.” Officials in the finance ministry, however, found solace in the trend that industrial output shows better results in the second half of the fiscal.
Capital goods output, a barometer of investment activity and which has shown high volatility in recent months, recovered a bit from a negative growth of 13.75% in July to 3.9% in August.
A slump in consumption demand was evident in the unimpressive 3.7% growth in consumer goods in August, compared to 4.6% growth in the corresponding month a year ago. A saving grace in the Central Statistical Office data released on Wednesday was a healthy 9.5% growth in electricity output in August, compared to a mere 1% growth a year ago.
Industrial output growth in August is the slowest since June, when an 8.8% expansion was reported before it spiraled down into a revised a 3.8% growth in July. Manufacturing, which accounts for three-fourth of industrial output, grew at a tepid 4.5% in August compared to a year ago and 3.14% in July. Mining output contracted 3.4% in August, against a 5.9% growth in the corresponding month last year suggesting it will eventually eat into the growth of electricity generation and steel production. Power generation grew at 9.5% in August from a low base of 1% a year ago.
Economists said it is difficult to draw a conclusion about the prospects of the economy from the capital goods data as it is highly volatile. However, feedback from the industry indicates that the order pipeline is dwindling due to the poor investment climate, they said. India’s exports grew 36.3% in September from a year ago to $24.8 billion, commerce secretary Rahul Khullar said on Wednesday, even as he saw a sign of deceleration given that the growth in August was an even higher 44.3%.
“There is no comfort on the inflation front, whereas there is rising discomfort on the growth front. Unless there is some relief on inflation, RBI’s tight monetary stance is likely to continue,” said Crisil director and principal economist DK Joshi, who expects a 25-basis point increase in the rate at which the central bank lends to and borrows from banks. RBI has raised the key repo rate 12 times since March 2010 to 8.25%, leading to higher borrowing costs that has affected consumer spending and growth. Consumer goods output grew at 3.7% in August compared to a 4.6% growth a year ago. Within this category, consumer durables production expanded by 4.6% in the month, nearly half the pace at which it grew a year ago.
India’s GDP grew 7.7% in April-June, the slowest pace in six quarters. The RBI, which has stuck to its 8% growth forecast for the fiscal, might pare down its estimate a bit. The September inflation rate is expected to be around the August figure, according to independent surveys, but the central bank’s optimism that the rate would ease to 7% by March is not shared by many as a weak rupee could inflate import costs.
The RBI will change its policy stance only if inflation eases and further rate hikes will depend on the price rise situation, said deputy governor Subir Gokarn. “It (further rate hike) depends on the inflation situation,” he said. “We raise rates not because it is an end in itself. To the extent we see the problem persisting, then there is a basis to raise rates, but if we see the problem is starting to ease off, then that would provide the basis for a change,” he added.
Finance minister Pranab Mukherjee said: “It is a bit disappointing and it may affect GDP in the second quarter.” Officials in the finance ministry, however, found solace in the trend that industrial output shows better results in the second half of the fiscal.
Capital goods output, a barometer of investment activity and which has shown high volatility in recent months, recovered a bit from a negative growth of 13.75% in July to 3.9% in August.
A slump in consumption demand was evident in the unimpressive 3.7% growth in consumer goods in August, compared to 4.6% growth in the corresponding month a year ago. A saving grace in the Central Statistical Office data released on Wednesday was a healthy 9.5% growth in electricity output in August, compared to a mere 1% growth a year ago.
Industrial output growth in August is the slowest since June, when an 8.8% expansion was reported before it spiraled down into a revised a 3.8% growth in July. Manufacturing, which accounts for three-fourth of industrial output, grew at a tepid 4.5% in August compared to a year ago and 3.14% in July. Mining output contracted 3.4% in August, against a 5.9% growth in the corresponding month last year suggesting it will eventually eat into the growth of electricity generation and steel production. Power generation grew at 9.5% in August from a low base of 1% a year ago.
Economists said it is difficult to draw a conclusion about the prospects of the economy from the capital goods data as it is highly volatile. However, feedback from the industry indicates that the order pipeline is dwindling due to the poor investment climate, they said. India’s exports grew 36.3% in September from a year ago to $24.8 billion, commerce secretary Rahul Khullar said on Wednesday, even as he saw a sign of deceleration given that the growth in August was an even higher 44.3%.
“There is no comfort on the inflation front, whereas there is rising discomfort on the growth front. Unless there is some relief on inflation, RBI’s tight monetary stance is likely to continue,” said Crisil director and principal economist DK Joshi, who expects a 25-basis point increase in the rate at which the central bank lends to and borrows from banks. RBI has raised the key repo rate 12 times since March 2010 to 8.25%, leading to higher borrowing costs that has affected consumer spending and growth. Consumer goods output grew at 3.7% in August compared to a 4.6% growth a year ago. Within this category, consumer durables production expanded by 4.6% in the month, nearly half the pace at which it grew a year ago.
Hyosung may move production to India
Hyosung, one of South Korea’s biggest two-wheeler brands, is looking to make India its production hub, making use of the country’s low-cost production abilities.
S&T Motors, which owns Seoul-based Hyosung, is planning for greater dependence on its Indian partner, Garware Motors, for setting up the facilities in the country to cater to the markets of America, Europe and Asia-Pacific region.
As for Garware Motors, it on Thursday launched the GT650 N, a performance bike in India at Rs 4.39 lakh (ex-showroom, Delhi). This is the third bike from the company, after the GT650 R and ST7 it launched in April.
The players note that the cost of manufacturing in Korea is considerably higher than that of India. The 1978-founded S&T was contemplating China as a production base too, but better prospects of growth of India’s domestic two-wheeler market and its cost-effective manufacturing processes moved into its favour, said Diya Garware, managing director of Pune-based Garware Motors.
The 1957-incorporated Hyosung does not currently have a full manufacturing facility outside South Korea, even as it exports products to over 60 countries. Garware Motors, which has been in the business since 1960, is building a facility to assemble motorcycles and scooters at Wai in Maharashtra’s Satara district. (It has a manufacturing facility in Pune.)
As for Hyosung, its research and development wing may still remain in Korea. The brand makes higher-capacity engine-performance motorcycles in the 250cc to 650cc range, besides electric vehicles, scooters and terrain vehicles.
Both Garware Motors and S&T Motors, headquartered in Changwon in east-central Korea, are talking on forming a joint venture company which will oversee Hyosung’s India operations. “Hyosung is very aggressive with its plans in India,” pointed out Garware. “There are plans of having equity participation by both companies on a separate level.”
As for the three performance bikes of Garware, they are currently being assembled in India at a temporary facility in the state. The motorcycles are brought to India in a knocked down format (in various parts) and later put together in the country.
The company, with 4,000 employees, hopes to follow this launch with some off-road bikes next year. This will be followed by the 250cc class to be launched around June-July next year. Eventually the entire range of Hyosung branded two-wheelers will be introduced in India.
“The 250cc class of bikes is what will bring us the volumes in India,” said Garware. “We hope to sell 5,000-6,000 units of them per year upon launch by mid of next year. We will price the bike competitively but ours will be having a V-twin engine unlike the Honda CBR250.”
Garware Motors sold 325 units of the two bikes during the six months period ended September from a dealer base of 14 dealers. It hopes to achieve total sales of 1,200 units by the end of this year.
S&T Motors, which owns Seoul-based Hyosung, is planning for greater dependence on its Indian partner, Garware Motors, for setting up the facilities in the country to cater to the markets of America, Europe and Asia-Pacific region.
As for Garware Motors, it on Thursday launched the GT650 N, a performance bike in India at Rs 4.39 lakh (ex-showroom, Delhi). This is the third bike from the company, after the GT650 R and ST7 it launched in April.
The players note that the cost of manufacturing in Korea is considerably higher than that of India. The 1978-founded S&T was contemplating China as a production base too, but better prospects of growth of India’s domestic two-wheeler market and its cost-effective manufacturing processes moved into its favour, said Diya Garware, managing director of Pune-based Garware Motors.
The 1957-incorporated Hyosung does not currently have a full manufacturing facility outside South Korea, even as it exports products to over 60 countries. Garware Motors, which has been in the business since 1960, is building a facility to assemble motorcycles and scooters at Wai in Maharashtra’s Satara district. (It has a manufacturing facility in Pune.)
As for Hyosung, its research and development wing may still remain in Korea. The brand makes higher-capacity engine-performance motorcycles in the 250cc to 650cc range, besides electric vehicles, scooters and terrain vehicles.
Both Garware Motors and S&T Motors, headquartered in Changwon in east-central Korea, are talking on forming a joint venture company which will oversee Hyosung’s India operations. “Hyosung is very aggressive with its plans in India,” pointed out Garware. “There are plans of having equity participation by both companies on a separate level.”
As for the three performance bikes of Garware, they are currently being assembled in India at a temporary facility in the state. The motorcycles are brought to India in a knocked down format (in various parts) and later put together in the country.
The company, with 4,000 employees, hopes to follow this launch with some off-road bikes next year. This will be followed by the 250cc class to be launched around June-July next year. Eventually the entire range of Hyosung branded two-wheelers will be introduced in India.
“The 250cc class of bikes is what will bring us the volumes in India,” said Garware. “We hope to sell 5,000-6,000 units of them per year upon launch by mid of next year. We will price the bike competitively but ours will be having a V-twin engine unlike the Honda CBR250.”
Garware Motors sold 325 units of the two bikes during the six months period ended September from a dealer base of 14 dealers. It hopes to achieve total sales of 1,200 units by the end of this year.
The Bajaj Pulsar gets a new look
For all those who are bored of the same old colours and look of the most commonly seen bike in India - the Bajaj Pulsar, there's some spice coming your way
Bajaj recently a new look for its flagship motorcycle range – the Pulsar. The bike will no longer be host to the same old standard black, blue, silver and red colour but for the first time will have some trendy graphics on it.
The new graphics will be seen on the Pulsar 150, Pulsar 180 and the Pulsar 220 and will completely substitute the existing colours. The decals for the naked Pulsars can be seen on the side panels at the pedestal of the fuel tank all the way down the side panels to the rear seat cowl, whereas the faired Pulsar 220 will see dual tone graphics across the fairing.
The decorative stickers will come in two alternatives – Blue with black and red with black. the previous look used to host black handle bars and grab rails only on the black coloured bikes but will now be seen on all the colour variants. The engine and the foot pegs will host an all new moonlight silver colour but the piston block will continue to remain black.
“The decals have added a new dimension to the look of the Pulsar, making it more aggressive and sporty. These decals along with the engine color scheme give the Pulsar a fresh and unique feel. ” said Mr. R. Chandrasekar – GM - Marketing & Sales, Bajaj Auto Ltd.
The new Pulsar now looks much sportier thanks to the graphics it will definitely pull in a lot of buyers who want something different from the same old single coloured Pulsar.
Bajaj recently a new look for its flagship motorcycle range – the Pulsar. The bike will no longer be host to the same old standard black, blue, silver and red colour but for the first time will have some trendy graphics on it.
The new graphics will be seen on the Pulsar 150, Pulsar 180 and the Pulsar 220 and will completely substitute the existing colours. The decals for the naked Pulsars can be seen on the side panels at the pedestal of the fuel tank all the way down the side panels to the rear seat cowl, whereas the faired Pulsar 220 will see dual tone graphics across the fairing.
The decorative stickers will come in two alternatives – Blue with black and red with black. the previous look used to host black handle bars and grab rails only on the black coloured bikes but will now be seen on all the colour variants. The engine and the foot pegs will host an all new moonlight silver colour but the piston block will continue to remain black.
“The decals have added a new dimension to the look of the Pulsar, making it more aggressive and sporty. These decals along with the engine color scheme give the Pulsar a fresh and unique feel. ” said Mr. R. Chandrasekar – GM - Marketing & Sales, Bajaj Auto Ltd.
The new Pulsar now looks much sportier thanks to the graphics it will definitely pull in a lot of buyers who want something different from the same old single coloured Pulsar.
Bajaj gets ready to shift to top gear for output push
Bajaj Auto, which expects to wrap up this fiscal with over 4.5 million bikes and three-wheelers, has put a fast-track strategy in place to double output.
“We have strong brands in our portfolio and are reasonably confident that the next three years will see our annual numbers touch 10 million units,” Mr Rajiv Bajaj, Managing Director, told Business Line.
Cornerstone
The company's Pulsar and Discover motorcycles, which are the cornerstone of this brand strategy, have played a key role in helping numbers double over the last three years. Bajaj wrapped up 2008-09 at 2.2 million units, going up to 2.8 million in FY '10 and over 3.8 million bikes and three-wheelers in FY '11.
With production of over 2.25 million units in the first half of this fiscal, the company believes that the momentum is in place to end the year at around 4.5 million units. “Our starting point today is a lot stronger and more potent than what it was three years ago when we were still finding our way around,” Mr Bajaj said.
The following fiscal will kick off with “a flurry of launches” beginning with the KTM (the Austrian company where Bajaj has a near 40 per cent stake) bikes. Some interesting initiatives are expected with the top-selling Pulsar and Discover bikes as well as the RE-branded three-wheelers.
Focus on profits
More than the numbers, the company's top priority is to keep its focus intact on profits, especially with its EBITDA consistently clocking 20 per cent for sometime now.
“We have worked very hard on our cost structure over the last two decades and even when (sales) numbers were low, the back-end was pretty much in place,” he said. Today, the buyers are back and a strong front-end is keeping the margins at a happy level.
Bajaj Auto's fixed costs only take up five per cent of the overall structure with variable costs (materials, tools, consumables, electricity etc.) accounting for over 70 per cent.
The small fixed cost component ensures that even something as drastic as a 20 per cent slowdown will affect EBITDA only marginally.
“As a result, the needle will not move too much during times of distress. We have ensured that it is not going to be easy to rock the boat of this company,” Mr Bajaj said.
While the Discover has been the best piece of news from the viewpoint of establishing a presence in the elusive commuter category, the growing shift from the 100cc option has been welcome news. Of the 1.4 lakh plus units sold every month, the combined numbers of the more contemporary Discover 125 and 150 are more than the 100cc.
“If at least 51 per cent of these customers are already part of the bigger Discover kitty, the shift will only increase in the coming months. This is precisely in line with our intention of growing our presence in the 125cc commuter space,” Mr Bajaj said. Hero MotorCorp is the clear leader in the 100cc segment with its Splendor and Passion accounting for nearly three lakh motorcycles a month.
“We have strong brands in our portfolio and are reasonably confident that the next three years will see our annual numbers touch 10 million units,” Mr Rajiv Bajaj, Managing Director, told Business Line.
Cornerstone
The company's Pulsar and Discover motorcycles, which are the cornerstone of this brand strategy, have played a key role in helping numbers double over the last three years. Bajaj wrapped up 2008-09 at 2.2 million units, going up to 2.8 million in FY '10 and over 3.8 million bikes and three-wheelers in FY '11.
With production of over 2.25 million units in the first half of this fiscal, the company believes that the momentum is in place to end the year at around 4.5 million units. “Our starting point today is a lot stronger and more potent than what it was three years ago when we were still finding our way around,” Mr Bajaj said.
The following fiscal will kick off with “a flurry of launches” beginning with the KTM (the Austrian company where Bajaj has a near 40 per cent stake) bikes. Some interesting initiatives are expected with the top-selling Pulsar and Discover bikes as well as the RE-branded three-wheelers.
Focus on profits
More than the numbers, the company's top priority is to keep its focus intact on profits, especially with its EBITDA consistently clocking 20 per cent for sometime now.
“We have worked very hard on our cost structure over the last two decades and even when (sales) numbers were low, the back-end was pretty much in place,” he said. Today, the buyers are back and a strong front-end is keeping the margins at a happy level.
Bajaj Auto's fixed costs only take up five per cent of the overall structure with variable costs (materials, tools, consumables, electricity etc.) accounting for over 70 per cent.
The small fixed cost component ensures that even something as drastic as a 20 per cent slowdown will affect EBITDA only marginally.
“As a result, the needle will not move too much during times of distress. We have ensured that it is not going to be easy to rock the boat of this company,” Mr Bajaj said.
While the Discover has been the best piece of news from the viewpoint of establishing a presence in the elusive commuter category, the growing shift from the 100cc option has been welcome news. Of the 1.4 lakh plus units sold every month, the combined numbers of the more contemporary Discover 125 and 150 are more than the 100cc.
“If at least 51 per cent of these customers are already part of the bigger Discover kitty, the shift will only increase in the coming months. This is precisely in line with our intention of growing our presence in the 125cc commuter space,” Mr Bajaj said. Hero MotorCorp is the clear leader in the 100cc segment with its Splendor and Passion accounting for nearly three lakh motorcycles a month.
TVS to roll out two-wheelers from West Bengal facility
After years of wait, the first batch of TVS two-wheelers are set to roll out from a contract manufacturing facility in West Bengal. The unit is located in Uluberiasome, 25 km to the west of the State capital.
INITIAL CAPACITY
Company officials told this correspondent that the initial capacity that was being looked at was 1,000 two-wheelers a month.
The objective was to tap the market in West Bengal and the seven North-Eastern States.
It may be mentioned that in 2008, the Chennai (Hosur)-based TVS Motor Company entered into a memorandum of understanding with the Kolkata-based Mahabharat Manufacturing Pvt Ltd under which Mahabharat Motors were to assemble agreed products as a contract manufacturer.
After meeting the then Chief Minister Buddhadeb Bhattacharjee, TVS Chairman Venu Srinivasan had said that the company needed a base in the region and it had planned to tie-up with Mahabharat Motors.
The assembly unit came up on land owned by a joint venture of a company called Universal Success promoted by NRI Prasun Mukherjee and the Salim Group of Indonesia. The initial project, announced in February 2006 which never took off, was to set up a facility for making budget bikes through Chinese collaboration. Mr. Mukherjee said that the arrangement with TVS replaced the original plan which had been scrapped.
However, TVS Motor got caught in the recession which came after September 2008 and the project took a backseat, officials said and it had been revived now.
“Ours is a business and technology-based relationship,” the official said adding that TVS had trained Mahabharat personnel and helped them with the layout and the design of the plant.
INITIAL CAPACITY
Company officials told this correspondent that the initial capacity that was being looked at was 1,000 two-wheelers a month.
The objective was to tap the market in West Bengal and the seven North-Eastern States.
It may be mentioned that in 2008, the Chennai (Hosur)-based TVS Motor Company entered into a memorandum of understanding with the Kolkata-based Mahabharat Manufacturing Pvt Ltd under which Mahabharat Motors were to assemble agreed products as a contract manufacturer.
After meeting the then Chief Minister Buddhadeb Bhattacharjee, TVS Chairman Venu Srinivasan had said that the company needed a base in the region and it had planned to tie-up with Mahabharat Motors.
The assembly unit came up on land owned by a joint venture of a company called Universal Success promoted by NRI Prasun Mukherjee and the Salim Group of Indonesia. The initial project, announced in February 2006 which never took off, was to set up a facility for making budget bikes through Chinese collaboration. Mr. Mukherjee said that the arrangement with TVS replaced the original plan which had been scrapped.
However, TVS Motor got caught in the recession which came after September 2008 and the project took a backseat, officials said and it had been revived now.
“Ours is a business and technology-based relationship,” the official said adding that TVS had trained Mahabharat personnel and helped them with the layout and the design of the plant.
Car sales growth may slow down to 2-4 %
The recurring hikes in interest rates and petrol prices have punctured the growth story of the Indian car industry. Against a 30% growth witnessed in 2010-11 , the car industry is projected to grow at a low single-digit level in 2011-12 .
Auto industry body Society of Indian Automobile Manufacturers (Siam) said a flurry of negatives had pulled down car sales drastically. "Apart from interest rates and the petrol price, inflation has also dampened the sentiments ," S Sandilya, president of Siam, said.
The gloomy outlook prompted Siam to again downwardly revise this year's growth projections for car sales, as part of its quarterly review . "Against the original projection of 16-18 % growth, we now forecast car sales to grow by 2-4 % this fiscal. The car industry is hit by a slowdown and it would take some time before demand picks up again," Sandilya said. Siam had cut down its forecast to 10-12 % in its firstquarter review in July. Indian car sales last grew in single digits in 2008-09 , at 1.4%.
Car sales have been depressed for last many months as RBI's attempt to tame spiralling inflation by raising interest rates has hit vehicle financing rates. Sandilya said interest rate on car financing has gone up by 3.6% since April last year and are currently hovering around the 13% mark.
Companies like Maruti Suzuki , Hyundai and Tata Motors are feeling the heat. Many companies have cut production to fall in line with slow demand. According to analysts, the dearer interest rates have also increased the EMIs on home loans, leading to reduction in disposable incomes. "So, many people have preferred to postpone car purchase to a later time," an analyst with a Mumbai-based brokerage said.
Marketing heads of many top car companies are already complaining of reduced traffic at dealerships. The festival season , where demand usually peaks, is expected to be a moderate affair due to the despondent mood among buyers.
Auto industry body Society of Indian Automobile Manufacturers (Siam) said a flurry of negatives had pulled down car sales drastically. "Apart from interest rates and the petrol price, inflation has also dampened the sentiments ," S Sandilya, president of Siam, said.
The gloomy outlook prompted Siam to again downwardly revise this year's growth projections for car sales, as part of its quarterly review . "Against the original projection of 16-18 % growth, we now forecast car sales to grow by 2-4 % this fiscal. The car industry is hit by a slowdown and it would take some time before demand picks up again," Sandilya said. Siam had cut down its forecast to 10-12 % in its firstquarter review in July. Indian car sales last grew in single digits in 2008-09 , at 1.4%.
Car sales have been depressed for last many months as RBI's attempt to tame spiralling inflation by raising interest rates has hit vehicle financing rates. Sandilya said interest rate on car financing has gone up by 3.6% since April last year and are currently hovering around the 13% mark.
Companies like Maruti Suzuki , Hyundai and Tata Motors are feeling the heat. Many companies have cut production to fall in line with slow demand. According to analysts, the dearer interest rates have also increased the EMIs on home loans, leading to reduction in disposable incomes. "So, many people have preferred to postpone car purchase to a later time," an analyst with a Mumbai-based brokerage said.
Marketing heads of many top car companies are already complaining of reduced traffic at dealerships. The festival season , where demand usually peaks, is expected to be a moderate affair due to the despondent mood among buyers.
One hundred years of fortitude
The South-based TVS group turns 100 this year. Many may be familiar with individual group companies like Wheels India, Brakes India, Lucas TVS, Sundram Fasteners, Sundaram Brake Lining and TVS Motor Company, without realising they all belong to the TVS group. With a group turnover of $7 billion or R35,000 crore, it employs more than 40,000 and is India’s largest manufacturer of auto components.
Barring one or two companies, they have been market leaders in their respective fields. It is quite likely that automobiles manufactured globally carry one or other of TVS parts. Among the vehicles on India’s roads, it is said 35% consists of TVS components. What is quite remarkable about the group is that the companies have maintained their reputation for quality and customer care over so many decades. T VS to them stands for Trust, Value and Service.
Group founder TV Sundaram Iyengar registered a company in 1911 and started South India’s first passenger bus service in 1912. Although this pioneering venture was wound up a few years later, Iyengar went on to open an automobile sales and service unit in Madurai in 1919, dealing in motor tires, auto spares and ancillaries. Over the next decade, he acquired sub-dealerships for Ford and Chevrolet cars. A few years down the line, General Motors gave him the sole dealership for all their vehicles.
In 1939, TVS ventured into transport service yet again, setting up Southern Roadways in Madurai. It soon became the country’s largest goods transport fleet in the private sector. The passenger division was nationalised in 1970. Its efficiency and customer service were legendary and people are believed to have set their watches by the bus timings.
Between 1950 and 1960, TVS expanded its activities and diversified into related fields. The importance of marketing spare parts was recognised even in those early days and distribution channels were set up wherever possible. It forayed into automobile insurance. To help transport operators buy vehicles, a hire purchase company, Sundaram Finance was set up in 1954. Today, Sundaram Finance is one of the largest and most-respected non-banking finance companies in the country. The sons of Sundaram Iyengar TS Rajam, TS Duraiswamy, TS Santhanam and T S Srinivasan became the architects of the group.
Till 1960, TVS did not enter into manufacturing. The government, however, was keen on building an indigenous automobile industry. GM, which had been assembling vehicles from CKD kits, refused to manufacture vehicles in India as it did not feel the country had a proper industrial base. Years later, Sundram Fasteners, a TVS star would become a dedicated supplier of radiator caps to GM and also win the best supplier of the year award from the MNC many times over. But GM’s India exit was a catalyst for change at TVS, as so many of its activities were built around the GM dealership which came to an end in the mid-50s. Premier, Telco, Ashok Leyland and M&M were all putting up plants and the need for indigenisation was increasingly gaining momentum.
TVS with its highly profitable agency business and the transport fleet was a cash-rich group. The family did not have to rely on outside funds to enter manufacturing. Given its track record, it was not difficult for TVS to enter into viable collaborations with the world’s leading component manufacturers, who at that time were all British. The manufacturing companies were set up in the vast Padi complex in North Chennai. By the seventies, the group had reached its dominant position in wheels, brakes, auto electricals, fasteners and many related components.
The group gained further momentum under the family’s third generation. Some well-known names include Suresh Krishna S Ram, S Viji, Venu Srinivasan, TK Balaji, K Mahesh and R Dinesh. The TVS companies did not want to go public until it became necessary and when unlisted companies started getting taxed more than listed ones. However, the group never got addicted to the stock market or market capitalisation. Financial institutions have been more than willing to finance their projects.
Problems emerged in the seventies. The close-knit family started coming apart. For the first time in the group’s history, it faced a major strike in 1977. By the eighties, both problems were resolved. The group, in fact, has an enviable reputation for good labour relations. Sundram Fasteners has never lost a day to labour unrest. In 1980, Sundaram Clayton launched TVS 50, the country’s first two-seater moped. This division metamorphosed into TVS Motor, the third-largest two-wheeler and three wheeler manufacturer in the country, run by Venu Srinivasan. In the eighties, the group adapted itself to supply to the Japanese vehicles entering the market even though all of its partners were British.
When the economy opened up in the nineties and many foreign automobile and component manufacturers rushed in, analysts started writing off indigenous groups like TVS. They did not think this conservative family-run business could survive liberalisation. The group quietly reinvented itself and grabbed the opportunities presented by the reform era. The first thing the group companies did was to divorce their joint venture partners, some of whom had shackled TVS’s export ambitions. Leaving its partners brought financial independence and the freedom to choose the technologies it wanted.
The partners were also putting shackles on export market. The TVS group companies have turned global players, achieved with their fanatical commitment to quality. They got the ISO certifications, Deming award (the Oscar of quality) TPM and TQM awards way ahead of others. All the awards were calling cards to the export market. Today, TVS group companies are truly international, with all of them buying companies in different counties and putting up plants. TVS Logistics, one of the newer companies in the group, has gone on a major buying spree in the last few years.
The group will have to make strategic decisions on whether to expand locally or globally in the next few years. The TVS family is also fortunate that the fourth generation has entered the business and as people who know the family say, they are all highly qualified and have earned their place in the business.
In spite of all its achievements, the TVS groups hides its light under the bushel. There are no celebrations yet for the centenary year. No uncorking of champagne bottles. It is business as usual at all the group companies.
Barring one or two companies, they have been market leaders in their respective fields. It is quite likely that automobiles manufactured globally carry one or other of TVS parts. Among the vehicles on India’s roads, it is said 35% consists of TVS components. What is quite remarkable about the group is that the companies have maintained their reputation for quality and customer care over so many decades. T VS to them stands for Trust, Value and Service.
Group founder TV Sundaram Iyengar registered a company in 1911 and started South India’s first passenger bus service in 1912. Although this pioneering venture was wound up a few years later, Iyengar went on to open an automobile sales and service unit in Madurai in 1919, dealing in motor tires, auto spares and ancillaries. Over the next decade, he acquired sub-dealerships for Ford and Chevrolet cars. A few years down the line, General Motors gave him the sole dealership for all their vehicles.
In 1939, TVS ventured into transport service yet again, setting up Southern Roadways in Madurai. It soon became the country’s largest goods transport fleet in the private sector. The passenger division was nationalised in 1970. Its efficiency and customer service were legendary and people are believed to have set their watches by the bus timings.
Between 1950 and 1960, TVS expanded its activities and diversified into related fields. The importance of marketing spare parts was recognised even in those early days and distribution channels were set up wherever possible. It forayed into automobile insurance. To help transport operators buy vehicles, a hire purchase company, Sundaram Finance was set up in 1954. Today, Sundaram Finance is one of the largest and most-respected non-banking finance companies in the country. The sons of Sundaram Iyengar TS Rajam, TS Duraiswamy, TS Santhanam and T S Srinivasan became the architects of the group.
Till 1960, TVS did not enter into manufacturing. The government, however, was keen on building an indigenous automobile industry. GM, which had been assembling vehicles from CKD kits, refused to manufacture vehicles in India as it did not feel the country had a proper industrial base. Years later, Sundram Fasteners, a TVS star would become a dedicated supplier of radiator caps to GM and also win the best supplier of the year award from the MNC many times over. But GM’s India exit was a catalyst for change at TVS, as so many of its activities were built around the GM dealership which came to an end in the mid-50s. Premier, Telco, Ashok Leyland and M&M were all putting up plants and the need for indigenisation was increasingly gaining momentum.
TVS with its highly profitable agency business and the transport fleet was a cash-rich group. The family did not have to rely on outside funds to enter manufacturing. Given its track record, it was not difficult for TVS to enter into viable collaborations with the world’s leading component manufacturers, who at that time were all British. The manufacturing companies were set up in the vast Padi complex in North Chennai. By the seventies, the group had reached its dominant position in wheels, brakes, auto electricals, fasteners and many related components.
The group gained further momentum under the family’s third generation. Some well-known names include Suresh Krishna S Ram, S Viji, Venu Srinivasan, TK Balaji, K Mahesh and R Dinesh. The TVS companies did not want to go public until it became necessary and when unlisted companies started getting taxed more than listed ones. However, the group never got addicted to the stock market or market capitalisation. Financial institutions have been more than willing to finance their projects.
Problems emerged in the seventies. The close-knit family started coming apart. For the first time in the group’s history, it faced a major strike in 1977. By the eighties, both problems were resolved. The group, in fact, has an enviable reputation for good labour relations. Sundram Fasteners has never lost a day to labour unrest. In 1980, Sundaram Clayton launched TVS 50, the country’s first two-seater moped. This division metamorphosed into TVS Motor, the third-largest two-wheeler and three wheeler manufacturer in the country, run by Venu Srinivasan. In the eighties, the group adapted itself to supply to the Japanese vehicles entering the market even though all of its partners were British.
When the economy opened up in the nineties and many foreign automobile and component manufacturers rushed in, analysts started writing off indigenous groups like TVS. They did not think this conservative family-run business could survive liberalisation. The group quietly reinvented itself and grabbed the opportunities presented by the reform era. The first thing the group companies did was to divorce their joint venture partners, some of whom had shackled TVS’s export ambitions. Leaving its partners brought financial independence and the freedom to choose the technologies it wanted.
The partners were also putting shackles on export market. The TVS group companies have turned global players, achieved with their fanatical commitment to quality. They got the ISO certifications, Deming award (the Oscar of quality) TPM and TQM awards way ahead of others. All the awards were calling cards to the export market. Today, TVS group companies are truly international, with all of them buying companies in different counties and putting up plants. TVS Logistics, one of the newer companies in the group, has gone on a major buying spree in the last few years.
The group will have to make strategic decisions on whether to expand locally or globally in the next few years. The TVS family is also fortunate that the fourth generation has entered the business and as people who know the family say, they are all highly qualified and have earned their place in the business.
In spite of all its achievements, the TVS groups hides its light under the bushel. There are no celebrations yet for the centenary year. No uncorking of champagne bottles. It is business as usual at all the group companies.
Auto stocks may remain weak in the short term.
For September, volume growth in the auto sector is showing initial signs of slowdown and increasing inventory levels affected by macro headwinds, especially in passenger, and medium and heavy commercial vehicles.
However, two-wheelers, utility vehicles and light commercial vehicles continue to record strong volume growth. While volume outlook in the short term is affected by macro headwinds, we believe long term volume outlook remains positive driven by strong economic growth, improved availability of finance, new product launches and export potential.
Though commodity costs have started easing now, higher levels in the first half of FY12 will put pressure on profitability. This coupled with increasing competitive intensity in some segments would restrict pricing power. However, cost reduction measures, productivity improvement programmes and high operating leverage would dilute effect of higher raw material cost. As a result, we estimate earnings before interest, tax, depreciation and amortization (Ebitda) margins to remain muted, after correcting from peak levels.
Auto industry is facing multiple headwind in the short-run, driven by (a) increase in cost of ownership as selling price increased due to partial pass through of cost inflation in raw material cost; (b) increase in cost of operations as petrol prices increased by around 28% and diesel price by 7% in last one year; (c) rising competitive pressures to restrict pricing power in the short term; and (d) tightening of monetary policy resulting in 150-200 basis points (bps) increase in interest rates for automobiles. However, the long-term volume outlook is positive due to improved economic activity, easy availability of finance and improved export outlook.
The performance of the sector has been strong over the last three months with outperformance by all auto makers, except Tata Motors Ltd. Both volumes and operating margins are expected to moderate from peak levels of FY10/11. We prefer companies less vulnerable to competitive dynamics, enabling dilution of short-term headwinds.
Company overview
Hero Motocorp Ltd: Hero Motocorp volumes grew 27% year-on-year, or y-o-y, (9% sequentially) to 549,625 units driven by strong demand at retail level. We estimate volume growth of 15.8% for FY12, implying residual growth of 10.4% and residual monthly run rate of 530,366 units.
With ownership issue settled, we expect stock performance to be driven by the business momentum in the short run and smooth transition in the long run. The stock trades at 17.1 times estimated FY12 earnings per share (EPS) of Rs. 113.30 and 13.6 times FY13 EPS of Rs. 142.40. We maintain a buy on the stock.
Bajaj Auto Ltd: Bajaj Auto’s total volumes grew by 18% y-o-y (9% sequentially) to 417,686 units, driven by strong growth in export volumes. However, domestic volumes grew by 10% y-o-y to 275,773 units (higher than our estimate of 260,000 units) driven by volumes of Boxer 150cc. Based on our volume growth estimates, implied residual growth is 12.9% and residual monthly run rate of 356,473 units.
Our FY12 estimates factor in volume growth of 14.9% and 110 bps decline in Ebitda margins to 19.3%. The stock trades at 15.1 times estimated FY12 EPS of Rs. 101.80 and 12.7 times FY13 EPS of Rs. 120.60. We maintain buy.
Maruti Suzuki India Ltd: Maruti’s September volumes slowed by 21% y-o-y (6% sequentially) to 85,565 units. While domestic volumes fell by 17% y-o-y, exports fell 47.5% y-o-y. Based on our volume growth estimates, implied residual growth rate is 1.4% and residual monthly run rate is 113,950 units.
The stock trades at 14.9 times FY12 consolidated EPS of Rs. 72.30 and 12.1 times FY13 consolidated EPS of Rs. 89.20. We maintain buy.
Mahindra and Mahindra Ltd: Mahindra and Mahindra’s volume grew 31% y-o-y (28% sequentially) to 68,810 units, driven by strong growth in utility vehicles, tractor and three-wheeler volumes. Our FY12 volume growth estimate of 16.6% implies residual growth rate of 8.2% and residual monthly run rate of 57,814 units.
Our FY12 estimates factor in 16.6% volume growth (20% for utility vehicles and 13% for tractors) and Ebitda margins of 13.4%. The stock trades at 16.4 times estimated FY12 of consolidated EPS of Rs. 48.90 and 12.2 times FY13 of consolidated EPS of Rs. 65.60. We maintain buy.
Tata Motors Ltd: Total volumes grew by 22% y-o-y (23% sequential growth) to 78,786 units, driven by domestic commercial vehicle volume growth of 29% y-o-y (around 7% sequentially). Total volume growth (ex-Nano) is 20% y-o-y.
The stock trades at 6.2 times estimated FY12 consolidated EPS of Rs. 25.30 and 11.3 times FY12 normalized consolidated EPS (adjusted for research and development capitalization) of Rs. 13.90.
However, two-wheelers, utility vehicles and light commercial vehicles continue to record strong volume growth. While volume outlook in the short term is affected by macro headwinds, we believe long term volume outlook remains positive driven by strong economic growth, improved availability of finance, new product launches and export potential.
Though commodity costs have started easing now, higher levels in the first half of FY12 will put pressure on profitability. This coupled with increasing competitive intensity in some segments would restrict pricing power. However, cost reduction measures, productivity improvement programmes and high operating leverage would dilute effect of higher raw material cost. As a result, we estimate earnings before interest, tax, depreciation and amortization (Ebitda) margins to remain muted, after correcting from peak levels.
Auto industry is facing multiple headwind in the short-run, driven by (a) increase in cost of ownership as selling price increased due to partial pass through of cost inflation in raw material cost; (b) increase in cost of operations as petrol prices increased by around 28% and diesel price by 7% in last one year; (c) rising competitive pressures to restrict pricing power in the short term; and (d) tightening of monetary policy resulting in 150-200 basis points (bps) increase in interest rates for automobiles. However, the long-term volume outlook is positive due to improved economic activity, easy availability of finance and improved export outlook.
The performance of the sector has been strong over the last three months with outperformance by all auto makers, except Tata Motors Ltd. Both volumes and operating margins are expected to moderate from peak levels of FY10/11. We prefer companies less vulnerable to competitive dynamics, enabling dilution of short-term headwinds.
Company overview
Hero Motocorp Ltd: Hero Motocorp volumes grew 27% year-on-year, or y-o-y, (9% sequentially) to 549,625 units driven by strong demand at retail level. We estimate volume growth of 15.8% for FY12, implying residual growth of 10.4% and residual monthly run rate of 530,366 units.
With ownership issue settled, we expect stock performance to be driven by the business momentum in the short run and smooth transition in the long run. The stock trades at 17.1 times estimated FY12 earnings per share (EPS) of Rs. 113.30 and 13.6 times FY13 EPS of Rs. 142.40. We maintain a buy on the stock.
Bajaj Auto Ltd: Bajaj Auto’s total volumes grew by 18% y-o-y (9% sequentially) to 417,686 units, driven by strong growth in export volumes. However, domestic volumes grew by 10% y-o-y to 275,773 units (higher than our estimate of 260,000 units) driven by volumes of Boxer 150cc. Based on our volume growth estimates, implied residual growth is 12.9% and residual monthly run rate of 356,473 units.
Our FY12 estimates factor in volume growth of 14.9% and 110 bps decline in Ebitda margins to 19.3%. The stock trades at 15.1 times estimated FY12 EPS of Rs. 101.80 and 12.7 times FY13 EPS of Rs. 120.60. We maintain buy.
Maruti Suzuki India Ltd: Maruti’s September volumes slowed by 21% y-o-y (6% sequentially) to 85,565 units. While domestic volumes fell by 17% y-o-y, exports fell 47.5% y-o-y. Based on our volume growth estimates, implied residual growth rate is 1.4% and residual monthly run rate is 113,950 units.
The stock trades at 14.9 times FY12 consolidated EPS of Rs. 72.30 and 12.1 times FY13 consolidated EPS of Rs. 89.20. We maintain buy.
Mahindra and Mahindra Ltd: Mahindra and Mahindra’s volume grew 31% y-o-y (28% sequentially) to 68,810 units, driven by strong growth in utility vehicles, tractor and three-wheeler volumes. Our FY12 volume growth estimate of 16.6% implies residual growth rate of 8.2% and residual monthly run rate of 57,814 units.
Our FY12 estimates factor in 16.6% volume growth (20% for utility vehicles and 13% for tractors) and Ebitda margins of 13.4%. The stock trades at 16.4 times estimated FY12 of consolidated EPS of Rs. 48.90 and 12.2 times FY13 of consolidated EPS of Rs. 65.60. We maintain buy.
Tata Motors Ltd: Total volumes grew by 22% y-o-y (23% sequential growth) to 78,786 units, driven by domestic commercial vehicle volume growth of 29% y-o-y (around 7% sequentially). Total volume growth (ex-Nano) is 20% y-o-y.
The stock trades at 6.2 times estimated FY12 consolidated EPS of Rs. 25.30 and 11.3 times FY12 normalized consolidated EPS (adjusted for research and development capitalization) of Rs. 13.90.
For Auto Industry challenge is 'developing new vehicles at better price points'
Growing aspirations of the consumers to own vehicles will drive the auto industry to develop new products with challenging price points, said Mr R. Seshasayee, Executive Vice-Chairman, Ashok Leyland.
“Aspiration of people to own vehicles will go up even at lower per capita income levels, challenging the industry to develop new products and better price points,” said Mr Seshasayee, at the inauguration of the 3-day, 16th Asia Pacific Automotive Conference, organised by Society of Automotive Engineers.
Mobility solutions
“These kinds of mobility solutions are important for the growth in the coming decades, with relentless rate of urbanisation.”
Mr Seshasayee also stressed on the need for confluence of technologies in developing mobility solutions. The auto industry is often the whipping boy, when it comes to emission and pollution, he said.
“This notion will continue in the future, hence there is a need to push for effective alternative fuels.”
Urban planning push
Mr Venu Srinivasan, Chairman and Managing Director, TVS Motor, said it is imperative for the auto industry to push for urban planning in order to grow the business.
“We need to take leadership role and join forces with NGOs working towards urban planning, or else we cannot sell our product,” said Mr Srinivasan.
Changes in urban planning call for “great deal of political will” and “a social revolution”.
Multi-modal transport
With challenges of increasing urbanisation, pollution, vehicular density and traffic in the coming 20 years, the need for urban planning cannot be understated, said Mr Srinivasan.
There are 143 million registered vehicles today. As the auto industry reaches $165 billion revenue by 2020, there will be 30 million two- and three-wheelers on Indian roads.
India will be ranked third in green house gas emissions by 2015, from rank 5 today, thus posing a challenge to “quality of life and mobility.”
India needs to look at multi-modal transport solutions, public parking facilities, raised bus lanes and dispersing work spaces outside the city by building planned satellite cities.
Apart from urban planning, there is also the need for developing smart, safe and connected vehicles, he said.
“Aspiration of people to own vehicles will go up even at lower per capita income levels, challenging the industry to develop new products and better price points,” said Mr Seshasayee, at the inauguration of the 3-day, 16th Asia Pacific Automotive Conference, organised by Society of Automotive Engineers.
Mobility solutions
“These kinds of mobility solutions are important for the growth in the coming decades, with relentless rate of urbanisation.”
Mr Seshasayee also stressed on the need for confluence of technologies in developing mobility solutions. The auto industry is often the whipping boy, when it comes to emission and pollution, he said.
“This notion will continue in the future, hence there is a need to push for effective alternative fuels.”
Urban planning push
Mr Venu Srinivasan, Chairman and Managing Director, TVS Motor, said it is imperative for the auto industry to push for urban planning in order to grow the business.
“We need to take leadership role and join forces with NGOs working towards urban planning, or else we cannot sell our product,” said Mr Srinivasan.
Changes in urban planning call for “great deal of political will” and “a social revolution”.
Multi-modal transport
With challenges of increasing urbanisation, pollution, vehicular density and traffic in the coming 20 years, the need for urban planning cannot be understated, said Mr Srinivasan.
There are 143 million registered vehicles today. As the auto industry reaches $165 billion revenue by 2020, there will be 30 million two- and three-wheelers on Indian roads.
India will be ranked third in green house gas emissions by 2015, from rank 5 today, thus posing a challenge to “quality of life and mobility.”
India needs to look at multi-modal transport solutions, public parking facilities, raised bus lanes and dispersing work spaces outside the city by building planned satellite cities.
Apart from urban planning, there is also the need for developing smart, safe and connected vehicles, he said.
Not Hero Yet, but Clearly King of the Road
It's not yet a hero, but by making stylish vehicles profitably Bajaj Auto (BAL) has succeeded in mustering up a fan following not just amongst bike aficionados but investors, too.
The Pune-headquartered maker of twoand three-wheelers lags leader Hero Moto-Corp by a fair distance - almost one in two two-wheelers sold in the country is a Hero, while one in five is a Bajaj. In just motorcycles, 56% of buyers ride Hero bikes; BAL's share is less than half that at 25.6%. But where the Rajiv Bajaj-managed company scores is on the profitability front.
Operating margins have been in the 20% region for five quarters now, making BAL easily the most profitable two-wheeler manufacturer in India. For Hero, the corresponding figure is a little under 15%, and for TVS, operating margins are in single digits. So if BAL is ET's Company of the Year, it's for its ability to combine robust growth - sales grew by 35% in the last fiscal year, 11 percentage points faster than the industry growth - with chunky margins.
"The award is a well deserved recognition for what BAL has achieved over the past 2-3 years. The company has managed an outstanding turnaround, led by new variants, a surge in exports, and increased rural penetration," says chairman Rahul Bajaj.
To be sure, over the past few years, BAL has wooed consumers with sporty and stylish versions of the Pulsar and the Discover. Exports and rural sales account for some 30% and 35% of its total sales, respectively. In September, for the first time, BAL's sales crossed the 4 lakh mark. The 75-year-old company is the world's fourth largest two-wheeler maker by volume. Its success, though, lies in its ability to create game-changing brands that attract loyal customers.
When BAL launched the Pulsar in 2001, it set a new benchmark in the space for premium - and powerful - bikes. Four years later it created another segment with the Discover - with 100 and 150 cc engines - for the more conservative consumer with the proposition of fuel efficiency thrown in. The dual-bike strategy has helped the company hold on to its position as India's second-largest bike-maker by volume. And a couple of months ago BAL launched a sporty, rugged avatar of one its earlier models called the Boxer to drive rural sales.
Such market-driven activity is launched with a conscious and constant watch on costs so that profitability is maintained. For instance, analysts point out that whilst rivals court customers with promotions and discounts, BAL counts on the sheer strength of the product to keep the wind in the sales.
BAL has also done well to rein in one of the biggest bugbears of auto makers - high raw material costs thanks to spiralling prices of commodities. If BAL has succeeded in sustaining its robust margin levels, it's because of its focus on high-end bikes like the Pulsar, which ranges from 135 cc to 220 cc.
The 220 cc, for instance, has a price tag of Rs 84,000 (on road in Delhi), two times what the mass market two-wheelers cost. Yet, the Pulsar is also a volume player in its own right, with the entire range accounting for some 30% of BAL's total volumes. Such a product mix explains, to a large extent, BAL's superior margins and higher realisations in what is otherwise a highly-competitive, price-sensitive market.
Yet, BAL has its task cut out if it has to come anywhere close to leader Hero Moto-Corp. The decision to move away from scooters - which have made a strong comeback - may be a decision that may haunt Rajiv Bajaj in the years ahead. Scooters today account for some 18% of all twowheeler sales.
"There are a couple of mistakes BAL has made in terms of new models and discontinuing a few prematurely. But things are looking good for us," says Rahul Bajaj. Also, BAL has a trump card that none of its rivals can boast - it is the world's largest producer of three-wheelers where margins are even higher than in two-wheelers.
The Pune-headquartered maker of twoand three-wheelers lags leader Hero Moto-Corp by a fair distance - almost one in two two-wheelers sold in the country is a Hero, while one in five is a Bajaj. In just motorcycles, 56% of buyers ride Hero bikes; BAL's share is less than half that at 25.6%. But where the Rajiv Bajaj-managed company scores is on the profitability front.
Operating margins have been in the 20% region for five quarters now, making BAL easily the most profitable two-wheeler manufacturer in India. For Hero, the corresponding figure is a little under 15%, and for TVS, operating margins are in single digits. So if BAL is ET's Company of the Year, it's for its ability to combine robust growth - sales grew by 35% in the last fiscal year, 11 percentage points faster than the industry growth - with chunky margins.
"The award is a well deserved recognition for what BAL has achieved over the past 2-3 years. The company has managed an outstanding turnaround, led by new variants, a surge in exports, and increased rural penetration," says chairman Rahul Bajaj.
To be sure, over the past few years, BAL has wooed consumers with sporty and stylish versions of the Pulsar and the Discover. Exports and rural sales account for some 30% and 35% of its total sales, respectively. In September, for the first time, BAL's sales crossed the 4 lakh mark. The 75-year-old company is the world's fourth largest two-wheeler maker by volume. Its success, though, lies in its ability to create game-changing brands that attract loyal customers.
When BAL launched the Pulsar in 2001, it set a new benchmark in the space for premium - and powerful - bikes. Four years later it created another segment with the Discover - with 100 and 150 cc engines - for the more conservative consumer with the proposition of fuel efficiency thrown in. The dual-bike strategy has helped the company hold on to its position as India's second-largest bike-maker by volume. And a couple of months ago BAL launched a sporty, rugged avatar of one its earlier models called the Boxer to drive rural sales.
Such market-driven activity is launched with a conscious and constant watch on costs so that profitability is maintained. For instance, analysts point out that whilst rivals court customers with promotions and discounts, BAL counts on the sheer strength of the product to keep the wind in the sales.
BAL has also done well to rein in one of the biggest bugbears of auto makers - high raw material costs thanks to spiralling prices of commodities. If BAL has succeeded in sustaining its robust margin levels, it's because of its focus on high-end bikes like the Pulsar, which ranges from 135 cc to 220 cc.
The 220 cc, for instance, has a price tag of Rs 84,000 (on road in Delhi), two times what the mass market two-wheelers cost. Yet, the Pulsar is also a volume player in its own right, with the entire range accounting for some 30% of BAL's total volumes. Such a product mix explains, to a large extent, BAL's superior margins and higher realisations in what is otherwise a highly-competitive, price-sensitive market.
Yet, BAL has its task cut out if it has to come anywhere close to leader Hero Moto-Corp. The decision to move away from scooters - which have made a strong comeback - may be a decision that may haunt Rajiv Bajaj in the years ahead. Scooters today account for some 18% of all twowheeler sales.
"There are a couple of mistakes BAL has made in terms of new models and discontinuing a few prematurely. But things are looking good for us," says Rahul Bajaj. Also, BAL has a trump card that none of its rivals can boast - it is the world's largest producer of three-wheelers where margins are even higher than in two-wheelers.
Packing a punch - Bajaj Boxer 150
Bajaj Boxer is well-equipped to handle the tough terrain of rural India and is easy to control in city traffic too
Bajaj Auto has always been the brave crusader, treading on untested grounds and facing challenges head on. With the launch of the new BM 150, Bajaj Auto is aiming to exploit the bottom end of the 150cc market.
The new motorcycle is a born-again Boxer that comes well-equipped to handle both the tough terrain of rural India and the many duties that will come its way. That's not all. Importantly, it bears a price tag that can shame many a 100cc bike, and is powered by a larger engine with extra punch. Bajaj even claims the new Boxer delivers near-100cc fuel efficiency.
It's all starting to sound too good to be true, which makes this the ideal time to take a closer look.
The Boxer BM 150 has a robust and functional albeit conservative look, complete with spoke wheels. The company has gone all out to deliver the sturdy look to this commuter bike. The metal front mudguard will find favour with those (read rural buyers) who associate the solidity of two-wheelers with metal bodies.
The big, classic circular headlight has a translucent wind deflector that gives it some modicum of flair. While most bikes have graduated to digital instruments, the BM 150 uses a simple twin-pod, analogue cluster with a fuel gauge and speedometer. While an odometer is available, this bike does without a tripmeter or an engine kill switch. The new Boxer has comfy palm grips, nice levers as well as wide mirrors, and you get Bajaj-typical crisp working switches that include a pass-flasher.
The BM's 11-litre classic tank looks boring but peels neatly back into a long and flat riding seat. Dual textures and trendy stickers spice up the side panels. At the rear, the carrier made from steel tubes is clearly capable of carrying heavy loads. The brake light cluster looks all too conservative. Meaty tyres give this Boxer a sure-footed stance while the rear wheel shroud is plastic in a bid to keep weight down. The BM's matte black exhaust has a slashed end and petite chrome heat-shield.
Overall, the classic, simple-looking Boxer succeeds in imparting a long-lasting, solidly built feel from the word go. Quality and fit and finish are praiseworthy on this new Bajaj motorcycle.
Four-stroke engine
At the heart of the Boxer BM 150 lies a kick or button-started, four-stroke, air-cooled, 144.8cc engine which is based on the Discover 150 DTS-i. On the BM, this alloy encased engine lacks Bajaj's proven dual-plug, DTS-i technology.
The carburettor-fed, two-valve, single-cylinder motor has long-stroke 56 x 58.8mm dimensions. While maximum power delivered is 12bhp at 7500rpm, the BM musters 1.25kgm of torque at a useable 5000rpm. While a five-speed gearbox does duty on the Discover, the BM makes do with four, well-spaced ratios, which actually translate into less work and are a boon when riding through heavy traffic conditions, so common in urban India. The clutch has a smooth, light feel and the four-down gearbox shifts with a smooth, precise enough feel. The heel and toe-operated shift lever is rubberised and provides good grip even when riding on wet roads.
The Boxer accelerates with a crisp, vibe-free nature through its wide power band. Throttle response isn't quite as quick as on the similar Discover 150 DTS-i but acceptable for a motorcycle positioned to challenge the 100cc class, and better than most bikes available in this segment.
The Boxer engine is tractable, effortlessly pulling away from speeds as low as 20kph in top gear, without requiring downshifts to find more power. Our acceleration tests proved the Boxer is almost as fast as a Discover 150 DTS-i, reaching 60kph in 5.54 seconds, and able to go past 80kph in 10.58sec.
Bajaj hasn't stinted on the Boxer frame for the BM 150 uses a sturdy, box-section frame that splits to cradle the motorcycle engine. The rear swingarm is likewise crafted from box-section metal and supports dual, ‘Spring-in-Spring' hydraulic shock absorbers. At the front, telescopic forks offer 125mm of travel.
The rider sits upright in a commuter-friendly riding position, reaching out to tall handlebars and well supported on a wide, plush riding seat. Pillions will find themselves easily accommodated, there being enough space on this new Bajaj to seat two in comfort.
The Boxer BM 150 is an easy bike to control in traffic, steering with a confidence-inspiring, neutral feel while always handling with lightness that helps keep fatigue at bay. Ride quality is plush, keeping the rider isolated from rough road conditions. The tyres are a letdown though, the ribbed pattern front tyre failing to provide adequate traction. The 100/90 section rear tyre also quickly feels out of its depth when trying to corner briskly on this bike or braking hard.
The Boxer gets 130mm drum brakes at both ends. We missed a front disc brake throughout this road test. Brake feel is however acceptable, with a drum brake-typical progressive feel at the lever. The BM is capable of braking to a halt from 60kph in 22.82 metres.
The Boxer BM 150 (Ex-showroom (Pune) Rs. 42,000) is effectively a 150cc bike for 100cc money, making it amazing value. But to expect it to also come good on the fuel efficiency front, like a typical 100cc bike, will be asking too much from the bike. The expected economy, as tested by us in real-world conditions, is 46.3kpl in typical Indian city traffic, and 50.6kpl on the highway.
Bajaj Auto has always been the brave crusader, treading on untested grounds and facing challenges head on. With the launch of the new BM 150, Bajaj Auto is aiming to exploit the bottom end of the 150cc market.
The new motorcycle is a born-again Boxer that comes well-equipped to handle both the tough terrain of rural India and the many duties that will come its way. That's not all. Importantly, it bears a price tag that can shame many a 100cc bike, and is powered by a larger engine with extra punch. Bajaj even claims the new Boxer delivers near-100cc fuel efficiency.
It's all starting to sound too good to be true, which makes this the ideal time to take a closer look.
The Boxer BM 150 has a robust and functional albeit conservative look, complete with spoke wheels. The company has gone all out to deliver the sturdy look to this commuter bike. The metal front mudguard will find favour with those (read rural buyers) who associate the solidity of two-wheelers with metal bodies.
The big, classic circular headlight has a translucent wind deflector that gives it some modicum of flair. While most bikes have graduated to digital instruments, the BM 150 uses a simple twin-pod, analogue cluster with a fuel gauge and speedometer. While an odometer is available, this bike does without a tripmeter or an engine kill switch. The new Boxer has comfy palm grips, nice levers as well as wide mirrors, and you get Bajaj-typical crisp working switches that include a pass-flasher.
The BM's 11-litre classic tank looks boring but peels neatly back into a long and flat riding seat. Dual textures and trendy stickers spice up the side panels. At the rear, the carrier made from steel tubes is clearly capable of carrying heavy loads. The brake light cluster looks all too conservative. Meaty tyres give this Boxer a sure-footed stance while the rear wheel shroud is plastic in a bid to keep weight down. The BM's matte black exhaust has a slashed end and petite chrome heat-shield.
Overall, the classic, simple-looking Boxer succeeds in imparting a long-lasting, solidly built feel from the word go. Quality and fit and finish are praiseworthy on this new Bajaj motorcycle.
Four-stroke engine
At the heart of the Boxer BM 150 lies a kick or button-started, four-stroke, air-cooled, 144.8cc engine which is based on the Discover 150 DTS-i. On the BM, this alloy encased engine lacks Bajaj's proven dual-plug, DTS-i technology.
The carburettor-fed, two-valve, single-cylinder motor has long-stroke 56 x 58.8mm dimensions. While maximum power delivered is 12bhp at 7500rpm, the BM musters 1.25kgm of torque at a useable 5000rpm. While a five-speed gearbox does duty on the Discover, the BM makes do with four, well-spaced ratios, which actually translate into less work and are a boon when riding through heavy traffic conditions, so common in urban India. The clutch has a smooth, light feel and the four-down gearbox shifts with a smooth, precise enough feel. The heel and toe-operated shift lever is rubberised and provides good grip even when riding on wet roads.
The Boxer accelerates with a crisp, vibe-free nature through its wide power band. Throttle response isn't quite as quick as on the similar Discover 150 DTS-i but acceptable for a motorcycle positioned to challenge the 100cc class, and better than most bikes available in this segment.
The Boxer engine is tractable, effortlessly pulling away from speeds as low as 20kph in top gear, without requiring downshifts to find more power. Our acceleration tests proved the Boxer is almost as fast as a Discover 150 DTS-i, reaching 60kph in 5.54 seconds, and able to go past 80kph in 10.58sec.
Bajaj hasn't stinted on the Boxer frame for the BM 150 uses a sturdy, box-section frame that splits to cradle the motorcycle engine. The rear swingarm is likewise crafted from box-section metal and supports dual, ‘Spring-in-Spring' hydraulic shock absorbers. At the front, telescopic forks offer 125mm of travel.
The rider sits upright in a commuter-friendly riding position, reaching out to tall handlebars and well supported on a wide, plush riding seat. Pillions will find themselves easily accommodated, there being enough space on this new Bajaj to seat two in comfort.
The Boxer BM 150 is an easy bike to control in traffic, steering with a confidence-inspiring, neutral feel while always handling with lightness that helps keep fatigue at bay. Ride quality is plush, keeping the rider isolated from rough road conditions. The tyres are a letdown though, the ribbed pattern front tyre failing to provide adequate traction. The 100/90 section rear tyre also quickly feels out of its depth when trying to corner briskly on this bike or braking hard.
The Boxer gets 130mm drum brakes at both ends. We missed a front disc brake throughout this road test. Brake feel is however acceptable, with a drum brake-typical progressive feel at the lever. The BM is capable of braking to a halt from 60kph in 22.82 metres.
The Boxer BM 150 (Ex-showroom (Pune) Rs. 42,000) is effectively a 150cc bike for 100cc money, making it amazing value. But to expect it to also come good on the fuel efficiency front, like a typical 100cc bike, will be asking too much from the bike. The expected economy, as tested by us in real-world conditions, is 46.3kpl in typical Indian city traffic, and 50.6kpl on the highway.
India manufacturing PMI falters but inflation continues to be high
India’s seasonally adjusted HSBC manufacturing Purchasing Managers’ Index (PMI) for September came dangerously close to slipping into the negative territory. It was at 50.4, only a tad above the 50 mark that separates expansion from contraction. Indeed, some of the sub-indices have already slipped below 50. The employment sub-index, for example, was at 47.9 for September, well into a contraction; it has been contracting for two months now. The new export index sub-index, too, has been below 50 for the last three months. PMI is a month-on-month seasonally adjusted indicator and its trend may therefore differ substantially from year-on-year numbers.
The September numbers come hard on the heels of the sharp fall in the composite PMI (both services and manufacturing) in August. The services PMI for September is yet to be released, but data show that the Reserve Bank of India’s (RBI) tightening is finally beginning to bite. The new orders sub-index has also slowed, which suggests that the weakness in manufacturing is going to persist. The new orders/inventory ratio is deteriorating, indicating slower growth ahead. Meanwhile, India continues to be one of the few countries with a manufacturing PMI above 50.
Unfortunately, the slowdown is only there so far as growth is concerned. The input price sub-index was at a high 62.1 in September, well into expansionary territory. True, it’s the lowest rate of expansion in many months, but it’s still elevated and above the long-term average. Moreover, the output price sub-index was at 55.5 for September, at almost the same level as in August. The continuing increase in the output price index suggests that manufacturers still have pricing power and are in a position to pass on at least part of the hike in input prices. Incidentally, the HSBC China PMI, both for manufacturing and services, continue to show high levels of increase in output prices.
Will the September PMI result in RBI pausing? The central bank’s stance was most recently spelt out by governor D. Subbarao in a speech at the Stern School of Business at New York on 26 September. He said that at the current high levels, “inflation is unambiguously inimical to growth; it saps investor confidence and erodes medium-term growth prospects. The Reserve Bank’s monetary tightening is accordingly geared towards safeguarding medium-term growth, even if it means some sacrifice in near-term growth”. The rise in output prices indicates that demand pressures continue to be strong. HSBC chief economist for India and Asean (Association of Southeast Asian Nations) Leif Eskesen explains it thus: “It will still take some time for capacity tightness to ease significantly despite the expected slowdown, which will leave underlying inflation pressures firmly in place for a while still.”
Moreover, there’s another reason why RBI may be loath to change its stance—economists agree that the budgeted fiscal deficit target for FY12 is likely to be breached. And this is what Subbarao said in his speech in New York: “For monetary policy to be more supportive of growth, it will be necessary for fiscal consolidation to take root more firmly.”
All these signals suggest the central bank may not change its stance in a hurry, in spite of the manufacturing slowdown. Unless the situation in Europe becomes worse, which of course is eminently possible.
The September numbers come hard on the heels of the sharp fall in the composite PMI (both services and manufacturing) in August. The services PMI for September is yet to be released, but data show that the Reserve Bank of India’s (RBI) tightening is finally beginning to bite. The new orders sub-index has also slowed, which suggests that the weakness in manufacturing is going to persist. The new orders/inventory ratio is deteriorating, indicating slower growth ahead. Meanwhile, India continues to be one of the few countries with a manufacturing PMI above 50.
Unfortunately, the slowdown is only there so far as growth is concerned. The input price sub-index was at a high 62.1 in September, well into expansionary territory. True, it’s the lowest rate of expansion in many months, but it’s still elevated and above the long-term average. Moreover, the output price sub-index was at 55.5 for September, at almost the same level as in August. The continuing increase in the output price index suggests that manufacturers still have pricing power and are in a position to pass on at least part of the hike in input prices. Incidentally, the HSBC China PMI, both for manufacturing and services, continue to show high levels of increase in output prices.
Will the September PMI result in RBI pausing? The central bank’s stance was most recently spelt out by governor D. Subbarao in a speech at the Stern School of Business at New York on 26 September. He said that at the current high levels, “inflation is unambiguously inimical to growth; it saps investor confidence and erodes medium-term growth prospects. The Reserve Bank’s monetary tightening is accordingly geared towards safeguarding medium-term growth, even if it means some sacrifice in near-term growth”. The rise in output prices indicates that demand pressures continue to be strong. HSBC chief economist for India and Asean (Association of Southeast Asian Nations) Leif Eskesen explains it thus: “It will still take some time for capacity tightness to ease significantly despite the expected slowdown, which will leave underlying inflation pressures firmly in place for a while still.”
Moreover, there’s another reason why RBI may be loath to change its stance—economists agree that the budgeted fiscal deficit target for FY12 is likely to be breached. And this is what Subbarao said in his speech in New York: “For monetary policy to be more supportive of growth, it will be necessary for fiscal consolidation to take root more firmly.”
All these signals suggest the central bank may not change its stance in a hurry, in spite of the manufacturing slowdown. Unless the situation in Europe becomes worse, which of course is eminently possible.
Invisible India' in Spotlight at TOI Awards
Baba Adhav,who was honoured for lifetime achievement at The Times of India Social Impact Awards on Sunday,drew the governments attention to a different kind of GDP growth during his speech that of Gareeb,dalit aur peedit (poor,dalits and the suffering ).The award winners on Sunday evening were all distinguished by their concern,action and focus on this kind of GDP,even as successive governments obsess about,and vaunt,the strides in that limited indicator,the gross domestic product.A BPO training centre for tribal youth,a large farm cooperative that helps improve farming methods and irrigation,an NGO that works in Indias most illiterate district to help tribals secure their rights,a trust that organises women into self-help groups,a district administration that ensured supply of clean water to a routinely flood-ravaged village in Uttar Pradesh,an army battalion that has undertaken a massive afforestation drive,and several other inspirational winners enriched the evening,as a galaxy of luminaries in the audience looked on and applauded.At The Times of India,we believe that this is Indias time, said Times Group MD Vineet Jain.The horizon of possibilities has opened up for many of us in a way that our parents could not have dreamt of.Helping Invisible India emerge from the shadows and join Emerging India is perhaps the single most important challenge we face.This is where we seek to play a small,but significant role, he added.Prime Minister Manmohan Singh applauded the winners and personally interacted with each of them,breaking the longstanding tradition that the PM of India does not attend social events on October 2,celebrated as the birthday of Mahatma Gandhi.As to not entirely part with tradition,the PM did not make a speech or hand out any awards.Senior BJP leader L K Advani,Information and Broadcasting Minister Ambika Soni,JP Morgan Chase Chairman and CEO Jamie Dimon,US Ambassador Albert Peter Burleigh,ambassadors and envoys from many countries,chief of the army staff General V K Singh,Delhi Lieutenant Governor Tejinder Khanna,Aditya Birla Group Chairman Kumar Mangalam Birla,and many eminent people were present.In a move that touched a chord with the audience,all award winners were presented the award by a beneficiary of their work.So,when TVS Motors Chairman and MD Venu Srinivasan walked up to the stage to collect the award for advocacy and empowerment in the corporate category for the Srinivasan Services Trust,he was greeted with a wide smile by Lakshmi Ammal.
BMW to launch under-1,000cc bikes by Jan
The German auto major BMW, which entered the domestic market early this year with as many as six models in the two-wheeler segment, plans to launch under-1,000-cc bikes by January.
"We will launch bikes below 1,000 cc in the domestic market in January," Navnit Motors Managing Director Sharad Kachalia said.
BMW Motorrad, the superbikes division of the German luxury carmaker, does not have direct presence in the country. It is present through two dealers--Deutsche Motoren in Delhi and Navnit Motors in Mumbai- who import these superbikes as completely built units from Berlin.
BMW Motorrad entered the domestic market this January. According to Kachalia, the auto major is aiming to sell over 50 motorcycles by the end of this year. "We have already sold 39 bikes so far and our target is to sell over 50 bikes by December."
"The demand for superbikes is growing here and we want to tap the opportunity," Kachalia said.
BMW sells six 1000 cc plus models in the country --the R1200R, S1000RR, R1200GS, K1300, K1600GTL and the HP2. These models are priced at Rs 18 lakh onwards.
"All our models have a good demand, but our three models - the S1000 RR, R1200 GS, the K1600GTL--have better demand. Our all bikes are above 1,000 cc and in the price range Rs 18-25-lakh," he said.
BMW had earlier planned to piggy ride the Munjals-promoted Hero Motors with the launch of a mid-sized single cylinder motorcycle. However, despite a positive market study, the project was shelved as the company found the domestic superbikes to be too small at that time.
"We will launch bikes below 1,000 cc in the domestic market in January," Navnit Motors Managing Director Sharad Kachalia said.
BMW Motorrad, the superbikes division of the German luxury carmaker, does not have direct presence in the country. It is present through two dealers--Deutsche Motoren in Delhi and Navnit Motors in Mumbai- who import these superbikes as completely built units from Berlin.
BMW Motorrad entered the domestic market this January. According to Kachalia, the auto major is aiming to sell over 50 motorcycles by the end of this year. "We have already sold 39 bikes so far and our target is to sell over 50 bikes by December."
"The demand for superbikes is growing here and we want to tap the opportunity," Kachalia said.
BMW sells six 1000 cc plus models in the country --the R1200R, S1000RR, R1200GS, K1300, K1600GTL and the HP2. These models are priced at Rs 18 lakh onwards.
"All our models have a good demand, but our three models - the S1000 RR, R1200 GS, the K1600GTL--have better demand. Our all bikes are above 1,000 cc and in the price range Rs 18-25-lakh," he said.
BMW had earlier planned to piggy ride the Munjals-promoted Hero Motors with the launch of a mid-sized single cylinder motorcycle. However, despite a positive market study, the project was shelved as the company found the domestic superbikes to be too small at that time.
Lohia Auto launches ‘Genius’ e-bike for teenagers
Lohia Auto Industries, one of the leading electric bike manufacturers in India, launched e-bike ‘Genius’ in the Capital. After the success of ‘FAME’ and ‘OMA Star’, Lohia Auto envisions tapping market in e-bikes for teenagers. Genius bike aims to cater the needs of teenagers with its trendy looks and attractive features. Genius e-bike can be a perfect choice for the safer and economical mode of travel.
According to Mr. Ayush Lohia, CEO, Lohia Auto Industries “We understand the needs of our customers and believe in providing with smart mobility solutions. Our Genius electric bike will cater to teenagers, which is still an un-tapped market. We believe ‘Genius’ will add significant value in form and function to the electric bike segment and also address the environmental concerns of the automobile industry and the country. Genius aims to inspire the parents to provide their children a safer transportation”.
The price of Genius e-bike is Rs. 25,495(ex –showroom Delhi) and it will be available in three different colors Blue, Yellow and Red for its customers across India.
With the launch of Genius the company targets to make deep inroads into the regions where it does not have dealerships and expand its dealer network to 50 in number. We are happy and excited to be in this segment of business as we see the volumes to surge going forward as we increase the portfolio of products”, added Mr. Lohia.
According to Mr. Ayush Lohia, CEO, Lohia Auto Industries “We understand the needs of our customers and believe in providing with smart mobility solutions. Our Genius electric bike will cater to teenagers, which is still an un-tapped market. We believe ‘Genius’ will add significant value in form and function to the electric bike segment and also address the environmental concerns of the automobile industry and the country. Genius aims to inspire the parents to provide their children a safer transportation”.
The price of Genius e-bike is Rs. 25,495(ex –showroom Delhi) and it will be available in three different colors Blue, Yellow and Red for its customers across India.
With the launch of Genius the company targets to make deep inroads into the regions where it does not have dealerships and expand its dealer network to 50 in number. We are happy and excited to be in this segment of business as we see the volumes to surge going forward as we increase the portfolio of products”, added Mr. Lohia.
Royal Enfield recasts biz to improve reach and brand
Royal Enfield Motorcycles, a division of the R4,397-crore Eicher Motors, is overhauling its business, which will see the company strengthen its leadership team and distribution network, and focus on new product development for the future, but analysts say this would be challenging amidst stiff competition.
The man in the thick of the overhauling process is Venkatesh (Venki) Padmanabhan, Royal Enfield’s chief executive. He says, “Siddharth Lal, the owner, told me “I have given you a global brand. Most other companies take a lifetime to develop one, so, go sell’.” Siddharth Lal is chief executive of Eicher Motors, which also makes trucks, buses, automotive gears and components, and provides engineering solutions. Royal Enfield contributes around 12% to the top-line of Eicher Motors for FY 2010-11.
Venki says his job is more than just selling units. “Customers’ expectations of quality, fit and finish have changed,” says Venki. He wants to make spare parts available easily, and create a distribution network that is state-of-the-art. “The aim is to create a brand value that is of high standard,” he says. At present, Royal Enfield has 11 brand stores and 180 dealers in the country.
The ride ahead is not easy for Royal Enfield, thanks to growing competition. Most of the major names in the world of motoring are present in the country, from the legendary Harley-Davidson to Japanese Honda and Italian Ducati. However, while Royal Enfield models cost anywhere between R95,000 to R1.63 lakh, Harley-Davidson sells its products at a starting price of around R7 lakh.
During April-August, the motorcycle segment with engine capacity 250 cc and above stood at 39,443 units, showing a growth of 95% year on year, according to the SIAM report released on September 9. The segment includes Royal Enfield, and models from Bajaj Auto, India Yamaha Motor and Honda Motorcycle & Scooter India.
“Royal Enfield as a brand will survive in the market because they do not have direct competition in the price segment they are present in,” said VG Ramakrishnan, senior director, transportation at consulting firm Frost & Sullivan. “However, they would need to invest in capacity, technology and product development to ready itself for the future,”
Venki says he is ready for the challenge. “We are aware of competition and preparing ourselves with future products and improving the current line up.”
Royal Enfield is in the process of setting up its second plant in at Oragadam, near Chennai. The new plant will take its annualised capacity to 1.5 lakh units by 2013 from 70,000 units at the moment, and will be ready by first quarter of 2013.
Currently the company has a waiting period on its models like Classic 500cc running into anywhere up to eight months to a year, owing to the capacity constraints it has at its plant in Chennai. In 2010, it sold a total of 50,000 units. Today, Classic 500cc makes up to 40% of its annual production and sales.
Abdul Majeed, auto practice leader at PricewaterhouseCoopers said, “There has been some structural changes within the company for a focused approach on each of the areas like marketing, management and advertising.” The brand has recall value in the market, and it should focus on product development and bringing in more value for the buyers, he added.
Royal Enfield is also readying to shift gears for better reach in the export market. “We would want to continue our focus on the domestic market and look at exports in a controlled fashion,” Venki said. He has drawn up plans to enter the export market in three phases. First, the neighbouring markets and those similar to India like Sri Lanka, Nepal, Bhutan, Bangladesh, Pakistan, Iran, Africa and Burma, second the advanced developed markets including Argentina, Brazil, Mexico and Czech Republic, and third, the developed markets including US and Europe. Currently, exports make around 5% of its total sales.
“We can enter the neighbouring markets easily with the current line-up of the motorcycles,” says Venki. “But advanced markets like Brazil would need some technology homologation and we need to work on the fit, finish and top speed to meet the US and EU customer requirements,” Venki said. He also hinted at plans to set up an assembly line in Brazil in the future.
“Asian markets are the best bet for Royal Enfield, considering the product line-up and price at which it sells,” said Ramakrishnan.
However, a bigger challenge is the bike’s fading ‘cult’ factor. Three years back, it moved from cast iron engine to unit construction engine, changing a number legacies loyalists were used to, like the thumping sound of the engine, the weight of the bike, and the position of the gears. “Iron barrel had its own inherent weaknesses and was limiting our brand. But the call was tough because we did not want to upset our loyalists,” Venki said.
But the loyalists are crying foul. Says Nikhil Kashyap, who owns seven Royal Enfields, “Royal Enfield is no more seen as a niche and masculine motorcycle by us. The cult is withering away.”
The man in the thick of the overhauling process is Venkatesh (Venki) Padmanabhan, Royal Enfield’s chief executive. He says, “Siddharth Lal, the owner, told me “I have given you a global brand. Most other companies take a lifetime to develop one, so, go sell’.” Siddharth Lal is chief executive of Eicher Motors, which also makes trucks, buses, automotive gears and components, and provides engineering solutions. Royal Enfield contributes around 12% to the top-line of Eicher Motors for FY 2010-11.
Venki says his job is more than just selling units. “Customers’ expectations of quality, fit and finish have changed,” says Venki. He wants to make spare parts available easily, and create a distribution network that is state-of-the-art. “The aim is to create a brand value that is of high standard,” he says. At present, Royal Enfield has 11 brand stores and 180 dealers in the country.
The ride ahead is not easy for Royal Enfield, thanks to growing competition. Most of the major names in the world of motoring are present in the country, from the legendary Harley-Davidson to Japanese Honda and Italian Ducati. However, while Royal Enfield models cost anywhere between R95,000 to R1.63 lakh, Harley-Davidson sells its products at a starting price of around R7 lakh.
During April-August, the motorcycle segment with engine capacity 250 cc and above stood at 39,443 units, showing a growth of 95% year on year, according to the SIAM report released on September 9. The segment includes Royal Enfield, and models from Bajaj Auto, India Yamaha Motor and Honda Motorcycle & Scooter India.
“Royal Enfield as a brand will survive in the market because they do not have direct competition in the price segment they are present in,” said VG Ramakrishnan, senior director, transportation at consulting firm Frost & Sullivan. “However, they would need to invest in capacity, technology and product development to ready itself for the future,”
Venki says he is ready for the challenge. “We are aware of competition and preparing ourselves with future products and improving the current line up.”
Royal Enfield is in the process of setting up its second plant in at Oragadam, near Chennai. The new plant will take its annualised capacity to 1.5 lakh units by 2013 from 70,000 units at the moment, and will be ready by first quarter of 2013.
Currently the company has a waiting period on its models like Classic 500cc running into anywhere up to eight months to a year, owing to the capacity constraints it has at its plant in Chennai. In 2010, it sold a total of 50,000 units. Today, Classic 500cc makes up to 40% of its annual production and sales.
Abdul Majeed, auto practice leader at PricewaterhouseCoopers said, “There has been some structural changes within the company for a focused approach on each of the areas like marketing, management and advertising.” The brand has recall value in the market, and it should focus on product development and bringing in more value for the buyers, he added.
Royal Enfield is also readying to shift gears for better reach in the export market. “We would want to continue our focus on the domestic market and look at exports in a controlled fashion,” Venki said. He has drawn up plans to enter the export market in three phases. First, the neighbouring markets and those similar to India like Sri Lanka, Nepal, Bhutan, Bangladesh, Pakistan, Iran, Africa and Burma, second the advanced developed markets including Argentina, Brazil, Mexico and Czech Republic, and third, the developed markets including US and Europe. Currently, exports make around 5% of its total sales.
“We can enter the neighbouring markets easily with the current line-up of the motorcycles,” says Venki. “But advanced markets like Brazil would need some technology homologation and we need to work on the fit, finish and top speed to meet the US and EU customer requirements,” Venki said. He also hinted at plans to set up an assembly line in Brazil in the future.
“Asian markets are the best bet for Royal Enfield, considering the product line-up and price at which it sells,” said Ramakrishnan.
However, a bigger challenge is the bike’s fading ‘cult’ factor. Three years back, it moved from cast iron engine to unit construction engine, changing a number legacies loyalists were used to, like the thumping sound of the engine, the weight of the bike, and the position of the gears. “Iron barrel had its own inherent weaknesses and was limiting our brand. But the call was tough because we did not want to upset our loyalists,” Venki said.
But the loyalists are crying foul. Says Nikhil Kashyap, who owns seven Royal Enfields, “Royal Enfield is no more seen as a niche and masculine motorcycle by us. The cult is withering away.”
Hero, Bajaj sales zoom on rural buys, launches
Bucking slowdown in four-wheeler sector, two-wheeler majors Hero MotoCorp and Bajaj Auto recorded their highest monthly sales last month buoyed by festive spirit. Soaring petrol prices, high, interest rates and inflation notwithstanding, companies rode on new launches and demand from rural areas with expectations of even better sales in October.
Hero MotoCorp sales increased 27 per cent at 5.49 lakh units in September 2011 against 4.33 lakh units in the year-ago period. “Sales have been regularly in excess of half a million two-wheelers per month since the formation of our new company, setting pace for our continued leadership. We expect this momentum to continue into the festive season,” said Anil Dua, senior vice-president (marketing and sales), Hero MotoCorp. The firm plans to launch two models — Impulse dirt motorcycle and Maestro gearless scooter — later this month.
Bajaj Auto sold 4.17 lakh units last month against 3.53 lakh units in September 2011, registering an increase of 18 per cent. “Flagship Discover brand has cumulatively crossed sales of four million units,” the automaker said in a statement to the Bombay Stock Exchange. The company sold 3.71 lakh motorcycles in September 2011 against 3.41 lakh in year-ago period, its highest ever motorcycle sales.
“Two-wheelers are cost efficient and remain cheapest mode of personal transport. Any nominal increase in petrol price will not see any impact on sales of two-wheelers,” said Nikhil Deshpande, auto analyst at Pinc Research.
Honda Motorcycle and Scooter India saw 44 per cent increase in sales owing to addition of fresh capacity rendering nearly two-fold increase in scooter sales. The company sold 1.78 lakh units in September 2011 against 1.23 lakh units in the year-ago period. “Scooter sales increased 64 per cent to 1.07 lakh units last month compared to 65,323 units in the year-ago period,” the company said. TVS Motor sold 2.19 lakh units in September 2011 against 1.88 lakh units in year-ago period, showing increase of 17 per cent.
Hero MotoCorp sales increased 27 per cent at 5.49 lakh units in September 2011 against 4.33 lakh units in the year-ago period. “Sales have been regularly in excess of half a million two-wheelers per month since the formation of our new company, setting pace for our continued leadership. We expect this momentum to continue into the festive season,” said Anil Dua, senior vice-president (marketing and sales), Hero MotoCorp. The firm plans to launch two models — Impulse dirt motorcycle and Maestro gearless scooter — later this month.
Bajaj Auto sold 4.17 lakh units last month against 3.53 lakh units in September 2011, registering an increase of 18 per cent. “Flagship Discover brand has cumulatively crossed sales of four million units,” the automaker said in a statement to the Bombay Stock Exchange. The company sold 3.71 lakh motorcycles in September 2011 against 3.41 lakh in year-ago period, its highest ever motorcycle sales.
“Two-wheelers are cost efficient and remain cheapest mode of personal transport. Any nominal increase in petrol price will not see any impact on sales of two-wheelers,” said Nikhil Deshpande, auto analyst at Pinc Research.
Honda Motorcycle and Scooter India saw 44 per cent increase in sales owing to addition of fresh capacity rendering nearly two-fold increase in scooter sales. The company sold 1.78 lakh units in September 2011 against 1.23 lakh units in the year-ago period. “Scooter sales increased 64 per cent to 1.07 lakh units last month compared to 65,323 units in the year-ago period,” the company said. TVS Motor sold 2.19 lakh units in September 2011 against 1.88 lakh units in year-ago period, showing increase of 17 per cent.
GenNext taking driver’s seat at Hamara Bajaj
Are senior Bajajs — Rahul, Niraj and Madhur — slowly exiting their holdings in Bajaj Auto and handing over reins to the second generation family members — Rajiv, Sanjiv, Nirav, Kirti and Sunaina among others? Stock analysts say Rahul Bajaj, who had already stepped down from operational decision-making, is now in the process of transferring his shareholdings to the next generation.
The transfer of shares may take as long as five years, say analysts. In last one-month alone over 23.1 lakh shares of Bajaj Auto were acquired by the second-generation family members. Chairman of Bajaj Auto Rahul Bajaj told Financial Chronicle, “It is in the private domain. The share transfer is for personal reasons. We, as promoters of the company, would continue to do so within Sebi’s guidelines.”
“Promoters sell shares for many reasons. The transaction is miniscule compared with the total share capital of the company,” said Bajaj Finserv MD and Bajaj Auto executive director Sanjiv Bajaj.
“This might be a distribution of stakes among sons and daughters of Rahul, Niraj and Madhur. All the senior Bajaj’s are moving towards retirement and all their children have proved themselves. They can run the business better than their parents. So as part of the long term strategy, the seniors will completely move out in a prudent way,” said Deepak Jain, assistant vice-president at Sharekhan.
Jain said the cash could be deployed in philanthropy. And since the sale of shares is to family members who are part of the promoter group, it will not attract capital gains tax, he added. Pankaj Pandey, head of research at ICICI Direct said, “Rahul Bajaj had given operational control to his sons and now it makes sense if he is transferring his shares too.” The transaction of over 23.1 lakh shares, last month, among the members of the promoter group of Bajaj Auto gave over Rs 177 crore to Rahul Bajaj and his wife — Ruparani Bajaj combined, Rs 85 crore to Madhur Bajaj (brother of Rahul Bajaj) and over Rs 67 crore to Niraj Bajaj (brother of Rahul Bajaj)
Madhur, who held 0.71 per cent stake in Bajaj Auto in his personal name sold 0.19 per cent stake. While Niraj, who helds 0.92 per cent stake in his own name, sold 0.14 per cent stake.
Vineet Hetamasaria, head of research at Pinc Research said, “This could be part of some arrangement between the family members not known to the market. But in three to four months, Bajaj Auto might announce change in Bajaj family holding structure in the company.” Promoters of Bajaj Auto held 50.02 per cent stakes in the company as of June 2011. Shares of the company fell by 1.2 per cent to Rs 1,515.9 per share on the Bombay Stock Exchange on Monday.
The transfer of shares may take as long as five years, say analysts. In last one-month alone over 23.1 lakh shares of Bajaj Auto were acquired by the second-generation family members. Chairman of Bajaj Auto Rahul Bajaj told Financial Chronicle, “It is in the private domain. The share transfer is for personal reasons. We, as promoters of the company, would continue to do so within Sebi’s guidelines.”
“Promoters sell shares for many reasons. The transaction is miniscule compared with the total share capital of the company,” said Bajaj Finserv MD and Bajaj Auto executive director Sanjiv Bajaj.
“This might be a distribution of stakes among sons and daughters of Rahul, Niraj and Madhur. All the senior Bajaj’s are moving towards retirement and all their children have proved themselves. They can run the business better than their parents. So as part of the long term strategy, the seniors will completely move out in a prudent way,” said Deepak Jain, assistant vice-president at Sharekhan.
Jain said the cash could be deployed in philanthropy. And since the sale of shares is to family members who are part of the promoter group, it will not attract capital gains tax, he added. Pankaj Pandey, head of research at ICICI Direct said, “Rahul Bajaj had given operational control to his sons and now it makes sense if he is transferring his shares too.” The transaction of over 23.1 lakh shares, last month, among the members of the promoter group of Bajaj Auto gave over Rs 177 crore to Rahul Bajaj and his wife — Ruparani Bajaj combined, Rs 85 crore to Madhur Bajaj (brother of Rahul Bajaj) and over Rs 67 crore to Niraj Bajaj (brother of Rahul Bajaj)
Madhur, who held 0.71 per cent stake in Bajaj Auto in his personal name sold 0.19 per cent stake. While Niraj, who helds 0.92 per cent stake in his own name, sold 0.14 per cent stake.
Vineet Hetamasaria, head of research at Pinc Research said, “This could be part of some arrangement between the family members not known to the market. But in three to four months, Bajaj Auto might announce change in Bajaj family holding structure in the company.” Promoters of Bajaj Auto held 50.02 per cent stakes in the company as of June 2011. Shares of the company fell by 1.2 per cent to Rs 1,515.9 per share on the Bombay Stock Exchange on Monday.
TVS Motor September sales up 17%
The company's cumulative sales for the period April to September 2011 grew by 15% with sales of 1,140,359 units against 988,794 units recorded in the previous comparable period.
Monthly sales of TVS Motor Company crossed the milestone figure of two lakh units with total sales touching 219,369 units in September 2011 compared to 188,005 units in the corresponding month of the previous year, a growth of 17%.
The company's cumulative sales for the period April to September 2011 grew by 15% with sales of 1,140,359 units against 988,794 units recorded in the previous comparable period.
Two Wheeler
Total two wheeler sales grew by 17% with sales of 215,690 units in September 2011 in comparison with 184,783 units recorded in September 2010.
Scooter sales increased by 30% with sales of 55,879 units compared to 43,086 units recorded in September 2010. Motorcycles grew by 12% recording 90,848 units in September 2011 against 81,381 units in September 2010.
Domestic two wheeler sales of the company reported a growth of 16% with sales of 192,027 units in September 2011 against 165,418 units reported in September 2010.
Exports
Exports grew by 27% registering total sales of 25,973 units in September 2011 against 20,487 units in the same month of the previous year. The company exported 23,663 units of two wheelers in September 2011 in comparison with 19,365 units in September 2010, an increase of 22%.
Three Wheeler
Three wheeler sales of the company grew by 14% with sales of 3,679 units in September 2011 against 3,222 units in the same month of the previous year. Cumulative three wheeler sales for the period of April 2011 to September 2011 stood at 23,106 units.
Monthly sales of TVS Motor Company crossed the milestone figure of two lakh units with total sales touching 219,369 units in September 2011 compared to 188,005 units in the corresponding month of the previous year, a growth of 17%.
The company's cumulative sales for the period April to September 2011 grew by 15% with sales of 1,140,359 units against 988,794 units recorded in the previous comparable period.
Two Wheeler
Total two wheeler sales grew by 17% with sales of 215,690 units in September 2011 in comparison with 184,783 units recorded in September 2010.
Scooter sales increased by 30% with sales of 55,879 units compared to 43,086 units recorded in September 2010. Motorcycles grew by 12% recording 90,848 units in September 2011 against 81,381 units in September 2010.
Domestic two wheeler sales of the company reported a growth of 16% with sales of 192,027 units in September 2011 against 165,418 units reported in September 2010.
Exports
Exports grew by 27% registering total sales of 25,973 units in September 2011 against 20,487 units in the same month of the previous year. The company exported 23,663 units of two wheelers in September 2011 in comparison with 19,365 units in September 2010, an increase of 22%.
Three Wheeler
Three wheeler sales of the company grew by 14% with sales of 3,679 units in September 2011 against 3,222 units in the same month of the previous year. Cumulative three wheeler sales for the period of April 2011 to September 2011 stood at 23,106 units.
Hiring in Auto Sector Down 22% in Fy 12
With rising fuel and interest rates affecting vehicle sales adversely, the auto sector has witnessed a 22 per cent decline in hiring activities in FY2011-12 so far, although it is upbeat on recruitment in the remaining months of the fiscal, say experts. "The job scenario will be robust
in the coming months. New positions, though limited, will be created as a result of expansion of capacities and entry of new companies. The rest will be lateral and upward progression," Hyundai Senior VP (Finance and Corporate Affairs) R Sethuraman told PTI.
Echoing a similar view, Ford GM (HR) Dhananjay Nair said, "The upcoming festival season will provide a boost to sales and the job market will be lucrative in the remaining months of 2011." However, he said, "Although we have hired a pretty high number of personnel in the current fiscal, it is not as high compared to last fiscal."
According to a report by recruitment tendering platform MyHiringclub.com, 724 people were hired in the automobile sector during April-August, 2011, compared to 1,022 in the corresponding year-ago, translating into a 22 per cent decline.
"Overall, hiring activity in the automobile industry declined by one-fourth compared to last year's hiring activity. The fuel price hike and increase in interest rates on vehicle finance had badly impacted sales in this industry," MyHiringclub.com CEO Rajesh Kumar said. Kumar further said, "A few companies -- they are expanding their offices and establishing new plants -- are hiring." Auto experts are optimistic that the upcoming festival season will provide a boost to sales as well as the job market. Kumar said, "We are expecting the same hiring activity will continue till the final quarter of the current fiscal year.
There is a possibility of an increase in hiring activity in the new financial year, because the auto industry can't stagnate." Experts believe that most of the recruitment will be in the sphere of sales, marketing and manufacturing and according to them, candidates having a sound technical background, flexibility and positive attitude, with an alert and creative mind, are more likely to get a job. From an organisational perspective, Sethuraman said that recruiting talented individuals that are able to gel with an organisation's culture remains a major challenge, while Nair said that attracting the right talent would be the key to success.
in the coming months. New positions, though limited, will be created as a result of expansion of capacities and entry of new companies. The rest will be lateral and upward progression," Hyundai Senior VP (Finance and Corporate Affairs) R Sethuraman told PTI.
Echoing a similar view, Ford GM (HR) Dhananjay Nair said, "The upcoming festival season will provide a boost to sales and the job market will be lucrative in the remaining months of 2011." However, he said, "Although we have hired a pretty high number of personnel in the current fiscal, it is not as high compared to last fiscal."
According to a report by recruitment tendering platform MyHiringclub.com, 724 people were hired in the automobile sector during April-August, 2011, compared to 1,022 in the corresponding year-ago, translating into a 22 per cent decline.
"Overall, hiring activity in the automobile industry declined by one-fourth compared to last year's hiring activity. The fuel price hike and increase in interest rates on vehicle finance had badly impacted sales in this industry," MyHiringclub.com CEO Rajesh Kumar said. Kumar further said, "A few companies -- they are expanding their offices and establishing new plants -- are hiring." Auto experts are optimistic that the upcoming festival season will provide a boost to sales as well as the job market. Kumar said, "We are expecting the same hiring activity will continue till the final quarter of the current fiscal year.
There is a possibility of an increase in hiring activity in the new financial year, because the auto industry can't stagnate." Experts believe that most of the recruitment will be in the sphere of sales, marketing and manufacturing and according to them, candidates having a sound technical background, flexibility and positive attitude, with an alert and creative mind, are more likely to get a job. From an organisational perspective, Sethuraman said that recruiting talented individuals that are able to gel with an organisation's culture remains a major challenge, while Nair said that attracting the right talent would be the key to success.