29 Nov 2010;economictimes.indiatimes.com:Lijee Philip & Chanchal Pal Chauhan:MUMBAI | DELHI: Booming demand for cars in November have forced carmakers to refrain from the tradition of production breaks during the year-end to prevent piling up of inventories . Rising incomes and positive consumer sentiment are expected to provide further fillip to salesthat have been growing at 25-30 % on the back of festival demand. Manufacturers such as Mahindra & Mahindra and Toyota took short production breaks during Diwali while General Motors and Renault will snip their long breaks this December. Luxury car makers such as Mercedes are also shortening Christmas breaks at their global factories because of surging demand for new models. With generally a low offtake in wholesales (manufacturer to the dealer) in December , car manufactures shut their factories for 8-10 days for maintenance. However , demand has outstripped supply for lager part of this year. Demand for cars has risen more than 30% this year and may double to 3 million vehicles annually by 2015, according to the Society of Indian Automobile Manufacturers (SIAM). World’s largest carmaker, Toyota, which operates in India through a joint venture Toyota Kirloskar Motors (TKM), enhanced production by 10% in November. “We have clubbed the festive holidays season with the plant shutdown to minimise the impact of the annual maintenance. The six-day shutdown was taken in November to minimise the impact on our production as we are under tremendous pressure to churn out maximum vehicles from our factory in Bangalore and cut the months of waiting on our cars like Innova and Fortuner,” said TKS deputy managing director (marketing) Sandeep Singh. General Motors is tweaking its maintenance shutdown schedule to optimise the production to meet the strong demand for its cars in the domestic market. It now maintains its older Halol plant in Gujarat once from the earlier two times-a-year and rotates the shutdown with other new plant at Talegaon in Maharastra. “We have reduced the number of days of the maintenance to 5 from the earlier 8-10 days to maximise production at our plants. Now our Halol plant is now closed for annual maintenance only in December and not in June as done earlier and in the same month we carry out the maintenance for the Talegaon plant,” GM vice president (corporate affairs) P Balendran said. The French auto major, Renault, has cut down its break from two weeks in December to just one week. “We have cut short the break as we are in the process of setting up systems ,” said a senior official of Renault India. Car sales in India have been growing at 25-30 % as easy finance and festival season drove up demand. “Sales are expected to rise further on the back of rising incomes, positive consumer sentiment, availability of easy finance and a slew of new and old models to choose from,” said Abdul Majeed , auto practice leader, PricewaterhouseCoopers (PwC). Margins may come under pressure in the next few quarters as prices of raw materials are expected to go up. Analysts said companies will be forced to increase local sourcing of critical components to maintain margins.
Toyota gears up for Etios launch in India on Wednesday
28 Nov 2010;deccanherald.com:Bangalore: Japanese automobile giant Toyota Motor Corporation is gearing up for the launch of Etios car in India on Wednesday with its President Akio Toyoda flying down for the event. The launch is undoubtedly a major milestone for Toyota's Indian entity -- the Toyota Kirloskar Motor Private Limited, its joint venture with the Kirloskar Group. TKM is launching the sedan version of Etios on Wednesday, with the unveiling of the hatchback slated for March. TKM's Deputy Managing Director (Marketing) Sandeep Singh told PTI here today bookings for Etios sedan would begin on December one with delivery to start from January one. Singh declined to talk about the price of Etios before the launch but said the sedan would compete with the likes of Swift Dzire and Tata Manza and the hatchback with Hyundai i20, Maruti Swift, Ford Figo and Polo of Volkswagen. TKM has targeted to sell 70,000 units of Etios in the first year. "We are very excited about the launch. We are sure the customers will be very happy. Reviews of auto journalists are very, very good", Singh added.
28 Nov 2010;business-standard.com:Basra: The final draft of Iraq’s multibillion-dollar deal with Royal Dutch Shell to capture flared gas at its southern oilfields would be completed within 10 days, a senior Iraqi oil official said. The $12 billion deal, which includes Japan’s Mitsubishi, involves capturing associated natural gas produced at fields near the oil hub of Basra, including Rumaila. “We are confident the final draft will be completed within a week, 10 days maximum,” Deputy Oil Minister Ahmed al-Shamma told reporters at an oil conference in Basra. Last month, Oil Minister Hussain al-Shahristani had said the contract would not include the 12.6-billion barrel Majnoon oilfield being developed by Shell and its Malaysian partner, Petronas. However, it will cover Rumaila – being developed by BP and CNPC, Zubair – being worked on by ENI, Occidental, KOGAS and West Qurna, whose two projects are in with Exxon and Shell, and Lukoil and Statoil. The Oil Ministry delayed finalising the deal with Shell and Mitsubishi in September due to legal issues regarding the joint venture. Iraq flares 1 billion cubic feet of gas every day at its oilfields — energy it needs to generate electricity in a country suffering from chronic power blackouts more than seven years after the US-led invasion. Shamma said Iraq’s current cabinet had the authority to sign the contract, adding, he was waiting for legal advisers to review the final draft. Iraqi politicians have been jockeying for positions in a new government since an election in March that failed to produce a clear winner. Two weeks ago, the squabbling factions reached a power-sharing deal and on Thursday, Prime Minister Nuri al-Maliki was given 30 days to choose a new cabinet.
28 Nov 2010;business-standard.com:New York: At $23.1 billion, General Motors Co’s initial public offering (IPO) became the world’s largest after underwriters swiftly took up additional shares following the last week’s IPO. The added shares vaulted GM past the Agricultural Bank of China’s $22.1 billion IPO in July and underscored the strong demand for the taxpayer-rescued automaker’s stock. On Friday, GM said that underwriters led by Morgan Stanley, JPMorgan Chase, Bank of America Merrill Lynch and Citigroup, exercised their full option on an additional 71.7 million common shares worth $2.37 billion. They also exercised the option to purchase 13 million preferred shares for $650 million. The underwriters had 30 days from the IPO to exercise theses options. Last week, GM raised $20.1 billion in an IPO of common and preferred shares, in what was the biggest US IPO ever. Without the preferred shares, GM’s IPO would have been smaller than China’s AgBank. On November 18, their first day of trading, the shares rose 3.6 per cent. On Friday, they closed up 33 cents at $33.81, or 2.5 per cent above the $33 IPO price. The US government bailed out GM for $50 billion after the automaker’s 2009 bankruptcy. The IPO caps the first stage of a turnaround that has taken the 102-year-old automaker from near-death to an unlikely Wall Street flotation favourite in 2010. A successful stock debut may help the Obama administration argue the controversial taxpayer bailout of GM was worthwhile. The White House has said US taxpayers were on track to recoup the full investment made by the administration and that it hoped to make substantial progress towards shedding the government’s stake entirely, by mid-to-late 2012. The strong response to the stock sale reflects growing investor confidence that GM was moving beyond its unpopular, taxpayer-funded bankruptcy with sharply lower costs and higher profit potential. The US Treasury remains GM’s largest shareholder after the IPO, with a third of the shares outstanding. Barclays Capital, Deutsche Bank, Goldman Sachs, Credit Suisse and Royal Bank of Canada are GM’s other major underwriters. Lazard and Boston Consulting Group served as advisers to the Treasury. Evercore Partners advised GM.
Oil inches up after big jump; Europe debt in focus
26 Nov 2010;business-standard.com:London: Oil inched up in paltry trade on Thursday, extending its biggest gain in four months as the dollar edged lower, but ongoing concerns about the euro zone and Chinese inflation threatened to limit gains. US crude for January delivery rose 32 cents to $84.18 a barrel by 1900 GMT, after plumbing lows of $83.45 earlier. Total New York Mercantile Exchange crude trade came to just 48,000 lots, less than a tenth its average this year. All trade on Thursday will be combined into Friday's official session. ICE Brent rose 41 cents to $86.25. Total trade of just over 100,000 lots was about a quarter of the norm. After falling sharply two weeks ago, oil prices found strong technical support at around $80 a barrel, setting the stage for Wednesday's 3.2 per cent rally on pre-holiday short covering spurred by inventory data that was less bearish than feared and upbeat US weekly jobs and consumer spending data. "Technically, the action of the last two days definitely print out a very strong defence of $80.50 a barrel as a support," Petromatrix' Olivier Jakob said in a note. Continued worries about the ability of peripheral euro-zone members to manage their debt weighed on the euro, which remained close to a two-month low even after staging late gains that pulled the dollar lower amid corporate buying. In Europe, senior officials dismissed suggestions by some commentators that the single currency area could break up. German Chancellor Angela Merkel said she was more confident than earlier this year that the European Union will emerge stronger from the current crisis. But German government bonds fell, pressured in part by the possibility of further euro-zone bailouts, although the European Commission said there were no discussions on financial aid for more countries after Ireland asked for help. DOLLAR DISCONNECT The dollar index slipped 0.21 per cent, lending a measure of support, although the normal inverse relationship between oil and the greenback has weakened recently. The average daily correlation over the last 25 days dropped to -30 per cent on Thursday, the weakest in over a month. "Once again yesterday, we saw a disconnect between the dollar and commodity prices in yesterday's trading," MF Global senior commodities analyst Edward Meir said. Oil tumbled to 2010 lows under $65 in May as the Greek debt crisis dampened confidence about the global economic recovery, and rebounded to a two-year high of $88.63 on November 11. Earlier this week, oil prices dropped to near $80 after North Korea's deadly artillery barrage against a South Korean island boosted the dollar's value and reduced the appetite for riskier commodity assets.
26 Nov 2010;business-standard.com:T E Narasimhan & Sharmistha Mukherjee:Chennai:New Delhi: Chennai is emerging as the country’s largest automotive and auto components manufacturing hub in terms of investment. According to a state government official, over $3 billion (around Rs 13,800 crore) will be invested in Chennai by global car manufacturers by end of 2010-11. The proposed investment is significantly higher than other auto hubs like Gurgaon in Haryana. Tamil Nadu Industry Secretary Rajeev Ranjan said the total installed capacity in and around Chennai would be 1.28 million cars a year by the end of the financial year. But, that figure is expected to go up significantly thanks to projects by Ford, Hyundai, BMW, Renault- Nissan and Mitsubishi-HM coming up in the area. “Every third car produced in India is from in and around Chennai,” says Ranjan. Similarly, the region will see the manufacture of around 350,000 commercial vehicles a year by the end of 2010-11. In 2008-09, 560,000 passenger cars were manufactured, accounting for 30.6 per cent of India’s total production. Haryana has an installed capacity of around 4.8 million vehicles (1.2 million for Maruti and 3.6 million for Hero Honda). Harley Davidson is also setting up an assembly unit at Bawal in Haryana, which will become operational by the first half of 2011. However, the company has not yet furnished details on its investment or production plans. Maruti will produce 1.2 million cars from its facilities at Gurgaon and Manesar. Besides, it has plans to add two more plants at its Manesar unit to increase capacity by 0.5 million by 2013. The total investment in both plants is Rs 3,625 crore. Hero Honda, which is the largest producer of motorcycles in the world, has two plants in Haryana: at Gurgaon and Rewari. It produces 6,000 units a day at each. The automotive industry occupies an important place in the industrial map of Tamil Nadu. The state’s innovative policy for the sector offers an attractive package of support to projects investing more than Rs 4,000 crore. As a result, since May 2006, investments attracted by Tamil Nadu in automotive and auto components manufacturing is around Rs 21,900 crore. That’s almost five times the investments attracted during previous 15 years. The employment potential, both direct and indirect, in these new projects is roughly 120,000. V Sumantran, executive vice-chairman, Hinduja Automotive, and chairman, Defiance Technologies, says India will produce around 2 million passenger car units in 2010. In a couple of years, annual production is expected to increase to around 10 million units a year. “Though the role of the ecosystem in Chennai cannot be underestimated, many measures on integration within the IT sector will be required to turn Chennai into the Detroit of the future,” he says. Kiminobu Tokuyama, managing director and CEO, Nissan Motor India, which has set up a Rs 4,500-crore manufacturing unit at Oragadam, near Chennai, along with French partner Renault, said the proactive industrial policies of the Tamil Nadu government helps expansion and setting up of technology centres in Chennai. “Nissan is bullish about India’s small-car segment — it is in the process of introducing new small-car models in the years to come,” he adds. Hyundai India has made Chennai its manufacturing and export hub for small cars. The i10 and i20 models are manufactured only in Chennai and exported to the world. Chennai is Hyundai’s largest base outside Korea. On the auto components sides, more than 350 auto component suppliers are located in the state, accounting for over 35 per cent of India’s production capacity. Some of the big names include Visteon, Delphi, Robert Bosch, Lear, Hwashin, Motherson, Unipress, Valeo, Mando and many more have large manufacturing facilities in Tamil Nadu. Three Chennai-based industrial groups — TVS, Rane and Amalgamations — constitute more than 25 per cent of India’s components production. The most critical intervention of the central government thus far in the automotive sector has come in the form of an ambitious project to set up world-class automotive testing and R&D infrastructure. This will deepen manufacturing, encourage localised R&D, boost exports and converge India’s strengths in IT and electronics with automotive engineering to help the country garner a larger share of the $6-trillion global automotive business. The Centre is currently implementing National Automotive Testing and R&D Infrastructure Project in Oragdam, Chennai, at a cost of around Rs 450 crore. This project aims to facilitate the introduction of world-class automotive safety, emission and performance standards in the country and ensure seamless integration of our automotive industry with the global industry.
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