ICICI discontinues 2-wheeler loans at dealer's end
07 August 2008; economictimes.indiatimes.com: George Smith Alexander: MUMBAI: ICICI Bank, the country’s largest two-wheeler financier, is discontinuing such loans offered at the dealer’s end from August 15. This model accounts for the bulk of the two-wheeler business for ICICI Bank. The bank has already transferred 200 employees in this unit to other departments. ICICI Bank executive director V Vaidyanathan confirmed this to ET, “The bank has decided to reorient the two-wheeler business through branches rather than at dealerships,” he said. ICICI Bank has a network of around 1,400 branches. The two-wheeler business in India has been facing a major upheaval, with many financiers exiting the market due to rising defaults and collection issues. Incidentally, some of the newer players are also said to be cutting back on disbursements. The move will impact the two-wheeler business, which is already seeing a slowdown. Currently, ICICI Bank disburses around Rs 180 crore of two-wheeler loans every month. Interest rates for two-wheelers are currently at around 24%. The average ticket size for these loans is quite small at around Rs 33,000, while the required income is Rs 5,000-15,000 a month. One out of four repayment cheques in two-wheeler loans bounces, but the backlash against the use of recovery agents has made repossession and recovery through agents difficult for lenders. “The clear focus of the retail business is to improve credit quality and all norms are being put place in order to achieve this. The business strategy is being reworked to deal directly with customers and improve our interaction with them. The focus of the bank is on controlling operating expenditure and increasing efficiency,” added Mr Vaidyanathan.
07 August 2008; economictimes.indiatimes.com: LONDON: Oil prices fell to a new three-month low near $117 a barrel on Wednesday after government data showed bigger-than-expected increases in crude and distillate stocks in the US last week, the world’s top oil consumer.
US light crude for September delivery was $1.69 down at $117.48 a barrel by 21:35 pm IST, off highs of $120.49 hit earlier in the session. London Brent crude was down $1.66 at $116.04 a barrel.
The US Energy Information Administration (EIA) said crude oil stocks in the world’s biggest energy user rose by 1.7 million barrels last week, against expectations of an increase of 300,000 barrels. Gasoline inventories fell by 4.4 million barrels compared with forecasts of a 1.2 million barrels drop, while stocks of distillate fuels, which include heating oil and diesel, rose by 2.8 million barrels, 700,000 barrels more than expected.
“It’s mixed data — it’s bearish for distillates, bearish for crude oil and bullish for gasoline. One key question is how much we’re going to make out of the draw in gasoline when we only have one month left in the driving season,” said Tim Evans, energy analyst at Citi Futures Perspective.
Oil earlier bounced off near three-month lows after an explosion on the Baku-Tbilisi-Ceyhan oil pipeline in eastern Turkey late on Tuesday halted oil flows along the key pipeline, providing a bullish backdrop.
Oil has fallen almost $30 from its mid-July peak of $147.27 a barrel —a drop of nearly 20% — amid growing evidence that high prices have finally started to take a toll on demand.
“The next support area is $117. If we break through $117 we are probably not going to be able to create any upward momentum in the market,” said Rob Kurzatkowski, futures analyst at optionsXpress in Chicago.
Traders kept a watchful eye on news about Opec member Iran, the world’s fourth biggest oil producer, which remains locked in a tense stand-off with the West, notably the US, over its nuclear programme. Iran says it is only seeking to master nuclear technology to generate electricity and has repeatedly refused to halt its atomic work, prompting the UN Security Council to impose three rounds of penalties on Tehran since 2006.
The US State Department said major powers had agreed on Wednesday to consider more UN sanctions against Iran after Tehran gave no concrete reply to their demand that it freeze its nuclear activities.
07 August 2008; economictimes.indiatimes.com: TOKYO: A Mitsubishi Motors affiliate will build a factory in Japan to mass-produce lithium-ion batteries for its upcoming all-electric car, the company said on Wednesday.
Mitsubishi has been developing the iMiEV car since 2005, planning to launch sales to fleet customers such as rental car companies beginning in mid-2009 and to the general public in 2010.
The lithium-ion battery for the car will be produced by Lithium Energy Japan, a subsidiary of Japan’s biggest battery maker, GS Yuasa, at a newly acquired site in Shiga in western Japan, the companies said in a statement.
GS Yuasa is already providing lithium-ion batteries to customers including Boeing, which uses them in its 787 jets. Mitsubishi initially planned to produce batteries for 2,000 iMiEVs in 2009 and 5,000 the following year at GS Yuasa’s existing factory in Kyoto.
But the company changed its plans in order to boost production targets to meet rising demand for electric cars amid soaring fuel prices and the growing appeal of environmentally friendly products, the automaker said.
A new battery plant will be ready in April 2009 to initially produce batteries for 2,000 units of the electric car, Mitsubishi said. The company will then boost battery production up to 10,000 a year “shortly afterward”, but did not specify the exact timeline for a planned production increase.
The move is part of a race among automakers to develop mass-market electric cars.
Nissan Motor and Japanese electronics maker NEC are working together to produce batteries for electric vehicles, and Honda Motor is leasing a fuel-cell vehicle in California.
US automaker General Motors is developing a plug-in electric vehicle called the Chevrolet Volt, which it hopes to launch in 2010. Ford Motor has a demonstration fleet of 20 plug-ins through a partnership with Southern California Edison.
06 August 2008;timesofindia.indiatimes.com : Sanjay Dutta: NEW DELHI: But for Cabinet Secretary K M Chandrashekhar's intervention, state-owned Bharat Petroleum and Hindustan Petroleum would have lost their Navratna status last month as a result of the government's policy of capping fuel prices despite runaway crude prices and keeping the companies afloat on dole.
The Navratna status gives state entities power to decide on their own projects of any size and invest up to Rs 1,000 crore in joint ventures without seeking government permission. This saves them from going through the cumbersome and time-consuming process of seeking government approvals which hampers progress of many other state firms.
At a recent meeting of the heavy industries department's apex committee on Navratna companies, Chandrashekhar put on hold an inter-ministerial panel's recommendation to put the two companies on notice. The inter-ministerial panel had recommended such a move after reviewing their performance during the last three years and a composite score card based on six selected operational parameters.
Both the companies managed to notch up only 58 on the composite score parameters, which was below the minimum requirement of 70. Their fall in the pecking order was essentially due to the support from the government they get by way of oil bonds and subsidies from domestic crude producers such as ONGC and Oil India for partially making up losses on fuel sales. Government support disqualifies state entities from Navratna status.
Oil ministry officials pointed out that the oil bonds and subsidies should not be construed as budgetary support as they were part of the policy to cushion consumers from high oil prices.
Even the finance ministry representative agreed with this. Chandrashekhar said the department should take a fresh look at the parameters in view of the government's fuel pricing policy.
Bajaj-Renault deal to be limited to ultra low-cost car project
06 August 2008; economictimes.indiatimes.com: Nandini Sen Gupta: NEW DELHI: Bajaj Auto has expressed disinterest in partnering the Nissan-Renault alliance in the mainstream car business. Bajaj Auto MD Rajiv Bajaj told ET that it was not an area he felt his company had any expertise in, hence the decision. So, the Bajaj-Renault-Nissan partnership will be limited to the ultra low-cost car project.
Speaking to ET, Mr Bajaj said: “We are not interested in participating in the mainstream car market as we do not believe that we can bring sustainable value to bear upon an existing auto major.” That’s the reason why, he said, Bajaj is not interested in expanding its partnership with Nissan-Renault beyond the ultra low-cost car project.
Last week, ET reported that Renault had initiated talks with Bajaj to extend their partnership to cover the greenfield plant in Chennai (that will manufacture Renault and Nissan cars) as well as the marketing and distribution of Renault cars made in the plant. This, even as Renault is negotiating with Logan project partner Mahindra & Mahindra for a wider distribution arrangement. M&M pulled out of the Chennai plant in January this year.
While Renault has officially denied it is in talks with Bajaj Auto to partner in the Chennai project, two persons familiar with the development confirmed to ET that Renault had made overtures to Bajaj for car distribution should the talks with M&M fail and had offered it a stake in the company that is setting up the manufacturing plant in Chennai.
05 August 2008; expressindia.com: New Delhi: State-run Oil and Natural Gas Corp has offered to pay a super profit tax (SPT) on any financial gains above USD 50 per barrel, but wants the present ad-hoc system of sharing fuel subsidies to be scrapped.
As per the offer, which backs the demand of the Left and the Samajwadi Party for levy of windfall profit tax from refiners and crude oil producers, the company is willing to pay three-fourths of anything above USD 50 a barrel as SPT.
ONGC, which earned USD 125.85 per barrel on crude oil it produced in April-June quarter, has suggested to the B K Chaturvedi Committee that the Rs 2,500 per tonne cess on domestic crude oil be converted into ad-valorem rates so that the government gets incremental revenues whenever crude prices rise.
"Base price of crude oil be fixed at USD 50 per barrel on which there would be no subsidy sharing... ONGC further proposes that beyond this crude oil price, additional tax may be levied, ONGC said.
The same may be 75 per cent of the incremental revenues beyond the crude price of USD 50 a barrel," it added.
Of the USD 125.85 a barrel gross realisation on crude oil produced, ONGC got a net revenue of only USD 69.14 a barrel after paying for subsidies on domestic cooking gas (LPG), kerosene, petrol and diesel.
Upstream firms like ONGC bear one-third of the revenue losses on fuel sales retailers IOC, BPCL and HPCL suffer on not being allowed to raise prices in line with cost.
ONGC wants this subsidy-sharing scheme to be replaced by the WPT or super profit tax regime.
The company despite paying Rs 9,811 crore in subsidies in Q1, earned a net profit of Rs 6,636 crore. In 2007-08, ONGC's subsidy share was Rs 22,001 crore.
ONGC, in its representation to Chaturvedi Committee, said that its proposal was based on the Chinese model for WPT where a 40 per cent additional tax is levied on crude price of over USD 60 per barrel.
As per its suggestion, ONGC would have paid out USD 56.88 per barrel in Q1 as against actual payout of USD 56.71 a barrel.
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