26 August 2010;dailypioneer.com:New Delhi: Contrary to reports, oil PSUs will not make a counter bid to Vedanta Resources’ $9.6 billion offer to buy Cairn India, with Oil Ministry now disinclined to a rival bid. “There is no counter bid,” a top oil ministry official said. “The price at which Vedanta is acquiring Cairn India already is too high.” The change in stance possibly came about after Vedanta Resources Chairman Anil Agarwal spoke to Oil Minister Murli Deora at least on a couple of occasions this week. There were also reports that Agarwal met Congress President Sonia Gandhi on Tuesday on issues relating to his India projects, but no confirmation could be obtained. Also, the Prime Minister’s Office is believed to have discussed the issue, sources said, adding that Cairn Energy is likely to respond to the ministry’s queries by Friday. The ministry, which till early this week was nudging state-owned Oil and Natural Gas Corp (ONGC) to cobble up an alliance with Oil India and gas utility GAIL for a rival bid, says that it is only awaiting clarifications from UK’s Cairn Energy Plc on it selling majority stake in Cairn India. This is what ONGC has been contending from August 16 when the deal was announced, but the ministry was pushing it to examine a counter bid. “We are awaiting response to certain clarifications sought from Cairn Energy and will decide (on giving approval to the deal) after that,” the official said. Meanwhile, the board of ONGC, which is a 30 per cent partner of Cairn India in the prolific Rajasthan oilfields that are at the centre of its parent Cairn Energy’s deal with Vedanta, is likely to be briefed about the possible scenarios. “The matter is being taken to the board as a non-agenda and a status (report) would be presented,” a source said. Cairn Energy chief executive Bill Gammell had on Tuesday stated that his firm would seek “Government of India’s endorsement and any necessary consent” for the Vedanta deal. Cairn Energy is selling up to 51 per cent out of its 62.37 per cent stake in Cairn India to Vedanta, the mining company controlled by NRI billionaire Anil Agarwal. The firm had last week written to the Oil Ministry detailing the Vedanta deal. The Ministry was not satisfied with the details and wrote to Cairn Energy seeking explanation on provisions of the production sharing contract (PSC) in case of stake transfer. The letter states that certain PSCs entered into by Cairn India for exploring for oil and gas, have parent company guarantees and some PSCs have explicit provision of prior government consent in case of change of ownership. Sources said the ministry feels government approval is pre-requisite for conclusion of Cairn-Vedanta deal. On the other hand, Cairn Energy fells the Vedanta deal is a corporate transfer and not sale of stake in an oil field that would have triggered need for regulatory approvals. Had Cairn Energy sold its shareholding in the stock market, Government could not have done anything, they said, adding that Cairn India as a company continues to exist and only its shareholding is changing. Cairn India holds 70 per cent operator interest in the 6.5 billion barrels Rajasthan block. The PSC for the Rajasthan block provides for explicit government approval only in case of a party selling its interest in the block, but does not make the nod mandatory in case of change of ownership at corporate level like in the Cairn-Vedanta deal. State-owned Oil and Natural Gas Corp (ONGC), which has 30 per cent interest in the Rajasthan block, believes it has the pre-emption or right of first refusal to buy Cairn India in case the company’s ownership changed. But, the Joint Operating Agreement, between Cairn India and ONGC, gives partners pre-emption rights in case of sale of interest by either parties in the block but not in case of corporate ownership change, they added.
Exploit potential of shale gas: US to India and China
25 August 2010;timesofindia.indiatimes.com:WASHINGTON: US has offered to India and China its full expertise and technical knowhow to exploit the full potential of shale gas to reduce dependence on foreign oil and move towards its goal of energy independence. As such the Obama Administration has proposed do a resource assessment of certain shale basins in India by the US Geological Survey, and provide workshops to train Indian geophysicists on how to do their own resource assessments. "What we have offered to India is to bring our best knowledge about how you make that estimate, how you make that resource evaluation, and to bring our scientists to them to talk about that," US Coordinator for International Energy Affairs David Goldwyn said. "We are waiting for India's reaction and we're hopeful that they'll do it. "I think you can't tell until you drill, but the shale presence is there," Goldwyn told reporters on the sidelines of the Global Shale Gas Initiative Conference. Representatives from 17 countries including India and China are participating in the two-day international conference hosted by the US State Department as part of its aim to help countries around the world to reduce dependence on foreign oil. The US shale gas phenomenon has transformed global energy markets, he said, adding that because the United States has the technology to develop efficiently large quantities of gas from shale, global prices of liquefied natural gas have decreased. "Gas has become cheaper. Gas is now competitive with coal on a BTU basis, which means that countries that might use coal can now not make an economic choice, but on a competitive basis choose gas for their next level of power generation," Goldwyn said. India has a licensing round probably in September, he said, adding the pace of development will probably come with whether there's success in these first basins, whether there's an assessment of what they have. "Reliance has made an investment in a US company to learn the technology, and what a lot of countries are doing is they're trying to find out how it's done. "So it'll depend on success and, in India in particular, depend on the price of gas," the US official said. Goldwyn said the US had entered into a memorandum of understanding with India during the visit of Prime Minister, Manmohan Singh, to Washington last November. The US has also signed a similar MoU with China. "We have MOUs signed with China and India, but there are follow-up steps that are needed to begin implementation, although, we will have our first workshop in China, November 9th to 11th so we'll be underway in China," Goldwyn said.
M&M-Ssangyong to source $4-5 bn worth of components
25 August 2010;business-standard.com:Swaraj Baggonkar/Mumbai: Though domestic utility vehicle market leader Mahindra & Mahindra hasn’t yet formally bought cash-strapped SUV maker Ssangyong Motor Company, it has already started to lay down a road map for the South Korean auto maker. M&M plans to source automotive components worth $4-5 billion (Rs 19,000-23,000 crore) over several years from global markets for Ssangyong and itself. A substantial portion on this would come from India, where M&M has built a network of about 200-odd component vendors. The sourcing will largely aid the joint product development plan which M&M is contemplating with Ssangyong in the areas of premium sports utility vehicles and crossovers. Besides new products, M&M also has plans of tapping into the engine options of Ssangyong, while developing new engines with Ssangyong’s strong R&D setup. “Ssangyong may not have a product line-up which is as grand as some of the global car makers but we are very optimistic about the ones which are in the pipeline. Our strength of low-cost manufacturing and component sourcing plans will change Ssangyong,” said a source from the company. M&M, which expects to complete the detailed due diligence process by September and wrap the deal by November, has made it clear that it will have to set up an assembly line for at least two of Ssangyong’s products — Korando C and Rexton — in India. Ssangyong is mainly into the SUV segment and had showcased the Korando C, a compact SUV which is also its newest offering, at the Frankfurt Motor Show. In addition, the Super Rexton, which will replace the ailing Rexton II, is the premium product in the company’s line-up. Sources say the luxury sedan, Chairman W, which is also the new version of the premium model, will be tested for the export market by M&M, something held back earlier by the previous owner. The Chairman W is powered by a 5-litre, V8 engine (Chairman W 5.0 version) that develops 306 bhp of peak power. It competes against other premium models such as Mercedes S-class, BMW 7-series and Audi A8. The multi-crore buy-out will allow M&M to get access to the advanced research and development (R&D) centre of Ssangyong, which according to industry experts is one of the finest in South Korea. “There are about 600-odd people working at the Ssangyong R&D facility. They have a very high quality centre, which is fully capable to carry out design and engineering aspects of product development, besides testing,” said an M&M source. Since the start of the year, Ssangyong vehicles have seen a substantial growth in demand. In the January-June period, sales grew nearly three-fold to 36,512 units, as compared to 13,020 units sold in the same period last year.
Carmakers focus on design, lifestyle features & marketing
25 August 2010;economictimes.indiatimes.com:NEW DELHI: Atul Madanpotra bought his first car last month: a red Maruti Swift. “I liked the styling and the overall value that the car offers; it is well powered, spacious and easy to drive,” says the 24-year-old IT executive in Delhi. The youth is clearly in the driver’s seat at India’s cruising car market, dictating terms and forcing carmakers change the way they build and sell vehicles. Carmakers say the average age of car buyers in the country has come down to 32 from 39 over the last decade with earning members in the age group of 25-30 becoming big buyers in the market. This has completely changed colour and flavour on Indian roads where trendy hatchbacks and high-performance sports utility vehicles are gaining ground. “We are now dealing with younger customers who are not just hugely demanding but also frequently changing cars,” says Mayank Pareek, executive director (marketing & sales) at Maruti Suzuki. “This post-liberalisation generation is willing to spend on new products and willing to experiment a lot,” he adds. Maruti has seen sales of its models such as Swift and A-Star speeding on the back of sporty design and powerful performance. Powered mostly by this new generation of car buyers, the Indian auto market has been growing in high double-digit rates for several months. The market grew 37% year-on-year to 2.22 lakh units in July. Design has played an integral part in the success of cars such as Maruti Swift, Hyundai i20 and Honda City, says Dilip Chhabria, car designer and founder of DC Design that offers customization and makeover service for different car models. “New cars in India portray aggression. Just look at the Maruti A-Star or the Hyundai i20, which have aggressive frown (the front space between headlights and bumper) that changes the stance of the car,” he says. Many marketers now directly address the young and the upwardly mobile. Advertisement of General Motors’ Beat compact, for example, says, “Perfect for the next-gen driver. You.”
24 August 2010;business-standard.com:Sohini Das/Ahmedabad: Sanand, which shot to fame overnight as the home to the world’s cheapest car — Nano, has another reason to cheer. Rising land deals, thanks to Tatas’ decision to shift the ultra-low-cost car project here from Singur in West Bengal, have created villages full of crorepati farmers in Sanand. At the rate of around Rs 40 lakh for a bigha (0.62 acre), selling a couple of bighas can fetch one a crore. Consider this: Nazir Khan of Chharodi village sold around four bighas for the approach road to the Nano plant from the highway. In 2009, the deal got him around Rs 1 crore, at the rate of Rs 25 lakh per bigha. “I bought two cars and now, rent them at the plant’s car pool,” he said. Khan has some more farmland left to sustain his living. His cousin, Shamshir Khan, sold around eight bighas and is richer by six tractors and two cars. Land prices, however, have shot through the roof in the last seven-eight months, after the Gujarat Industrial Development Corporation (GIDC) announced its plans to come up with an engineering estate near the Nano plant. According to Khan, a bigha now costs around Rs 30-40 lakh in some areas that are close to the highway. It was hardly Rs 5-6 lakh a bigha three years ago. GIDC is shelling out Rs 1,200 per square meter to acquire land for its project that is coming up over 700-odd acres. Sources in the state revenue department indicated that in the last two-three months, around 1,000 land deals per month had been struck in the area. While exact figures are difficult to ascertain, sources said nearly 12,000 farmers had sold their land in the last three years. While only seven farmers sold their land to make way for the Tata Motors’ project, as the Tatas were given land that belonged to state-owned Anand Agriculture University, it is after the project was parked in the area that land prices started soaring. Initially, realtors bought land at cheaper rates and now, they are selling the same land as residential plots to individual investors. According to Ahmedabad-based Synthesis Spacelink, which has two residential projects coming up near Sanand, agricultural land is available at Rs 40 lakh per bigha. The company already has 90 per cent bookings in place for its project Suramya Lifespaces, where it sold land at Rs 3,500-4,000 per square yard. A Sanand-based land broker said, “If one wanted to buy land here around a couple of years back, it would have cost him around Rs 1,200 per square yard.” While there were nearly 13,000 landowners for the 997 acre plot in Singur near Kolkata, the average land holding size is higher here in Sanand. Of the 12,000 odd farmers who have sold land in the last two years, cashing in on the recent interest in this once nondescript town, many would have turned ‘crorepatis’. While Nano has brought fame to this town, it has also brought along the conflicts over land issues. Chandubhai, a local resident, said, “Yes, we are getting offers to sell our land, but the problem is we can’t buy good farmland in the adjacent villages, as prices have soared. We do not wish to part with our land, as that is the only source of secured livelihood we have.” Villages around Sanand cultivate mainly wheat, cotton and vegetables. According to a land broker, farmers wish to hold on to their land for now, as they feel prices will go up further. “Now, people, who are selling land after GIDC’s engineering estate was announced, are getting better deals, compared to the ones who sold around a couple of years back. And so, the business-savvy Gujarati farmers plan to get more money for their only asset, land,” he said. Last December, farmers of the area took out a rally against the land acquisition notice served by GIDC in four villages of Haripura, Charol, Bol and Siyawada. Things had mellowed down since then, and with farmers’ consent, land acquisition had started in Bol, informed a GIDC official. Some, still feel selling their land is not in their long-term interest as the compensation is soon consumed
23 August 2010;economictimes.indiatimes.com:Anuradha Himatsingka & Rakhi Mazumdar:KOLKATA: KOLKATA: Hindustan Motors last week announced a major overhaul of the iconic Ambassador car in what auto analysts and brand experts see as a last shot at redemption for the car that ruled the pot-holed Indian roads for decades. And not many are excited about its prospects. “It is a spacey car but the technology is obsolete,” says Murad Ali Baig, one of the country’s best-known auto analysts. Modelled on the British Morris Oxford of 1956 and in production since 1958, the Ambassador accounted for three out of every four cars that plied on Indian roads in the seventies before first Maruti Suzuki and then others such as Hyundai Motors and Tata Motors stole the road show with sleek, fuel-efficient and features-rich vehicles. “The Ambassador lost out to the contemporary, trendy and the ‘in’,” says Jagdeep Kapoor, managing director of brand consulting firm Samsika Marketing Consultants. It will be an uphill drive for the Ambassador, or ‘Amby’, to cater to the expectations of the new generation. That is what Hindustan Motors aspires for. It will hire a European design house to help redo the car with “retro design and cutting-edge technology”, says Manoj Jha, managing director of Hindustan Motors. The new car will look different from the current Ambassador, he says. It will cost between Rs 5 lakh and Rs 7 lakh, comply with European emissions standards and hit the roads by August next year. The company wants it to be a niche product and will continue producing the existing model as well. Experts believe this will be the Ambassador’s last chance to survive. “I hope Hindustan Motors knows which design house to select because this might just be the last chance ever for the Ambassador brand,” says Adil Jal Darukhanawala, editor-in-chief of automobile magazine ZigWheels. “Instead of a makeover or lipstick job, what the Ambassador needs is a clean sheet approach to design an all-new car from the ground up,” he adds. But it is not easy task, as pointed out by Mr Baig. The car retains its old suspension, architecture and platform. The only bit of modern engineering it has got is the Isuzu engine. It will cost a minor fortune to overhaul it completely and the company is unlikely to do that, says Mr Baig. What it can do is adopt hydraulic suspension, bring in new gear-shifting technology and improve upholstery and interior design. But, even then, the car may at best go to 2,000 sales per month from 600-700 now, says Mr Baig. That may not be good enough in a market of more than two lakh cars a month. Mr Kapoor of Samsika, however, believes the Amby, loved for its spacious sofa-style rear seats and sturdiness, can still make a comeback if it can be effectively upgraded and marketed. “If the brand wants to rejuvenate itself, it will have to retain its goodwill and the positive attitude and cater to the new expectations of the new generation,” he says. “It can still be Ambassador of the Indian roads provided intangibles such as goodwill, image and attitude can be achieved through repositioning, communication and services.” The Amby relaunch could be a make-or-break move for Hindustan Motors, which posted losses of Rs 43 crore last fiscal and had to inform to the Board for Industrial and Financial Reconstruction as its networth eroded more than 50%. The company, which also manufacture and sell Mitsubishi Motors vehicles such as Mitsubishi Lancer, Cedia and Pajero, has been losing several top-level executives in recent months. Then MD R Santhanam left the company in May, followed by executive vice president Moloy Chowdhury, chief general manager of sales and marketing Ratan Singh and assistant general manager (North Zone) Romesh Lalwani. Only a grand success of the new Ambassador can perhaps pull it out of the red. Now the question is, if Amby can do a Royal Enfield Bullet, which has found renewed acceptability in the country.
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