Car companies like Maruti Suzuki, Hyundai Motor & Volkswagen skip price hike on dipping demand
16 Jan 2012;economictimes.indiatimes.com:Chanchal Pal Chauhan: NEW DELHI: For the first time in 15 years, carmakers such as Maruti Suzuki, Hyundai Motor and Volkswagen have skipped their customary price hikes in January on constantly falling demand, giving customers a rare opportunity to buy new models at last year's price. From a high of 2.18 lakh units sold in September to a mere 1.59 lakh cars last December, sales have dipped alarmingly over the last four months despite a slew of discounts and freebies, putting the companies in a catch-22 situation. While a steady rise in input costs and rupee depreciation over the last few months have put enormous pressure on their already squeezed margins, any further hike would deter potential buyers and add to the already gloomy market conditions. "We would be increasing prices soon, but a final decision is yet to be taken," says Maruti Suzuki managing executive officer (marketing & sales) Mayank Pareek. Toyota Kirloskar Motors too is yet to take a final call on price hike. "The change in price is expected in the next few days," said a senior executive of Bangalore-based Toyota Kirloskar Motors, declining to mention the time when the auto major would bite the bullet. Last December, carmakers announced a price hike of up to 1 lakh, to be applicable from January 1, hoping buyers to lap up new models and push up year-end sales. However, their gambit failed to lure customers. "Carmakers are under pressure," says Abdul Majeed, partner automotive practice PricewaterhouseCoopers. Footfalls have been falling and sales have now become very model specific, adds Majeed. "For instance, while Maruti is selling its Swift hatchback in good numbers, its other flagship models such as Alto and WagonR are reporting sluggish sales." Ditto for second-largest carmaker in India Hyundai Motor, which has seen an uptick in its Verna sales, but a fall in i10 and other models, adds Majeed. However, trouble for carmakers is an opportunity for potential car buyers as analysts predict high discounts, a hallmark of auto segment last year, to continue in 2012 as well. "Well, this is perhaps the best time to buy cars as New Year models are available at last year's price," said a Mumbai-based analyst working with an international consultancy firm. In fact, there's more in store for buyers. Most of the cars launched at the recently-concluded Auto Expo in New Delhi have been launched at an introductory lower price.
Iran warns of consequences if Arabs back oil sanctions
16 Jan 2012;business-standard.com:Tehran: Iran warned Gulf Arab neighbours they would suffer consequences if they raised oil output to replace Iranian crude facing an international ban. In signs of Tehran's deepening isolation over its refusal to halt nuclear activity that could yield atomic bombs, China's premier was in Saudi Arabia on Sunday probing for greater access to its huge oil and gas reserves and Britain voiced confidence a once hesitant EU would soon ban oil imports from Iran. Major importers of Iranian oil were long loath to embargo the lifeblood of Iran's economy because of fears this would send oil prices rocketing at a time - amidst debt and deficit crises and high unemployment - when they could least afford it. But strong momentum for oil sanctions has been created by a UN watchdog report saying Iran appeared to have worked on designing an atom bomb. A new US law signed by President Barack Obama on New Year's Eve would freeze out of the US financial system any institution dealing with Iran's central bank - which processes its oil revenues. If fully applied, the law would make it impossible for most countries to buy Iranian oil. Washington is offering waivers to countries to let them keep buying Iranian oil for now, but demanding they gradually cut their imports back. Leaders from some of the Asian countries that buy the most Iranian oil have begun touring the West Asia to secure alternative supply lines from Arab states. European buyers suggest they will also lean more heavily on Arab oil producers should an EU ban come into effect. Feeling increasingly encircled, Iran's hardline Islamic clerical elite has lashed back by threatening to block the main West Asian oil shipping route. Since the New Year, Tehran also began to enrich uranium in an underground bunker and sentenced an Iranian-American citizen to death on espionage charges. Tensions in the Gulf have caused occasional spikes in oil prices in recent weeks. The sanctions are also having a real impact on Iran's domestic economy, causing prices of imported staples to soar and the rial currency to tumble. Iran holds a parliamentary election in March, its first since a presidential vote in 2009 led to eight months of street protests. Those demonstrations were put down by force, but since then the "Arab Spring" has shown the vulnerability of states in the region to public anger fueled by economic hardship. Iranian OPEC Governor Mohammad Ali Khatibi said Tehran would regard as an unfriendly act any move by neighbouring Gulf Arab oil exporters to make up for Iranian crude.
Iran oil imports to fall 30% in 2011-12: Government
13 Jan 2012;economictimes.indiatimes.com:NEW DELHI: The government has not asked any refiner to cut imports of Iranian crude oil despite US sanctions but after the RBI barred payments through a regional clearinghouse a year ago, refiners themselves are gradually reducing such purchases, which are projected to fall 30% in 2011-12, government and industry officials said. "We have not asked companies to cut imports from Iran," said additional secretary oil ministry Sudhir Bhargava. India imports about $12 billion worth Iranian crude oil. Total imports are estimated to fall to 13 million tonnes in the current fiscal from 18.5 million tonnes in 2010-11 and 21.2 million tonnes in the previous year.
13 Jan 2012;business-standard.com:Kalpana Pathak:Mumbai: State-run Oil India Ltd (OIL) is in advanced talks to acquire an oil and gas producing asset in Africa, a person familiar with the matter said. A company executive confirmed the development, adding the company would make a non-binding agreement for the acquisition in the next two-three months. "Considering OIL largely operates in the northeast, we have been looking at reducing our risk concentration. Producing overseas assets provide us a good opportunity to do the same. We are also studying other assets in Africa," said an Oil India executive. The company is likely to spend between Rs 5,000 and Rs 6,000 crore on the asset, which has reserves of around 200 million barrels. "We believe Maurel & Prom’s oil assets in Gabon has a similar data point as disclosed by the management for the potential target," said Deepak Pareek, Research Analyst-Institutional Equities, Prabhudas Lilladher Private Ltd. OIL’s interest in the asset has been in the news for some time. The company has done the due-diligence and is likely to approach the empowered group of ministers for approval. "Given the smaller size of the asset under contention, competition from bigger Chinese players is also not significant," said Pareek. Production from the asset under discussion is likely to be 15,000 barrels of oil per day to 20,000 barrels of oil per day (around 25 per cent of the current production). The management believes the acquisition is likely to be value-accretive as the company works with a minimum IRR (internal rate of return) of 14 while examining the acquisition prospects vis-à-vis an interest yield of 10.5 per cent earned on the cash with the company. Apart from the conventional oil and gas segment, OIL is also looking for assets in the non-conventional hydrocarbon segment, such as shale gas, for strategic benefits. OIL is actively pursuing opportunities to acquire producing E&P assets, exploration acreage, etc in Africa, West Asia, Southeast Asia, South America, Commonwealth countries and Russia.
13 Jan 2012;business-standard.com:Washington: The Obama administration is in talks with India to reduce New Delhi's dependence on Iranian oil, as the US is leading an international effort of imposing tough sanctions on Tehran. The US is talking to a broad number of allies and partners about a legislation that the US President (Barack Obama) signed and about the implications, trying to urge as many countries as possible to reduce their dependence on Iranian crude, State Department spokesperson Victoria Nuland said. This is another way that the international community can send a message to Iran about the choice it faces, she said. "India is one of the countries that we are talking to, and we will continue to talk to India about this legislation, and we are hopeful that we can make progress together, because India certainly shares our view that what Iran is doing on the nuclear docket is dangerous, and we have a shared interest in getting them to change course," Nuland said. Nuland was responding to questions on the statement made by the a senior Indian official that New Delhi would continue to do business with Iran. The US yesterday asked China to reduce its dependence on Iranian oil. Under US' measures, foreign firms will have to choose between Iran or the US to do business.
Government to put a cap on energy usage by companies
12 Jan 2012;business-standard.com:Piyali Mandal:New Delhi: Programme will create world’s largest energy saving certificate-trading platform. Big corporations in India, including Tata Steel, Jindal Power and NTPC, will have to keep a tab on power usage at their plants as the government is setting a cap on the energy consumption of large corporations. According to officials, the Bureau of Energy Efficiency (BEE) has drawn a list of about 477 plants belonging to different corporations and has set targets on their energy consumption. The move is aimed at improving the energy efficiency of the Indian industry. Companies overshooting their cap will be penalised while those achieving the target will be rewarded with tradable permits. The programme is expected to create the world’s largest energy saving certificate-trading platform. Once implemented, companies that achieve their target would be given permits. Corporations that fail to achieve their target have to compensate for their failure by buying permits. If they fail to do either of this, they may have to pay penalties. The energy consumption reported by plants will be based on audit by any of the BEE accredited agencies. The programme includes plants across eight sectors, including steel, fertilizer, oil refineries, paper mills, thermal power plants and others. Some of the plants included in the initial list belongs to Tata Steel Ltd, Tata Power, Jindal Steel and Power, Jindal Power, Reliance Energy Ltd, Reliance Industries Ltd, Hindalco Industries Ltd, Birla Corporation Ltd among others. Even PSUs like NTPC, Rashtriya Chemicals and Fertilisers Ltd, etc, are part of the list. The Bureau of Energy Efficiency will be the implementing and regulatory agency for the same. “The programme has been designed after broad industry consultations. Initially, companies were worried about the base period and the methodology followed for arriving at the targets. But the issues have been resolved and the government would soon come out with a gazette notification,” said Prodipto Ghosh, chairman (environment committee) of FICCI. Globally, there are small energy saving certificate-trading platform in Netherlands and Germany. But, this would be the largest such trading platform in the globe, Ghosh added. According to a senior official at the BEE, “The industry consultation is over. We will notify the companies about the energy cap soon. The process would start in March, 2012.” The companies would be given a time-period of three years to achieve their targets. The first tradable certificate is likely to be issued in 2013. The energy permits would be traded monthly. The initiative is a part of the government‘s National Mission on Enhanced Energy Efficiency (NMEEE), which is one out of the eight missions planned under the National Action Plan on Climate Change. The Perform, Achieve and Trade scheme is a market-based mechanism to enhance energy efficiency in large energy-intensive industries and facilities. According to Professor Shreekant Gupta of Delhi School of Economics, “This is a very progressive idea. The perform, achieve, trade scheme focuses on the aggregate target rather than individual quota. It also offers flexibility to the companies. Firms failing to meet their targets can buy certificates from firms which are more energy efficient.” Considering the vast potential of energy savings and benefits of energy efficiency, the Energy Conservation Act 2001, was amended in 2010. One of the key amendments was that the government might issue energy savings certificate to the designated consumer whose energy consumption is less than the prescribed norms and standards.
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