18 Nov 2008;business-standard.com:Ranju Sarkar:Mumbai: After commercial vehicle and two-wheeler makers, it could be the turn of car- makers to undertake production cuts on flagging demand as slowdown, high interest rates and shrinking availability of finance mar consumer sentiment.
Some vendors say Maruti Suzuki may take a 5-8 per cent production cut this month as well as in December, though a company official ruled out such plans.
In fact, vendors say that many auto manufacturers have already implemented a 20-40 per cent output cut in October on select models, which is likely to continue.
“Barring Maruti and Hyundai (which has export support), several manufacturers undertook 20-50 per cent production cut in October on select models,’’ said a senior executive with a leading Delhi-based auto parts supplier.
Most car manufacturers, however, denied undertaking production cuts. Vendors, who shared manufacturer-wise production cuts figures with this newspaper, feel the production cuts are aimed at keeping inventory levels under check.
Car sales declined 6.59 per cent in October, dropping for three of the last four months even as overall automobile sales fell 14.42 per cent last month, led by truck and bus sales (down 50 per cent) and two-wheelers (down 18.17 per cent).
“Maruti is moderating production in line with stockholding of its dealers,’’ said the CEO of a Delhi-based vendor. Though festivals in October and marriages in November helped boost sales, December promises to be a tough month for dealers.
“Banks have become cautious (as they can’t send people to repossess vehicles) and are rejecting 20 per cent of the auto loan applications,” said Raj Chopra, CEO, Competent Automobiles, a large dealer for Maruti in Delhi and North India.
This could, felt Chopra, bring down sales by 15-18 per cent as 90 per cent of the car purchases are financed. “December will be the real test. Sales are likely to drop 15 per cent in December because of rejections by banks,’’ said Chopra.
“The feedback that we are getting from car-makers is that the slowdown has hurt sentiment and customers are opting not to buy new vehicles and save money,’’ said a senior executive with OEM supplier, who didn’t wish to be identified.
Given the uncertainty, car makers are often revising their production plans twice a month while they never used to do so even once earlier. Maruti provides a tentative production plan for a month and a firm plan for 15 days, said vendors.
“There’s nobody willing to commit for 2-3 moths. Almost every plan undergoes change in 15 days, depending on the stock-level of dealers. It’s difficult to look beyond one month,’’ said another CEO of an auto-parts manufacturer.
Typically, December is the worst month for sales as customers defer purchases in the year-end, which has a bearing on the resale value. Some have deferred their purchases to buy new models, which will hit the market in the next two months.
“If interest rates come down, it won’t take much time for a revival. It’s the reluctance of the banks and high interest rates that are holding back customers,’’ said Ashok Taneja, president, Shriram Pistons.
17 Nov 2008;business-standard.com:New Delhi: Unperturbed by the slowdown in the auto sector, India's largest car-maker Maruti Suzuki India is going ahead with its hiring plans and expects to have a total staff strength of 7,350 by the end of the year.
The auto-maker’s total headcount is currently 7,200.
"We plan to have a total employee strength of 7,350 by the year-end," Maruti Suzuki India (MSI) Managing Executive Officer Administration (HR, Finance and IT) S Y Siddiqui said.
The move comes at a time when the slowdown in the auto industry had made other vehicle manufacturers such as Tata Motors disengage 700 temporary workers at its Jamshedpur plant.
MSI is also in the process of strengthening its research and development (R&D) strength to 1,000 by 2010 as it seeks to develop its R&D capability equivalent to parent Suzuki Motor Corp in Japan.
"We will hire another 30 to 40 employees in our R&D team, taking the total to 740 by year-end," Siddiqui said. Now, the company has 570 engineers at its research and development division.
To lure buyers, cars to come out with Made-in-India tag
17 Nov 2008;business-standard.com:Swaraj Baggonkar:Mumbai: Global car manufacturers are charting out plans to cement their position in the country by building an all-India car that is tailor-made to suit the preferences of the Indian buyer. This move comes close on the heels of growth in developed auto markets such as the US and Europe dipping in the red. Companies such as General Motors, Maruti Suzuki (MSIL) and Volkswagen have either commenced work on the ‘Made-in-India’ car or are in the final stages of drafting the plan. While MSIL and Volkswagen have announced their strategies, GM said that a project involving a car model built entirely out of India has a ‘strong possibility’ in the next few years. GM India President and Managing Director Karl Slym said, “There is a strong likelihood that a car will be built entirely in India considering the strong presence we have here. Our Bangalore technical centre will play a pivotal role if that happens. However, the car will not be restricted just to the Indian market. It will be exported too.” A Made-in-India car is the one, which will be developed almost entirely in the country, using the technical expertise and know-how of Indian engineers. Although finer details are yet to be worked out, GM said it will not face any financial difficulties in carrying out the plan even as its parent company, the US-based General Motors Corporation, is close to bankruptcy. As Maruti prepares to increase the headcount of engineers to 1,000 by 2010 to facilitate the India-built car, Korean auto major Hyundai has launched the i10, which was partially designed keeping the emerging markets such as India in focus. Hyundai launched the car in India first, before exporting it to foreign destinations. Although the recently unveiled A-Star of MSIL owed its success to Indian engineers and designers, the car still had a lot of Japanese technology involved. Similarly, the Swift hatchback, which is also called the world car, was developed with the help of Indian engineers based in Japan. Volkswagen, the German auto giant, will also build an ‘India car’ from scratch, the plans of which are in the developmental stage currently. The project will involve various levels of engineering such as design cues, architecture, manufacturing process and engine development among many other necessary aspects. Analysts say that global auto companies are now focusing on developing new models for emerging markets like India with main focus on containing costs. The cost of development in India is considered to be the lowest in the world. “Instead of reworking and fine-tuning their international models, mainly compact cars, companies are not shying away from investing into India for the development of new models. Besides, some of the Indian models such as Hyundai i10 and Suzuki AStar (Alto in overseas markets) are hot favourites in places like the Europe,” stated a Mumbai-based analyst. Currently, seven out of every 10 cars sold in the country are compact cars ranging from Rs 2.50 lakh to Rs 4.5 lakh. Experts say that the contribution of small cars will stagnate over the next few years not considering the ultra-low cost cars from Tata Motors and Bajaj Renault and Nissan among others.
16 Nov 2008;economictimes.indiatimes.com:MANAMA: Bahrain and neighbour Saudi Arabia will look into expanding an oil pipeline connecting the two countries, a senior Bahraini official said in
remarks published on Sunday.
The countries plan to expand the oil pipeline capacity to 350,000 barrels per day (bpd) from 235,000 bpd, Bahrain Petroleum Company (Bapco) Chief Executive Abdulkarim al-Sayed told local newspaper Al Watan. The project was likely to cost between $300 million and $350 million, Sayed said.
The company contracted to study the proposal will advise on the project and prepare a preliminary engineering report on the route of the pipeline and its size, he said. Bahrain plans a $2 billion expansion of its Sitra refinery, to boost capacity to around 360,000 bpd beyond 2016 from around 260,000 bpd.
The expansion depends on obtaining increased supplies from Saudi Arabia through the pipeline. Output at the Sitra refinery stood at around 271,000 bpd in the first nine months of the year, Oil Minister Abdul-Hussain Ali Mirza said in comments published in local paper Gulf Daily News on Sunday.
That was slightly above nameplate capacity. Bahrain's share of output from the Abu Saafa oilfield stood at around 149,867 bpd in the first nine months of the year, Mirza said. Saudi Arabia pumps Bahrain's share of the oil from Abu Saafa through the pipeline. Bahrain also buys Arab Light crude from its neighbour to process at the Sitra refinery.
Bahrain's gas production rose 5.8 per cent to 32.22 billion cubic feet during the first nine months, the minister said. Production at Bahrain's onshore Awali oil field, the first oil find on the Arab side of the Gulf in 1932, dropped 5.4 per cent to 32,818 bpd during the same period, Mirza said.
The Gulf Arab state plans to double output at the Awali field by bringing in international oil companies to tap deeper layers of oil.
15 Nov 2008;timesofindia.indiatimes.com:Sanjay Dutta:NEW DELHI: Less than a month after getting a reprieve from the government on their fuel bills, private carriers have got embroiled in a fresh
dispute with state-owned oilmarketing firms. The carriers are refusing to provide a collateral for the extra 30 days credit period granted by the oil ministry, even as they have so far failed to pay the first instalment of past dues, the deadline for which ends on Sunday.
After the carriers ran up dues of of Rs 2,926 crore, out of which Rs 2,131 crore was beyond the 60-day credit period, the government stepped in to end the impasse on October 22. At a meeting called by oil minister Murli Deora, which was attended by civil aviation minister Praful Patel, the credit period to airlines was extended by 30 days to 90 days for fuel that was to be sold thereafter. The commercial terms were to be worked out between the companies.
For past dues, it was decided that the carriers will clear the outstandings in six equal instalments which they will pay every 26th day from the day of the meeting. On the day of the meeting, Naresh Goel's Jet Airways had an outstanding of Rs 1,576 crore, out of which Rs 321 crore was beyond credit limit. Industrialist Vijay Mallya's Kingfisher Airlines owed Rs 983 crore, of which Rs 924 crore was beyond the credit period. Government's own National Aviation Company of India Ltd, which flies under Air India brand and did not have any credit period, had an outstanding of Rs 886 crore.
Even as the deadline for the first instalment looms, the carriers are refusing to give collateral such as a bank guarantee or a post-dated cheque to cover the fuel sales in the 30 days of extra credit period. The airlines are taking the plea that no such mechanism was discussed at Deora-Patel's meeting. The oil companies, who themselves are reeling under mounting losses, are playing twice-shy after being bitten once over fuel sales to the carriers.
‘‘It was discussed (at Deora's meeting) that the commercial terms for extended credit period will be discussed between the companies. The 60-day credit period was covered through some or other mechanism that oil firms had worked out with individual carriers. The carriers defaulted on 60-day credit. How can they be given fuel for 30 more days without cover?'' an oil ministry official asked.
15 Nov 2008;business-standard.com:Mumbai: General Motors India has tied up with Bharat Petroleum Corporation (BPCL) for establishing Chevrolet authorised service centres at select BPCL workshops called “V CARE”. BPCL has opened service facilities at select fuel retail outlets.
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