09 August 2011;timesofindia.indiatimes.com:NEW DELHI: The government on Tuesday said that prices of petrol and other fuel could be lowered if global crude prices continue to slip further. A fall in crude prices would also help the government bring down its subsidy bill on fuel which would help curb the fiscal deficit. The government has projected the fiscal deficit at 4.6 per cent of GDP for 2011-12. "We are not fully satisfied with the downward movement from $107 per barrel to $102 per barrel, the prices are still reasonably high," said Finance Minister Pranab Mukherjee. "We hope prices of oil and other commodities will come down further, which will help us to manage inflation and also help in reducing subsidy on oil," he added. Global crude oil prices have been falling after credit rating agency Standard and Poor downgraded the sovereign debt of the US. Speaking on the decline, Petroleum Minister S. Jaipal Reddy also said that if the prices fall any further it will be passed on to the consumers. "If the prices globally come down sharply and in a stable way, naturally the prices of petrol would be adjusted downwards," Reddy told reporters. Petrol prices have been de-regulated and now oil marketing companies price the fuel on the retail level according to global movement of crude. This has led to sharp increases in the petrol prices. Other fuels like diesel, kerosene and cooking gas are still under government control. The petroleum ministry had hiked prices of fuel in June as global crude oil prices shot up. A dip in prices of fuel will also have a sobering effect on high inflation, which has been troubling policymakers for over two years.
Hindustan Motors aims 5-fold increase in vehicle sales by FY14
08 August 2011;economictimes.indiatimes.com:KOLKATA: Ailing C K Birla group company Hindustan Motors today announced five-fold increase in vehicle sales to 50,000 by 2013-14 which would help the company to turnaround. "We are expecting a rapid increase in sales with all these new launches. By 2013-14 we will hopefully sell about 50,000," HM Managing Director Manoj Jha said here. HM has sold about a total of 10,000 units in the last fiscal. "Our focus is more on commercial vehicle segment now. The sales ratio of passenger vehicles and commercial vehicles is about 80:20. We this will be around 50:50 in couple of years time." The company has three plants -- at Uttarpara in West Bengal, Tiruvallur near Chennai and Pithampur in Madhya Pradesh. Five vehicles would be launched during the current fiscal, Jha added. The company today launched small commercial vehicle 'Veer'. Four more vehicles will also be launched this year from both Uttarpara and Chennai plants, Jha said. Apart from two more commercial vehicles to be launched, Jha said, "By the third quarter we will introduce, a seven-seater Outlander from the Chennai plant. We are also working on another brand new sports utility vehicle (SUV) from the facility. This may come some time in January next year."
Oil plunges below $84 after S&P downgrades US debt
08 August 2011;timesofindia.indiatimes.com:SINGAPORE: Oil prices sank below $84 a barrel Monday in Asia after Standard & Poor's lowered the US credit rating, a blow to confidence that could hurt economic growth and demand for crude. Benchmark oil for September delivery was down $3.27 to $83.61 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. Crude rose 25 cents to settle at $86.88 on Friday. In London, Brent crude was down $2.46 at $106.91 per barrel on the ICE Futures exchange. Oil plunged after Standard & Poor's announced Friday it was lowering its rating for US debt one notch from AAA to AA+. Investors are concerned the first-ever U.S. debt rating downgrade will batter already weakening consumer confidence and hurt economic growth. Crude has dropped from $100 last month and near $115 in May. "A drastic weakening of sentiment has brought oil prices down sharply, with sovereign debt fears key in a mounting loss of faith in economic, and hence demand, prospects," Barclays Capital said in a report. Crude traders often look to stock prices as a barometer of overall investor confidence, and oil prices were swept down Monday by a major sell-off across Asian stock markets. Despite growing fears of a recession in the US, some analysts expect global economic growth to remain robust, supporting oil prices. Goldman Sach recommended investors buy the Brent December 2012 futures contract, forecasting Brent will average $130 next year. "We maintain that commodity markets will continue to tighten as long as global economic growth remains broadly positive and the emerging market economies in particular continue to perform," Goldman Sachs said in a report. "We expect that the market will continue to tighten to critical levels by 2012, pushing oil prices substantially higher to restrain demand." In other Nymex trading in September contracts, heating oil fell 6.2 cents to $2.88 a gallon while gasoline dropped 6.5 cents at $2.74 a gallon. Natural gas futures slid 5.0 cents at $3.89 per 1,000 cubic feet.
Japanese car companies like Honda, Maruti Suzuki & Toyota start a price war after dip in July sales
08 August 2011;economictimes.indiatimes.com:Chanchal Pal Chauhan:NEW DELHI: Japanese carmakers Honda, Maruti Suzuki and Toyota have taken the lead as the Indian car market speeds into an imminent price war after slipping into the negative zone for the first time in 30 months in July. Honda Siel, which slashed the price of its flagship City sedan by up to Rs 66,000 last month, will soon launch a new version of its Jazz hatchback with a much more affordable price tag - dealership sources say it will be around Rs 6 lakh, or more than Rs 1 lakh less than the previous model that was sold out last month through a huge discount offer. Maruti Suzuki too will introduce the new version of its popular premium hatchback Swift with several added features including variable valve timing (VVT) for added power in the petrol engine, fiber fuel tank for lighter weight, tilt steering and indicators on side mirrors in the new car that is bigger by 40 mm for extra legroom for its passengers. The new changes in the specs will make the car more punchy against new entrants like Polo and i20 that carry more features than the outgoing Swift and will be launched on 17 August, but without much increase in price. Toyota has already introduced its entry-level Etios sedan and Liva hatchback at prices lower than most competitors. Infact, Liva is priced much cheaper at Rs 3.99 lakh than its competition like Maruti Swift and Skoda Fabia. "There has been some rapid changes in the market. Earlier, it was Toyota with the killer pricing of its new Etios, and then Honda cut prices of its top selling cars. Now Maruti is expected to bring top-line with some aggressive prices," said Abdul Majeed partner automotive practice, Pricewaterhouse Coopers.
Enforcing dual pricing of diesel to be difficult, says oil marketing cos
08 August 2011;business-standard.com:Shuchi Srivastava:MUMBAI: Any move to sell diesel at higher prices to large cars and at subsidized rates to trucks would be difficult to implement and create a black market for the fuel, top officials at state-run oil firms said. Diesel is widely used in irrigation pumps, agricultural equipment, trucks and buses prompting the government to price it much lower than petrol. But this policy also helps owners of luxury cars and SUVs that also use diesel. Finance Minister Pranab Mukherjee said in Parliament that the government can consider such a system that will stop low-cost fuel sales to the rich. "Dual pricing for diesel is just not feasible right now because it is impossible to control or monitor the actual end-use of diesel sold to luxury vehicles or trucks deployed in the agricultural value chain," said PK Goyal, director, finance, Indian Oil Corporation (IOC). S Varadarajan, a director at Bharat Petroleum Corp Ltd, agreed. "Across fuel retail outlets only 10-15% of the bulk of diesel sales is consumed by passenger vehicles. So this move towards dual pricing is surprising, especially as execution would be a major operational issue at the pump level," he said. "Dual pricing for diesel is impractical as it is difficult to execute," said B Mukherjee, director, finance, HPCL. An oil industry official said that unless a proper marker system is introduced at fuel stations, dual pricing would lead to rampant black-marketing. Currently diesel prices are nearly Rs 7 per litre lower than international rates. On an annualized basis it would amount to Rs 52,365 crore out of the total fuel subsidy estimated at Rs 1,14,336 crore in the current fiscal.
08 August 2011;timesofindia.indiatimes.com:Piyush Pandey & Partha Sinha: MUMBAI: The global uncertainty after the US could lead to a fall in the prices of crude oil, which could turn out to be a blessing for the oil marketing companies (OMCs) in India, especially the PSUs. Over the last few days, mainly after the US data showed its economy was slowing again, the stocks of Indian Oil, BPCL, HPCL and Mangalore Refineries have gained. Besides, private refiners like RIL and Essar Oil will also gain from low crude oil prices. On Friday, the shares of HPCL and BPCL gained about 2% each and IOC gained about 1%, while the benchmark sensex fell over 2%. This came as brent crude oil prices, which have been trading around the $110 a barrel range, slid near the $100 level on Friday. If there are further signs of weakness in the US economy, the price could go below the triple-digit mark, and that would be comforting for Indian OMCs. "Its very difficult to predict crude oil prices but India will be quite comfortable with crude oil prices hovering around $90 a barrel," said R K Singh, CMD, BPCL. However, for the April-June quarter, state-owned OMCs are expected to pose losses, mainly because of the high crude oil prices during those months and also because the higher costs could not be passed on to the consumers in full. These firms are still selling diesel, kerosene and cooking gas below market prices. "The fall in crude is seen as a positive for three OMCs and for ONGC and OIL India," said investment advisor S P Tulsian. "OMCs will have lower under recovery while upstream companies will have lower under recovery sharing, which may even see them realizing about $55 per barrel as well," Tulsian said. The stocks of OMCs could get a further boost if the government moves ahead in deregulating petro-product prices. "For an investment horizon of 18-24 months, we expect the OMCs to outperform all the other sector large caps driven by potential government measures for eventual elimination of under-recoveries, either through deregulation or through ad hoc decisions on price/duties," Alok Deshpande of Elara Capital noted in a research report. The broking house has set a price target of Rs 800 for BPCL, Rs 400 for HPCL and Rs 365 for IOC, indicating returns of over 15% in each of these stocks. Another positive news for OMCs is that an empowered group of ministers is expected to meet on Monday to review the global crude oil prices, its impact on India and measures to protect revenues of OMCs. India, which imports over 80% of its crude oil requirement, is worried as prices soared from $68 a barrel in May 25 last year to $122 in just one year. And the government estimates fuel subsidy bill for the current financial year at over Rs 1.2 lakh crore.
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