18 Feb 2010;business-standard.com:Swaraj Baggonkar:Mumbai: Auto makers, who enjoyed a record-breaking sales run over recent months, are now bracing themselves for upheaval, led primarily by changing government policies and rising inflationary pressures. Most companies — Mahindra & Mahindra (M&M), Tata Motors, Maruti Suzuki, Ashok Leyland, Hyundai — have already raised vehicle prices and are actively contemplating another round of hikes in the coming months. The first round of raises was only in the region of 1 to 3 per cent and primarily on the back of increased commodity prices. It will be much higher in the second round, as a partial rollback of excise duty and rollout of the new and expensive series of BS-IV engines from April 1 seems inevitable. Besides, companies are willing to sacrifice on volumes, which will be felt through price hikes in the coming months than have an impact on their margins, according to a senior executive in M&M. Industry sources expect a 2 per cent rise in excise duty in the Union Budget. Further, steel makers are in the process of raising prices by 5-8 per cent in the coming weeks. In addition, analysts believe that due to large instances of pre-buying of vehicles in December, January and the current month, there will be a lag period in the first quarter of next financial year, which will impact cash flows of manufacturers. C R Ramakrishnan, chief financial officer, Tata Motors, said: “There are some short-term challenges facing the industry: Hardening of interest rates, possible withdrawal, gradually, of the stimulus support the government provided to revive the economy. We do have some lack of clarity on the exact introduction of the emission norm and commodity price increase continues to be a concern. These are some challenges immediately facing the industry, which will have pressure on the performance.” The executive was speaking to analysts on a conference call. The proposal by the Kirit Parikh report to impose an additional excise duty of Rs 80,000 on all diesel vehicles (primarily passenger vehicles), if accepted even partially, would greatly affect sales. Diesel-run vehicles constitute a major portion of the line-up of Indian manufacturers like Tata Motors and M&M. Pawan Goenka, president - automotive, M&M, said: “If the government is unable to generate revenue on its own, then it’s unfair to lay down additional excise duty specifically on diesel engines. This will have a very negative impact on sales, as nobody would consider the price differential of close to Rs 200,000 (between the two class of vehicles, petrol and diesel). The government can equalise the prices of both fuels by cutting the subsidy on diesel.” Most companies who passed on the price rise in commodities to the consumer in January had exercised restraint in passing on the full impact of the increase, to maintain the sales momentum which started in October. “We have not fully factored in the rise in cost of input materials through the 1-1.5 per cent increase we had made on the vehicles. We will continue to look at opportunities for further price increase,” said Ramakrishnan. The Reserve Bank of India had signalled that it intended to control inflation through tightening money supply in the financial system. It had raised the cash reserve ratio by 75 basis points last month, leaving the repo and reverse repo rates unchanged. Experts feel that with a rise in the number of non-performing assets (NPAs) over recent months, banks will be forced to clamp on frivolous lending to curb NPAs, while imposing stricter lending criteria.
17 Feb 2010;dailypioneer.com:Rakesh Bihari Jha:New Delhi: US car maker Ford, which is all set to join volume segment in India with its small car ‘Figo’, will phase out its hatchback ‘Fusion’. “We will discontinue the Fusion...The car was anyway giving us relatively small volumes,” said Ford India Managing Director and President Michael Boneham, adding, “the company will focus on small car Figo, which will be launched in March.” In a very bold move, Ford on Tuesday opened 28 dealerships across 24 cities in the country, as it is getting fully prepared to cope up with the anticipated high demand of its small car Figo. The Figo will feature a standard 1.2-litre engine and will be available in the 1.4-litre diesel engine as well. New facilities have been opened in New Delhi, Sangrur, Haldwani and Gwalior in the North; Durgapur, Dhanbad and Guwahati in the East; Hyderabad, Chennai, Warangal, Vellore, Salem, Vijayawada and Malappuram in the South; and Bilaspur and Mehsana in the Western region. “We will increase our network further by 15-20 per cent this year and we have an aggressive growth strategy in Tier II and III cities,” Boneham said. Ahead of the launch, Ford has added new dealers to take the total to 164, across 97 cities. “With the openings today, 40 per cent of our dealers are now in secondary markets and we will further increase it,” he added. The commercial production of Figo has started at the Ford’s Chennai plant from February 5. The plant has a capacity to produce 2,00,000 units annually. The Chennai facility will produce both petrol and diesel engines in a flexible assembly line, along with four cylinder engines with capacities varying up to 1.6-litre for export. When asked about what is the outlook for the company this year, he said: “We will have significant growth this year also and the company hopes to grow in the range of 15-20 per cent.”
17 Feb 2010;economictimes.indiatimes.com:DETROIT: Ford Motor Co said on Tuesday that it plans to cut 900 workers at the Michigan plant that makes the Mustang, after slow sales last year due to the tough economy and competition from the new Chevrolet Camaro. Ford will reduce shifts from two to one in July at the AutoAlliance International plant in Flat Rock, Michigan. The plant, which is jointly owned with Mazda Motor Corp, also makes the Mazda6 midsize sedan. The plant employs nearly 2,300 people. Most of the layoffs will be hourly manufacturing workers, but some salaried staff also will be cut, Ford spokeswoman Marcey Evans said. Evans said there was significant down time at the plant last year and Ford can get the volume it needs from one shift. Mustang sales fell 27 percent last year, in part because of competition from the Camaro, which went on sale in the spring and came within 5,000 cars of outselling the Mustang. The Camaro hasn't outsold the Mustang since 1985. Mazda6 sales were down 34 percent. Evans says a majority of the workers will be offered positions at other plants. Ford said last month it will hire 1,200 workers at its Chicago Assembly Plant to build the new Ford Explorer. Explorer production will start at the end of this year. Ford also recently announced a plan to create 1,000 jobs in Michigan to make electric car batteries. Evans said the company also needs workers at the Michigan Assembly Plant in Wayne, Michigan, which is scheduled to begin producing the new Ford Focus later this year. Ford currently has around 600 workers on indefinite layoff in the US Those workers and the ones to be laid off at Flat Rock will have the first opportunity to take jobs at facilities that are hiring. The company has been trying to thin the ranks of hourly workers, most recently offering buyout packages to all 41,000 US hourly workers in December. Around 1,000 workers took similar buyout offers last year.
OilMin preparing Cabinet note for 44% rise in APM gas
17 Feb 2010;business-standard.com:Ajay Modi:New Delhi: The Union petroleum ministry is ready to take the issue of price revision in administered price mechanism (APM) gas to the Union Cabinet, with a recommendation for a 44 per cent increase in the price, retrospective from April 1, 2009. This would benefit government-owned Oil and Natural Gas Corporation (ONGC) and Oil India Ltd. The proposed rise in the price of natural gas sold under the APM by these companies would take it to $2.6 per million British thermal unit (mBtu). The ministries of fertiliser and power have, however, opposed any price hike in APM gas. The two sectors together account for 75 per cent of APM gas consumption. "We have received comments from the ministries concerned and a final note for the approval of the Cabinet will be sent," said a petroleum ministry official. The APM gas price hasn’t been raised since July 2005, when it was increased by 20 per cent. The increase would mean an increased fertiliser subsidy burden. The retail prices of fertiliser are capped by the government and any increase in input cost is offset as subsidy. The difference between cost and the maximum retail price (MRP) is released as fertiliser subsidy to manufacturers and importers. The fertiliser subsidy from April till mid-November of 2009 was Rs 38,760 crore. In case of power, thoughm any increase in input can be passed on to consumers. According to the draft note, the petroleum ministry is proposing a price of $2.6 per mBtu, against $1.8 per mBtu now. The gas produced from Reliance Industries Ltd's KG-D6 field, allotted to it under the New Exploration and Licensing Policy (Nelp), is sold at a base price of $4.2 per mBtu. ONGC incurred an underrecovery of Rs 4,745 crore during 2008-09 on its gas revenues of Rs 5,800 crore. The proposed increase will help ONGC in cutting its losses. APM gas is produced from the ‘nominated’ fields, allotted (to government companies) before introduction of the Nelp in 1999. At 45 million standard cubic metres a day (mscmd), APM gas currently accounts for over 34 per cent of the country’s 130 mscmd gas availability (which includes the latest production from Reliance Industries’ Krishna-Godavari basin). However, the share of APM gas in total availability has been falling gradually.
16 Feb 2010;hindustantimes.com:Anupama Airy:New Delhi: The country's largest fuel retailer Indian Oil Corporation (IOC) is planning to open 24-hour C-stores (convenience stores) at its petrol pumps. With the largest network of 18,700 petrol pumps across the country, Indian Oil Corporation (IOC) says it wants to expand its foot prints into organised retail. The oil company has entered into a pact with K.K. Modi’s Godfrey Phillips for opening such C-stores in northern India. “This is our beginning in organised retail,” said IOC’s chairman and managing director, Sarthak Behuria. “So far we had a loose structure with individual tie-ups with banks or mobile operators and restaurants,” he added. “We are now beginning to look at tie-ups with companies that already have a presence in the retail side. Godfrey Philips is already operating an extensive retail format in Delhi under the brand Twenty Four Seven.” In the first phase, 100 such C-stores will be opened in major cities of North India. “We will enter into similar tie-ups with other retail chains for other regions of the country.” These stores will stock a range of consumer goods including ready to eat foods, music, magazines and would even offer movie tickets. On how different will these stores be from the existing ones, Behuria said, “There aren’t many stores offering round-the-clock service. We have undertaken studies that have shown that there exists a large clientele who wants such service beyond 10 pm.”
15 Feb 2010;economictimes.indiatimes.com:Rajeev Jayaswal & Subhash Narayan: NEW DELHI: Country’s only international fuel retailer Shell India has silently ramped up its petrol pump network to 74, a 50% jump in just one year, even as other private retailers fret about the lack of level playing field in the retailing business between the private players and government-owned companies. After getting a licence to open 2,000 retail outlets in India in 2004, Shell opened only 50-odd pumps in over four years, citing predatory pricing by state-owned competitors — Indian Oil (IOC), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL). A Shell official confirmed that the company has increased the number outlets and said Shell India has aggressive expansion plans. “We have 74 (retail outlets) up and running. A few more are in the process of commissioning,” the official, who did not wish to be named, said. Petrol and diesel sold at Shell pumps are costlier by Rs 2-5 a litre (depending on the location), compared with those sold at a public sector fuel station. It could not be ascertained whether Shell India has achieved break-even in its fuel retail business. The privately-held company declined to reveal its accounts and other details. The company, which does not have a refinery in the country, buys petrol and diesel from Mangalore Refinery & Petrochemicals (MRPL) and sells through its pumps. “The company’s retail operation is running on reputation. As fuel retailer, it is the best in the country,” an oil sector expert and CEO of a private-sector refinery said requesting anonymity. Shell India’s growth is in sharp contrast to Reliance Industries’ (RIL) fuel retail business. “Only 600 pumps of RIL are functional today, mainly in Rajasthan, West and South India,” a company official said on condition of anonymity. At present, the company has about 1,400 retail outlets, he added. Interestingly, another private sector company Essar Oil is planning to nearly double its retail network. “We are going to increase (number of petrol pumps) to 2,500 by next fiscal (end),” Essar group chairman Shashi Ruia said in Delhi recently. “It is likely that the private oil companies are expanding their retail business in hope that the government will soon deregulate pricing of auto fuel,” an official in IOC said. All the three private firms declined to comment on this issue. The government is expected to take a decision on freeing prices of petrol and diesel by Sunday or next week, a senior official in the oil ministry said. “I have submitted a memorandum (regarding pricing of petrol, diesel, kerosene and cooking gas) to the Prime Minister and the finance minister,” oil minister Murli Deora said. “We have also requested them (PM and FM) to compensate PSU oil companies the shortfall on account of SKO (kerosene) and LPG (cooking gas) for the current fiscal,” he said. The finance ministry has paid a cash compensation of Rs 12,000 crore to public sector oil retailers for the entire financial year, leaving a gap of around Rs 19,000 crore in their books.
Petrolstop is a division of Car Fuel Info Solutions, LLC Petrolstop.com is a registered trademark owned by Car Fuel info Solutions, LLC Website Design by Onazari Technical Solutions
