Indian car makers yet to take call on Ssangyong Motor
Friday, 06 August 2010
06 August 2010;business-standard.com: Indian automakers bidding for Ssangyong Motor, the troubled South Korean company, have kept the automobile industry guessing. While Kolkata-based Ruia Group today said it would take another three days to take a call on this issue, Mahindra & Mahindra (M&M) said it had time till August 10 to decide on the bid. M&M also denied media reports that the company’s board was meeting today to decide on this issue. The six shortlisted contenders, including Renault-Nissan and other local companies, have to submit their bids by August 10. “I have visited South Korea and seen the plant, but we are yet to make a decision. We will need another three days,” Ruia Group Chairman Pawan K Ruia said here. He explained that four specific issues were being looked into: future cash flows of Ssangyong, profitability of the carmaker, stand-alone manufacturing capacity of the plant, and the territories where the company had a presence and the possible expansion of these markets. “We have started talks for funding, and have found positive indications for this.” Although Ruia was unwilling to talk about the possible valuation of Ssangyong, he said media reports on the same were based on the market capitalisation of the company, which currently stood at $400 million. He had earlier told Business Standard that the acquisition, if undertaken, would be a leveraged buyout. “We are excited by some of the facilities. I have no doubts on the quality of the product(s),” Ruia said. Ssangyong Motor has been under court-led bankruptcy protection since early 2009 after suffering cash exhaustion. The company is the fourth-largest car maker in South Korea, although its market share is just 2 per cent. It manufactures sport utility vehicles (SUVs), recreational vehicles and sedans. Pawan Goenka, president, automotive and farm equipment sector, M&M, said, “We still have time to decide whether we should put in a bid for Ssangyong or not. We have not finalised on what should be the extent to which we should bid for it. Although the company has great synergies for us, but we are yet to finalise its financial viability.” A spokesperson at M&M said there was no board meeting due on Thursday to decide on its bid for Ssangyong. “The board had asked for more information before making a decision. I would think a decision will be made closer to the deadline,” the spokesperson said. Ruia Group buys German company The Rs 3,000-crore Ruia Group on Thursday announced the acquisition of its third overseas company, Germany’s Gumasol-Werke, for an undisclosed sum. The company manufactures solid tyres, rubber components and rubber-to-metal components. “This is our second acquisition in less than two years. Gumasol has several patents and high-tech products. We will concentrate on putting things in order and move operations to India,” Ruia Group Chairman Pawan K Ruia said. The group had been able to acquire Gumasol in an “asset deal”, Ruia said, after the company filed for an insolvency last December.
06 August 2010;dailypioneer.com:New Delhi: In yet another blow to the Centre’s plans on the proposed GST, the states on Thursday categorically stated that petroleum products will be out of the proposed indirect tax regime, even as the Centre pressed for the same saying such a move can check wild volatility in fuel prices. “Petroleum products will be out of the GST,” empowered committee of State Finance Ministers Chairman Asim Dasgupta said here on Thursday. Addressing the Lok Sabha on Wednesday Finance Minister Pranab Mukherjee had called for the inclusion of petroleum products in proposed goods and services tax (GST) so that sharp domestic price movements can be checked. In fact, even some of the Congress States are also in favour of keeping oil products out the GST regime. Recently, Delhi Finance Minister AK Walia had said he would request the empowered panel and the Centre to keep diesel, petrol, and CNG out of the new indirect tax regime, saying keeping oil products and CNG under GST will result in financial losses to the city government that is already facing fund crunch due to the huge spend on the Commonwealth Games. In fact, a discussion paper floated by the empowered committee also talked about keeping the petroleum products out of the purview of the GST. “As far as petroleum products are concerned, it was decided that the basket of petroleum products, crude, motor spirit (including ATF) and HSD (high speed diesel) would be kept outside GST,” the paper said. In fact, petroleum products are outside even the state-level VAT. The discussion paper had said that “sales tax could continue to be levied by the states on these products with prevailing floor rate. Similarly, the Centre could also continue its levies.” It also said a final view whether natural gas should be kept outside the GST ambit will be taken after further deliberations. The empowered committee’s decision is yet another blow to the Centre’s plans over the proposed GST. Yesterday, the states had rejected the draft constitutional bill to roll out GST, a opposing the veto power of the Union finance minister over state taxation issues. The Centre has proposed a three tier-rate structure for GST--20 and 12 per cent for goods and 16 per cent for services. GST is slated to be introduced from next fiscal, after the earlier deadline of implementing it from this fiscal was missed
06 August 2010:timesofindia.indiatimes.com:NEW DELHI: Aston Martin, the hot wheels seen in many James Bond thrillers, could soon be racing on Indian roads with the British carmaker finalising plans to launch its models by the year-end. The price would, however, be as hefty as the brand's rich legacy and could run up to a cool Rs 3 crore. Aston Martin is believed to have signed an agreement with Mumbai-based Infinity Cars, a dealer of BMW, and appointed it as the company's exclusive distributor for the Indian market. Bookings are expected to open from next week and it will take about five to six months for the deliveries to start. Aston Martin will initially sell four models — V8 Vantage, DB9, Rapide and DBS — and the prices are likely to be between Rs 1.35 crore and Rs 2.8 crore, without insurance and registration charges. Aston Martin is primarily a sports cars manufacturer. Established in 1914 by Lionel Martin and Robert Bamford, the company was part of US car giant Ford from 1994 to 2007. In 2007, a joint venture company, headed by David Richards and co-owned by Investment Dar and Adeem Investment of Kuwait and English businessman John Sinders, acquired Aston Martin from Ford for a consideration of £479 million.
05 August 2010;business-standard.com:New Delhi:Mumbai: The final blueprint of the multi-crore global tie-up between Volkswagen and Suzuki Motor Corporation has started to unfold, with Maruti Suzuki looking at becoming an original equipment maker (OEM) in cars for the German automaker for markets outside India. Maruti Suzuki may forge a manufacturing deal with Volkswagen and the deal could be on the lines of its tie-up with Nissan, Japan’s fourth-largest carmaker. “Talks are on with Volkswagen. Collaboration can happen in production and product planning between the two companies. The possibility is that we will act as the original equipment maker (OEM) to Volkswagen,” said Shinzo Nakanishi, managing director and chief executive officer of India’s largest passenger vehicle manufacturer. He was speaking to reporters at the launch of an upgraded version of its best-selling Alto hatchback. Maruti Suzuki makes the Pixo hatchback, essentially the A-star, for Nissan. The company makes nearly 35,000 units of the small car every year for Nissan and the vehicle is sold as an entry-level car in Europe. Volkswagen had picked up nearly 20 per cent in Suzuki Motor last year for $2.5 billion to gain small car technology and explore different markets. Although finer details of the plan between the two companies are not known, Maruti sources said since Suzuki had extensive expertise in building small cars in Indian and Japanese markets, products for Volkswagen would be built for the same category. “There are several existing products with Suzuki, as well as product programmes from Volkswagen, which can be explored for this purpose. There are several opportunities which can be properly explored,” said a Maruti executive. Due to rising fuel costs and stricter emission norms, small cars are in good traction in Europe. While India and Japan remain as large production bases for Suzuki, the company has achieved tremendous cost efficiencies in India due to its large- scale presence. Sources said Volkswagen was sourcing technological help of Suzuki to fine-tune its compact car Up!, a concept car it had showcased three years ago. The cost of manufacturing this five-seater small car is way beyond the car models it has to compete with. Maruti Suzuki is working towards increasing its installed capacity by 50 per cent to 1.5 million units over the next five years. For this, the company will double its Manesar plant’s production capacity of to 600,000 units a year. The company achieved the manufacturing target of one million units last financial year.
Decontrol of petrol prices not enough to tame subsidy bill
Thursday, 05 August 2010
05 August 2010;business-standard.com:Jyoti Mukul:New Delhi: Despite the June fuel hike and deregulation of petrol prices, the government petroleum subsidy in the current year will be much higher than last year, creating pressure on the fiscal health of the country. The subsidy currently is Rs 17,108 crore, about 14 per cent higher than the Rs 14,954 crore given out in the entire 2009-10. This is despite the fact that the government has so far committed only Rs 3,108 crore cash subsidy to compensate oil marketing companies for their revenue loss for 2010-11. The Rs 14,000-crore subsidy approval for which the government sought parliamentary approval yesterday has already been accounted for by the oil marketing companies in the January-March quarter as receivables. In the government budget, it would be accounted this year. With global crude oil prices ruling around $80 a barrel, the government subsidy burden will rise further this year though it may postpone taking part of the burden on its books to next year. The benchmark Indian basket has breached the $75 average which was taken into account while arriving at the decision in June. It averaged around $77 from April 1 to August 2, a 10 per cent increase over $70 average in 2009-10. The Cabinet decision of fuel hike was based on a $75 average. Revenue loss on petrol at Rs 7,000 crore constituted about 10 per cent of the total underrecoveries, estimated at about Rs 72,000 crore prior to the increase in prices. Though the subsidy is now contained, the fact is that 70 per cent of the estimated underrecovery after the hike is due to LPG and kerosene pricing, that has not been decontrolled. “The decontrol of petroleum prices has not happened. Even in petrol, price should change daily alongside the international price. Still a lot of subsidy will have to be paid because of LPG and kerosene,” said M Govinda Rao, member, Prime Minister’s Economic Advisory Council. Senior executives in government-controlled oil marketing companies maintained the June decision would not change the situation substantially for the government since subsidy on petrol in any case was being provided by upstream companies last year. “The decontrol of petrol price still leaves a balance underrecovery which will have to be absorbed somewhere in the system, that is by the government, the oil marketing companies or the upstream companies. So far, we have had an ad hoc burden sharing formula. So, from that perspective, petrol decontrol is a direct relief. However, the decontrol in petrol and marginal increase in diesel, kerosene and LPG prices has been done on the assumption of a static crude oil price ($75 per barrel) which unfortunately is not true,” ONGC Chairman and Managing Director R S Sharma had earlier told Business Standard. Another official in the ministry of finance echoed his views but added that “at least a right signal has gone” that the government is open to the idea of total deregulation of petroleum prices. Petroleum Secretary S Sundareshan pointed out that without the hike, the subsidy burden would have gone up further. He said a total deregulation was not possible in one go due to political compulsions. “Whatever changes have been made are significant. We will build upon it,” Sundareshan told Business Standard. Rao said the hike did provide a cushion to some extent but if subsidy was not tackled there would be fiscal concerns and the government would need to cut expenditure on other items. “We will have to live with subsidy for some time. Politically it is not possible in the short-term but it can be made possible,” he added.
Reliance to buy 60 per cent stake in US shale-gas venture
Thursday, 05 August 2010
05 August 2010;hindustantimes.com:New Delhi:Reliance Industries on Thursday said it will buy a 60 per cent stake in a shale-gas venture in the US for $392 million, the third unconventional gas acquisition made by the Mukesh Ambani-run firm this fiscal. RIL in a press statement said it will pay $340 million in cash and $52 million in drilling cost to Carrizo Oil and Gas Inc and its partners for a 60 per cent stake in the Marcellus shale-gas areas of central and northeast Pennsylvania. RIL President for International E&P Business Walter Van de Vijver said, "Reliance is excited about the opportunity to further expand presence in the Marcellus Shale in the United States. The Marcellus Shale is a giant rock formation underlying Pennsylvania, New York and other states. "The proposed joint venture (with Carrizo) will supplement strengths achieved through our recent joint ventures and further expand our footprint in North American shale gas operations." The Mumbai-based firm had in April bought a 40 per cent stake in Atlas Energy Inc's Marcellus Shale acreage for $1.7 billion. In June, it had agreed to buy a 45 per cent stake in Pioneer Natural Resources Co's - Eagle Ford shale natural gas asset in Texas for about $1.36 billion.
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