Auto sales dip after seven straight years of growth

After seven straight years of growth, the Indian automobile industry declined 4.7% to 96.48 lakh units in 2007-08 against 1.01 crore units in the previous financial year. The automobile industry, which was plagued by high interest rates affecting local consumer demand, credit squeeze and rising input costs, interestingly reported a robust growth in exports (22.3% growth to 12.37 lakh units in FY08 as against 10.11 lakh units in last fiscal.) According to figures released by the Society of Indian Automobile Manufacturers (SIAM) yesterday, the total production declined 2.29% to 1.08 crore units against 1.11 crore units in FY07 as demand remained low.

The industry was largely impacted by the steep decline in two-wheeler sales, which reduced 7.92% to 72.48 lakh units in FY08 against 78.72 lakh units the previous year. Motorcycles proved to be the biggest dampener. It declined 11.90% to 57.68 lakh units in FY08 as against 65.47 lakh units of the previous year. Scooter sales, however, remained positive and grew 11.64% to 10.50 lakh units in FY08. Mopeds, on a slightly lower base, grew 16.63% to 4.13 lakh units in FY08 against 3.54 lakh units of the previous year.

Passenger cars sales, increased by 12.17% to 15.47 lakh units last year against 13.79 lakh units clocked in FY07. More than 50 new cars launched in the last fiscal pushed sales as the mid-size cars segment Maruti SX4, Tata Motors Indigo, Hyundai Verna grew the highest at 14.6% to 2,25,719 units while the B segment Maruti Swift & WagonR, Hyundai Santro & i10, Tata Motors Indica grew 14.1% to 8,59,137 units. More than 60 new cars and models are expected to hit the market in current year, which is likely to keep the sales momentum going.

The commercial vehicle market posted positive sales on the back of strong sales growth in light commercial vehicles (LCV) and buses. The total LCV market grew 12.29% to 2,15,823 units last fiscal and buses grew 34.72% to 38,655 units.

The industry is fighting the credit squeeze problem in the market, which has affected much more than the prevailing high interest rates. The lack of finance in semi-urban and rural areas and the rising fuel cost are worrisome trends and are likely to hit the industry in the current fiscal too.

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Tata Steel and MMTC plan SPV to buy gold mines overseas

India’s largest private sector steel maker Tata Steel is forming a special purpose vehicle (SPV) with state-owned MMTC for acquiring gold and diamond mining businesses abroad. MMTC would hold 26% stake in the proposed venture, leaving 76% to the Tata Steel.

The venture is likely to start operations by acquiring mining rights for diamond in Angola and Namibia before venturing in other African markets. The SPV would also explore business opportunities in iron ore and coal mining abroad through acquisitions or fresh mining rights. India is the world’s largest importer of diamond and gold with imports to the tune of $10 billion in each category. The joint venture between Tata Steel and MMTC would aim at acquiring mining rights for these minerals mainly in African markets with the aim of reducing country’s import dependence. While African markets would be the prime focus of the venture, it would also explore mineral rights in Australia, Brazil, Russia and Indonesia.

While MMTC is likely to bring its expertise in mineral trading and mining into the venture, Tatas would infuse cash to help the SPV to place aggressive bids for mining rights. The joint sector SPV is being conceived on the lines of a coal SPV formed in collaboration with five PSUs including SAIL and NTPC.

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Areva T&D targets to double turnover; to invest Rs 700 crore

Power equipment maker Areva T&D (India), which is investing Rs 700 crore to put up three greenfield manufacturing plants, is eyeing to double its sales turnover in the next two to three years. Indian subsidiary of the French major, had recorded a sales turnover of Rs 2,000 crore in the last year, up by 24.9 per cent over 2006. It has eight existing manufacturing facilities in India. Its greenfield projects are coming up at Hosur, Baroda and Padappai. The company has upwardly revised its investment plans in these plants to Rs 700 crore from Rs 500 crore earlier.

The transmission and distribution business in India will continue to grow since modernisation of grids & interconnections and new generation capacity are taking place in the country. Transmission contributes 60 per cent of Areva T&D’s total business.

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