Auto Monitor - 1-15 September 2011

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I N D I A ’ S N O . 1 M A G A Z I N E F O R A U T O M O T I V E N E W S , V I E W S & A N A LY S I S

Auto Monitor Vol. 11 No. 16

w w w.amonl ine.in

1-15 September 2011

INTERVIEW “WE WANT TO MAKE OURSELVES ACCESSIBLE TO SMBs” Suman Bose, Managing Director India, Siemens PLM

Pg 8

64 Pages

` 50

AUTOPINION TRANSFER PRICING: CUSTOMS HARMONISATION: THE NEED OF THE HOUR

Pg 14

Rubber supply mismatch may hit profitability

NEWS IN BRIEF Tata launches new Vista

T

ata Motors has recently launched the new version of its premium hatchback, the Tata Vista, which will be available at dealerships from September, 2011. The new vehicle comes with a redesigned front chrome grill, complemented with a new triple barrelled head lamp, for Tata Vista

better visibility in low-light conditions. It offers connectivity via USB, auxiliary input and bluetooth using the Blue 5 technology that helps pair up to five mobile phones. The vehicle is powered by 1.3-litre common rail direct injection quadrajet diesel engine and 1.4-litre MPFi Safire petrol engine with variable valve timing technology.

DATA MONITOR Domestic Top 5 PV-makers Sector

Jul-10

Jul-11

Change

MSIL

90,114

66,504

-26.20%

HMIL

28,811

25,642

-11.00%

TML

32,676

22,011

-32.64%

M&M ^

12,825

19,825

54.58%

Toyota

6,834

13,592

98.89%

Domestic Top 5 2W-makers Sector

Jul-10

Jul-11

Change

HML

414,571

477,714

15.23%

BAL

192,138

202,326

5.30%

TVS

143,039

160,348

12.10%

HMSI

130,720

141,789

8.47%

IYM

22,899

29,021

26.73%

Domestic Top 5 CV-makers Sector

Jun-10

Jun-11

Change

TML

30,883

36,298

17.53%

M&M

7,053

10,959

55.38%

ALL

6,022

6,774

12.49%

VECV Eicher

2,853

3,935

37.92%

FML

1,863

2,281

22.44%

* Source: SIAM/ ** Excluding exports/ *** all sub segments considered/ ^ excluding MRPL

Abhishek Parekh Mumbai

T

yre manufacturers have been wilting under the pressure of rising natural rubber prices adversely affecti ng profitability. Even as most tyre manufacturers have announced growth in sales in the last fi scal as well as the fi rst quarter of this fiscal, they are struggling to remain profitable. Apollo Tyres sees the gap between the growing demand for natural rubber and dwindling supplies to increase to ‘alarming’ proportions of around one million tonnes by year 2020, according to the company’s latest annual report. It further points out that the natural rubber market had been characterised by rising prices and a shortage in supply. The prices hit as high as $6,768 a tonne in February this year. The tightness is likely to last till 2018. A large number of today’s productive plantations had come up in the 1980s. Most of these will require massive uprooting and replanting between 2012 and 2018. Combined with this is the spectre of dramatic climate

change, where the past few years have seen unprecedented rains and even flooding in the two largest natural rubber producing countries of Thailand and Indonesia. This is likely to lead to major demand supply mismatches in the coming months. The company is working on multiple fronts to address this situation. Apart from accelerating research to substitute natural rubber in the tyres, the company has also entered the area of rubber plantations to secure future sup-

plies. On the other hand, it is hopeful of making most of the upcoming demand for tyres with significant capacities coming onstream t h is ca lenda r year. The company’s Chennai plant will reach its planned capacity towards the end of this year. The company’s annual report further points out that the June quarter saw India’s growth rate in passenger sales outstrip that of China. As China starts to slow down, India will take its preeminent position; not just in the automobile industry but across various sectors. The rising cost of raw materials has begun to bite most frontline tyre manufacturers even as demand continues to show robust growth across all vehicle segments. Ceat announced an operating loss of `25.04 crore for the quarter ended June 2011 as against `32.9

crore operating profit. The company net loss increased to `41.9 crore in the first quarter this fiscal as compared to `13.87 crore net profit in the first quarter in the last fiscal. The company standalone revenues for the last fiscal stood at `3,751.62 crore as against `2,989.98 crore in the previous fiscal. The operating profit in the last fiscal decreased to `106.73 crore as compared to `277.59 crore in the previous fiscal. The net profit decreased to `22.28 crore as compared to `161.03 crore in the previous fiscal. JK Tyres’ net sales grew to `1,401.67 crore in the fi rst quarter this fi scal as compared to `1,163.49 crore in the first quarter of last fiscal. The operating profit in the fi rst quarter reduced to `40.04 crore as compared to `50.8 crore in the first quarter, last fiscal. The net profit in turn went down to just under a crore rupees as against `19.53 crore in the first quarter last fiscal. It was similar story for the largest tyre manufacturer MRF, which announced net sales of `2,573 crore in the first quarter, this fiscal as compared to `1,925.4 crore but operating profit reduced to `140.3 crore as compared to `154.98 crore.

Lucas Indian Service firms up plans on car accessories T Murrali Chennai

L

ucas Indian Service (LIS), the specialised aftermarket player in sales and service of auto electrical and diesel injection equipment, is in the process of fi rming up its plans for its retail business—Carplus dealing with car accessories. A couple of weeks ago, the company had opened a counter at a departmental store in Janakpuri in Delhi, which is yet another format of its retail business. The pilot project, introduced little over a year ago, in Gurgaon and Ludhiana catering to all classes of vehicles, has been receiving encouraging response and is trying out several options to reach out to the discerning customers. This initiative is expected to help the company to understand the customers’ expectations in terms of reach and convenience besides, the availability of the range of products.

Sandeep Abbi, President, LIS

President, Lucas Indian Service, Sandeep Abbi said, “This is a pilot project, an experiment to see how we can go about it in a big way. It is in the nascent stage and we are trying to understand the retail business. Opening a smaller format in the departmental store, is again a learning process to understand whether we should have standalone stores or be part of a mall or a departmental store. The idea is to offer completely unique and different buying experience to the customers.”

Currently, the two outlets are owned by the company. However, it might look at a franchise model also when it plans to expand in future. “We have a roadmap, which basically envisages us to look at about 120 outlets over a period of five to seven years,” he said. Carplus deals with the complete range of accessories right from infotainment to security systems, navigation, upholstery, interiors and exteriors. It also deals with different brands. Besides, t he retail out lets carry several services including anti-rust treatment, wheel balancing and such things. The two outlets have specific bays where the customers can see the work in progress from an air-conditioned lounge. The retail store also deals with tyres for passenger cars. Asked if LIS would extend a similar concept to two-wheelers, he says, “We may consider it at a later stage, but at this point

of time we would like to focus on passenger cars and multiutility vehicles.” LIS sees tremendous synerg ies a mongst d if ferent business divisions such as LucasTVS (auto electrical), DelphiT VS (diesel fuel injection system), Lispart (outsourced auto pa r ts) a nd Lucas (batteries, ignition coils and switches). The core business of the company is to provide sales and service to auto electrical components manufactured by Lucas-TVS and diesel injection systems made by Delphi-TVS. The company is also looking at expanding its product portfolio in the adjacent areas of business. Recently, it has tied up with a US lubricant company— Top1, to distribute the products all over the country except south India. The company has a network of over 2,000 dealers covering close to 700 towns and cities and deals in over 10,000 part numbers.


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