Indian steel firms have started selling products directly to small buyers to help save costs, as part of their commitment to keep prices down and stave off inflationary pressures, company officials said.
While steelmakers themselves would be unaffected by the move, small and medium enterprises (SMEs) who have been forced to buy through middlemen because of the smaller size of orders may save between 20 percent and 25 percent of their costs, they said.
About 5 percent of hot-rolled products are marketed through retailers who buy from the steel companies at the same price as major buyers and sell it to SME consumers at a marked-up price.
"The ultimate beneficiary (of the current system) is the middleman. As a support to the government to fight inflation, we are selling directly to the end-consumers to ensure they get the right price," a senior official at JSW Steel Ltd (JSTL.BO: Quote, Profile, Research) said.
Steel firms promised to take steps to fight inflation last week including reviewing trading arrangements and setting a maximum retail price, the government said in a release last week.
Other steps include advertising the price and facility for small buyers to buy through the internet, the government said.
JSW Steel Ltd (JSTL.BO: Quote, Profile, Research), India's third biggest producer, said in an advertisement on Monday it will make up to 10 tonnes steel available to actual users through its warehouses across India.
Ispat Industries Ltd (ISPT.BO: Quote, Profile, Research), which supplies around 90 percent of its output directly to re-rollers such as Bhushan Steel (BSSL.BO: Quote, Profile, Research) and Uttam Galva Steels (UTTM.BO: Quote, Profile, Research), recently started direct marketing to the SMEs.
"Now, we are catering to small customers directly. We directly process their requests online. This is to ensure price transparency," an Ispat spokesman said.
Prices of steel, used in construction, auto parts, engineering goods and heavy equipment, have risen by a third in India and doubled globally.
Tata Steel Ltd (TISC.BO: Quote, Profile, Research), world's sixth biggest producer, sells only 20-25 percent to retailers and has no plans for direct retail sales. Jindal Steel & Power (JNSP.BO: Quote, Profile, Research), part of $8 billion Jindal group, said it doesn't have any such plans "as of now."
Shares in steel companies were firm on Monday in a strong Mumbai market with JSW Steel rising as much as 6.99 percent to 804.80 rupees and Ispat up 5.57 percent at 21.80 rupees. Tata Steel was up 2.3 percent at 658.35 rupees.
Monday, July 07, 2008
Govt approves 23 coal blocks to Essar, JSPL, Ispat
The government is understood to have approved allocation of 23 coking and non-coking coal blocks to leading steel, cement and power producers, including Essar, JSPL, Grasim, Monnet and Ispat.
While four coking coal blocks have been allocated in Madhya Pradesh, the rest 19 non-coking blocks are in West Bengal, Madhya Pradesh, Chhatisgarh, Jharkhand, Maharashtra and Andhra Pradesh, a senior government official told PTI.
In its meeting held last week, the Screening Committee of Coal Ministry, headed by Coal Secretary H C Gupta, decided to allocate the Behrabandh coking coal block to Vinod Mittal-led Ispat Industries on a sharing basis with Essar, Mukund Steel and Ind Synergy.
Of the total 170 million tons reserves, Ispat Industries was allocated 70 million tons, while Essar and Mukund 53 and 25 million tons respectively. Orissa's Ind Synergy got the rest.
Coking coal is a major raw material for steel making in addition to iron ore.
The committee has also approved the Urtan coking coal block, which has an estimated reserves of about 42 million tons, to Jindal Steel and Power Ltd and Monnet Ispat on a sharing basis.
The Urtan North coking coal block with an estimated reserves of about 54 million tons was approved for Bhushan Steel and Prakash Industries.
Of the major non-coking coal blocks, Moira and Madhujore (North and South) in West Bengal were allocated to Adhunik Group on a sharing basis with Uttam Galva, ACC, Vikas Metal and Power Ltd, Mideast Integrated and Ramsarup Lohh Udyog.
The block has a reserve of over 685 million tons, of which Adhunik Group was allocated the maximum 30 per cent of the total reserves.
While four coking coal blocks have been allocated in Madhya Pradesh, the rest 19 non-coking blocks are in West Bengal, Madhya Pradesh, Chhatisgarh, Jharkhand, Maharashtra and Andhra Pradesh, a senior government official told PTI.
In its meeting held last week, the Screening Committee of Coal Ministry, headed by Coal Secretary H C Gupta, decided to allocate the Behrabandh coking coal block to Vinod Mittal-led Ispat Industries on a sharing basis with Essar, Mukund Steel and Ind Synergy.
Of the total 170 million tons reserves, Ispat Industries was allocated 70 million tons, while Essar and Mukund 53 and 25 million tons respectively. Orissa's Ind Synergy got the rest.
Coking coal is a major raw material for steel making in addition to iron ore.
The committee has also approved the Urtan coking coal block, which has an estimated reserves of about 42 million tons, to Jindal Steel and Power Ltd and Monnet Ispat on a sharing basis.
The Urtan North coking coal block with an estimated reserves of about 54 million tons was approved for Bhushan Steel and Prakash Industries.
Of the major non-coking coal blocks, Moira and Madhujore (North and South) in West Bengal were allocated to Adhunik Group on a sharing basis with Uttam Galva, ACC, Vikas Metal and Power Ltd, Mideast Integrated and Ramsarup Lohh Udyog.
The block has a reserve of over 685 million tons, of which Adhunik Group was allocated the maximum 30 per cent of the total reserves.
Korea, India, Vietnam Currency Interventions May Fail
South Korea, India and Vietnam will fail to halt declines in their currencies by using intervention because their economies are slowing and trade deficits widening, said Morgan Stanley, the second-biggest U.S. securities firm.
Central banks in each of the countries have ``repeatedly'' been buying and selling foreign-exchange this year as their currencies have weakened, Stewart Newnham, a research analyst at Morgan Stanley, wrote in a note to clients. The won, rupee and dong have all fallen at least 5 percent in 2008, threatening to quicken inflation by increasing import costs. Korea, the world's sixth-biggest holder of foreign-exchange reserves, pledged today to take ``stern action'' to stabilize the won.
``Their intervention will ultimately fail,'' Hong Kong- based Newnham wrote in the note, which he confirmed by telephone today. ``The best they can hope for, in our view, is to engineer an orderly decline through a `smoothing operation.' And maybe Vietnam cannot even achieve that.''
The won has fallen 10.2 percent this year to 1,042.85 per dollar according to Seoul Money Brokerage Services Ltd. It is the second biggest loser against the dollar in the period of the 10 most-traded Asian currencies outside Japan. India's rupee has weakened 8.7 percent to 43.165 and the dong has slipped 5 percent to 16,846.50.
Minister Dismissed
Korea's currency snapped two days of losses today, gaining 0.7 percent, after the Ministry of Finance and the Bank of Korea said they will use foreign-exchange reserves to stabilize the won and ``take strong necessary measures if the imbalance seems excessive.'' President Lee Myung Bak today dismissed Vice Finance Minister Choi Joong Kyung, who was in charge of currency policy, as part of a wider cabinet reshuffle.
``By far, the strongest pressure is on the Vietnamese dong'' due to its limited foreign-exchange reserves, Newnham wrote. Morgan Stanley estimates Vietnam's reserves to be $27 billion, India's $302 billion, the world's fourth biggest, and South Korea's $258 billion.
Vietnam will be forced to ``realign'' the dong, Newnham said. Traders are pricing in an 18 percent decline in the coming year to 20,500 per dollar, according to offshore 12-month non- deliverable forwards.
Accelerating inflation has pushed so-called ``real rates,'' which are interest rates accounted for inflation, towards zero or negative levels because ``interest-rate stances are not sufficiently tight,'' Newnham wrote.
Not Credible
Korea's benchmark rate is at 5 percent and Vietnam's at 14 percent, compared with inflation of 5.5 percent and 26.8 percent respectively. India's policy rate is at 8.5 percent, compared with its wholesale price index at 11.63 percent.
``Their interest-rate and exchange-rate policies are not internally consistent for currency intervention to be regarded as credible,'' Newnham said in the note.
Banks in the three countries are ``showing signs of discomfort and this could feed through into foreign-exchange weakness,'' Newnham wrote, citing high loan-to-deposit ratios, a shortage of dollars onshore and property loans.
Central banks in each of the countries have ``repeatedly'' been buying and selling foreign-exchange this year as their currencies have weakened, Stewart Newnham, a research analyst at Morgan Stanley, wrote in a note to clients. The won, rupee and dong have all fallen at least 5 percent in 2008, threatening to quicken inflation by increasing import costs. Korea, the world's sixth-biggest holder of foreign-exchange reserves, pledged today to take ``stern action'' to stabilize the won.
``Their intervention will ultimately fail,'' Hong Kong- based Newnham wrote in the note, which he confirmed by telephone today. ``The best they can hope for, in our view, is to engineer an orderly decline through a `smoothing operation.' And maybe Vietnam cannot even achieve that.''
The won has fallen 10.2 percent this year to 1,042.85 per dollar according to Seoul Money Brokerage Services Ltd. It is the second biggest loser against the dollar in the period of the 10 most-traded Asian currencies outside Japan. India's rupee has weakened 8.7 percent to 43.165 and the dong has slipped 5 percent to 16,846.50.
Minister Dismissed
Korea's currency snapped two days of losses today, gaining 0.7 percent, after the Ministry of Finance and the Bank of Korea said they will use foreign-exchange reserves to stabilize the won and ``take strong necessary measures if the imbalance seems excessive.'' President Lee Myung Bak today dismissed Vice Finance Minister Choi Joong Kyung, who was in charge of currency policy, as part of a wider cabinet reshuffle.
``By far, the strongest pressure is on the Vietnamese dong'' due to its limited foreign-exchange reserves, Newnham wrote. Morgan Stanley estimates Vietnam's reserves to be $27 billion, India's $302 billion, the world's fourth biggest, and South Korea's $258 billion.
Vietnam will be forced to ``realign'' the dong, Newnham said. Traders are pricing in an 18 percent decline in the coming year to 20,500 per dollar, according to offshore 12-month non- deliverable forwards.
Accelerating inflation has pushed so-called ``real rates,'' which are interest rates accounted for inflation, towards zero or negative levels because ``interest-rate stances are not sufficiently tight,'' Newnham wrote.
Not Credible
Korea's benchmark rate is at 5 percent and Vietnam's at 14 percent, compared with inflation of 5.5 percent and 26.8 percent respectively. India's policy rate is at 8.5 percent, compared with its wholesale price index at 11.63 percent.
``Their interest-rate and exchange-rate policies are not internally consistent for currency intervention to be regarded as credible,'' Newnham said in the note.
Banks in the three countries are ``showing signs of discomfort and this could feed through into foreign-exchange weakness,'' Newnham wrote, citing high loan-to-deposit ratios, a shortage of dollars onshore and property loans.
Dubai International Says Asia Is the Place to Invest in 2008
Dubai International Capital LLC, the asset management firm with more than $12 billion, said any investments made in 2008 will be in Asia, where economies may expand faster than the global average this year.
The firm has earmarked $5 billion over the next two-to-three years for Asia, especially China and India, Sameer al-Ansari, the company's chief executive officer, said in an interview in Japan's Fukuoka prefecture. Cash is the best option for now as private equity deals have come to a halt in Europe and in the U.S., he said.
Dubai International has bought stakes in ICICI Bank Ltd., HSBC Holdings Plc and Sony Corp. with money from investors, including Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum, as the second-biggest sheikhdom in the United Arab Emirates seeks to diversify its sources of income away from real estate and oil.
``The focus has shifted to emerging markets and Asia where we see the better opportunities,'' said al-Ansari, who was attending the Asia Innovation Initiative conference in Japan's southwestern island of Kyushu. ``We strongly believe that cash is king at the moment and that there will be phenomenal investment opportunities.''
Infrastructure, construction and services are the industries that the fund is focused on, according to al-Ansari, as well as on companies that can benefit from growth in Dubai and neighboring countries.
China, India
Dubai International aims to invest about $1 billion each in India and China, al-Ansari said. The fund is currently in ``advanced talks'' with manufacturers in the U.A.E. and India, he said, declining to be more specific.
``Asia is very important for our investment strategy, and a year ago we started saying we want to invest more in Asia,'' al- Ansari said. ``We're looking to build long-term relationships that help us for diversification and will benefit Dubai and the region.''
Economies in Asia will expand 6.2 percent this year, according to the International Monetary Fund. That's more than the 4.1 percent global average the IMF projects.
In April, Dubai International said it plans to set up a $1 billion fund with Hong Kong-based First Eastern Investment Group to focus on China. China Dubai Capital fund will invest in Chinese companies in the infrastructure, resources and health- care industries, according to Dubai International and First Eastern.
`Serious Money'
``We want to be investing heavily in China,'' al-Ansari said. ``It's impossible to say one has a global investment strategy and not have serious money in China.''
Dubai International last July said it bought a 2.87 percent stake in ICICI Bank, India's biggest lender by market value, worth about $730 million.
It bought shares in Sony, the world's second-largest maker of consumer electronics, in 2007, its first investment in a Japanese company. The fund has no plans to make additional investments in Japan, al-Ansari said, citing Japanese companies' reluctance to sell to foreigners.
``If you ask me today, are you close to making any investment in a Japanese public company, the answer would be no,'' he said. Still, ``Japan is also very much on the radar screen.''
The firm has earmarked $5 billion over the next two-to-three years for Asia, especially China and India, Sameer al-Ansari, the company's chief executive officer, said in an interview in Japan's Fukuoka prefecture. Cash is the best option for now as private equity deals have come to a halt in Europe and in the U.S., he said.
Dubai International has bought stakes in ICICI Bank Ltd., HSBC Holdings Plc and Sony Corp. with money from investors, including Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum, as the second-biggest sheikhdom in the United Arab Emirates seeks to diversify its sources of income away from real estate and oil.
``The focus has shifted to emerging markets and Asia where we see the better opportunities,'' said al-Ansari, who was attending the Asia Innovation Initiative conference in Japan's southwestern island of Kyushu. ``We strongly believe that cash is king at the moment and that there will be phenomenal investment opportunities.''
Infrastructure, construction and services are the industries that the fund is focused on, according to al-Ansari, as well as on companies that can benefit from growth in Dubai and neighboring countries.
China, India
Dubai International aims to invest about $1 billion each in India and China, al-Ansari said. The fund is currently in ``advanced talks'' with manufacturers in the U.A.E. and India, he said, declining to be more specific.
``Asia is very important for our investment strategy, and a year ago we started saying we want to invest more in Asia,'' al- Ansari said. ``We're looking to build long-term relationships that help us for diversification and will benefit Dubai and the region.''
Economies in Asia will expand 6.2 percent this year, according to the International Monetary Fund. That's more than the 4.1 percent global average the IMF projects.
In April, Dubai International said it plans to set up a $1 billion fund with Hong Kong-based First Eastern Investment Group to focus on China. China Dubai Capital fund will invest in Chinese companies in the infrastructure, resources and health- care industries, according to Dubai International and First Eastern.
`Serious Money'
``We want to be investing heavily in China,'' al-Ansari said. ``It's impossible to say one has a global investment strategy and not have serious money in China.''
Dubai International last July said it bought a 2.87 percent stake in ICICI Bank, India's biggest lender by market value, worth about $730 million.
It bought shares in Sony, the world's second-largest maker of consumer electronics, in 2007, its first investment in a Japanese company. The fund has no plans to make additional investments in Japan, al-Ansari said, citing Japanese companies' reluctance to sell to foreigners.
``If you ask me today, are you close to making any investment in a Japanese public company, the answer would be no,'' he said. Still, ``Japan is also very much on the radar screen.''
Indian shares rise for 2nd day but worries remain
Indian shares rose 0.5 percent on Monday but there was little conviction for a recovery as the market shed most of the day's gains with investors bracing for an interest rate rise.
With little sign of inflation easing in the near term from a 13-year-high of 11.6 percent in late June, the Reserve Bank of India is expected to again tighten policy to calm nerves about rising prices, traders said.
Export-focused software companies led the market higher on hopes for strong quarterly earnings, with a weaker rupee seen helping revenue. Bellwether Infosys Technologies, which reports earnings on Friday, rose 2.6 percent to 1,801.20.
The 30-share BSE index closed up 0.54 percent, or 71.99 points, at 13,525.99, stretching gains into a second successive session. Twenty-two components rose.
The benchmark had risen 2.5 percent during trade after the Congress party-led coalition won assurance of support from a regional party on Saturday for a U.S. nuclear deal helped ease concerns about political stability after the government's left allies threatened to withdraw support.
Jigar Shah, head of research at Kim Eng Securities India, said the early rebound was on hopes the government would stay, but on the economic front there was little cheer.
"The negative factors are still there. So volatility will continue," he said, referring to expectation for further monetary tightening by the central bank to contain inflation.
The BSE index, which has lost nearly a fifth in the last five weeks, is down more than a third this year with foreign funds dumping shares worth $6.6 billion.
No. 4 mutual fund UTI Asset Management has decided to defer its planned $480 million share sale because of a subdued market, six sources with direct knowledge of the matter told Reuters.
Refiner Reliance Industries, the heaviest stock in the main index, fell 3.4 percent to 2,028.15 rupees after a newspaper reported the government was considering higher taxes on private sector refiners to pay for high oil prices.
No. 2 mobile operator Reliance Communications reversed gains to close 4.2 percent lower at 419.80 rupees as investors awaited for clarity on its exclusive tie-up talks with South Africa's MTN that ends on Tuesday.
Analysts and media reports have said the deadline could be extended.
In the broader market, gainers led losers by more than two-to-one. Volume was high at 584 million shares, helped by a block deal of 282.9 million shares in Spice Communications.
The 50-share NSE index closed 0.35 percent higher at 4,030.
Elsewhere in the region, Karachi's 100-share index fell 0.7 percent to 11,878.38 and Colombo's All-share index slipped 0.14 percent to 2,401.17.
STOCKS THAT MOVED
Shares in top lender State Bank of India gained 3.9 percent to 1,171.75 rupees and ICICI Bank added 0.5 percent to 603.75 rupees as investors bought bargains after heavy falls in recent weeks.
* Software services providers Wipro gained 2.5 percent to 440 rupees and while Satyam firmed 4.3 percent to 481.95 rupees in anticipation of good quarterly results.
* State-run Oil and Natural Gas Corp rose 1.2 percent to 887.10 rupees. The company has qualified to bid as an operator for Angolan deepwater blocks, which are likely to be offered after elections in the African nation.
* SpiceJet Ltd rose 21.8 percent to 30.45 rupees, extending gains for the fourth straight session, on media reports that founders of the low-cost carrier were close to a stake sale deal with Vijay Mallya-owned rival Kingfisher Airlines.
MAIN TOP THREE BY VOLUME
* Spice Communications on 286 million shares
* Reliance Natural Resources on 26.4 million shares
* IFCI Ltd on 20.6 million shares
With little sign of inflation easing in the near term from a 13-year-high of 11.6 percent in late June, the Reserve Bank of India is expected to again tighten policy to calm nerves about rising prices, traders said.
Export-focused software companies led the market higher on hopes for strong quarterly earnings, with a weaker rupee seen helping revenue. Bellwether Infosys Technologies, which reports earnings on Friday, rose 2.6 percent to 1,801.20.
The 30-share BSE index closed up 0.54 percent, or 71.99 points, at 13,525.99, stretching gains into a second successive session. Twenty-two components rose.
The benchmark had risen 2.5 percent during trade after the Congress party-led coalition won assurance of support from a regional party on Saturday for a U.S. nuclear deal helped ease concerns about political stability after the government's left allies threatened to withdraw support.
Jigar Shah, head of research at Kim Eng Securities India, said the early rebound was on hopes the government would stay, but on the economic front there was little cheer.
"The negative factors are still there. So volatility will continue," he said, referring to expectation for further monetary tightening by the central bank to contain inflation.
The BSE index, which has lost nearly a fifth in the last five weeks, is down more than a third this year with foreign funds dumping shares worth $6.6 billion.
No. 4 mutual fund UTI Asset Management has decided to defer its planned $480 million share sale because of a subdued market, six sources with direct knowledge of the matter told Reuters.
Refiner Reliance Industries, the heaviest stock in the main index, fell 3.4 percent to 2,028.15 rupees after a newspaper reported the government was considering higher taxes on private sector refiners to pay for high oil prices.
No. 2 mobile operator Reliance Communications reversed gains to close 4.2 percent lower at 419.80 rupees as investors awaited for clarity on its exclusive tie-up talks with South Africa's MTN that ends on Tuesday.
Analysts and media reports have said the deadline could be extended.
In the broader market, gainers led losers by more than two-to-one. Volume was high at 584 million shares, helped by a block deal of 282.9 million shares in Spice Communications.
The 50-share NSE index closed 0.35 percent higher at 4,030.
Elsewhere in the region, Karachi's 100-share index fell 0.7 percent to 11,878.38 and Colombo's All-share index slipped 0.14 percent to 2,401.17.
STOCKS THAT MOVED
Shares in top lender State Bank of India gained 3.9 percent to 1,171.75 rupees and ICICI Bank added 0.5 percent to 603.75 rupees as investors bought bargains after heavy falls in recent weeks.
* Software services providers Wipro gained 2.5 percent to 440 rupees and while Satyam firmed 4.3 percent to 481.95 rupees in anticipation of good quarterly results.
* State-run Oil and Natural Gas Corp rose 1.2 percent to 887.10 rupees. The company has qualified to bid as an operator for Angolan deepwater blocks, which are likely to be offered after elections in the African nation.
* SpiceJet Ltd rose 21.8 percent to 30.45 rupees, extending gains for the fourth straight session, on media reports that founders of the low-cost carrier were close to a stake sale deal with Vijay Mallya-owned rival Kingfisher Airlines.
MAIN TOP THREE BY VOLUME
* Spice Communications on 286 million shares
* Reliance Natural Resources on 26.4 million shares
* IFCI Ltd on 20.6 million shares
Hybrid cars may get cheaper
In a major boost to eco-friendly hybrid cars, the government is planning to slash excise and customs duties on such vehicles. The move aims at encouraging the use of alternative sources of fuel. At present, Honda Civic is the only hybrid version in the country. Several other manufacturers like Mahindra and Tatas are planning to join the race soon.
Policy makers are examining the proposal to encourage use of such cars that run both on fossil fuel and electric battery in the country, an official said. As per the proposal mooted by the Department of Heavy Industries, excise duty on such cars should be reduced to 12% from existing 14%. It has also demanded a reduction in customs duty which is over 100% on such imports.
“The finance ministry has responded positively to our proposal to bring hybrid cars at par with small cars for levying excise duty in the first phase and reduce it further in later phases,” an official in the department of heavy industries (DHI) said.
Hybrid cars receive a favourable tax treatment in other countries as they consume less fossil fuel. Honda Civic, the only hybrid car available in the domestic market is currently being imported as a completely built unit (CBU) attracting an import duty of 104%.
Mahindra and Tata are expected to follow with their hybrid variants of Scorpio and Indica, respectively, next year. Toyota is also likely to come out with its hybrid variant of Prius. In the international market popular hybrid brands are priced in the $18,000-$30,000 range. The cars produced in India would be much cheaper and more so if a favourable tax treatment is given.
According to recent statistics, there are close to 51 lakh petrol cars on Indian roads, consuming around 315 crore litre of petrol a year. Introduction of hybrid cars in the market can bring it down.
Policy makers are examining the proposal to encourage use of such cars that run both on fossil fuel and electric battery in the country, an official said. As per the proposal mooted by the Department of Heavy Industries, excise duty on such cars should be reduced to 12% from existing 14%. It has also demanded a reduction in customs duty which is over 100% on such imports.
“The finance ministry has responded positively to our proposal to bring hybrid cars at par with small cars for levying excise duty in the first phase and reduce it further in later phases,” an official in the department of heavy industries (DHI) said.
Hybrid cars receive a favourable tax treatment in other countries as they consume less fossil fuel. Honda Civic, the only hybrid car available in the domestic market is currently being imported as a completely built unit (CBU) attracting an import duty of 104%.
Mahindra and Tata are expected to follow with their hybrid variants of Scorpio and Indica, respectively, next year. Toyota is also likely to come out with its hybrid variant of Prius. In the international market popular hybrid brands are priced in the $18,000-$30,000 range. The cars produced in India would be much cheaper and more so if a favourable tax treatment is given.
According to recent statistics, there are close to 51 lakh petrol cars on Indian roads, consuming around 315 crore litre of petrol a year. Introduction of hybrid cars in the market can bring it down.
Made-in-India cars for the world
Call it the Nano engineering gold rush. Indian engineering skills are suddenly hot property as global auto companies source competence, along with components, for their next-gen models. Sourcing cheaper components to cut costs for cars sold in India and globally is now de rigeur.
The second wave of sourcing focuses on skills, particularly in small cars where India has a core competence. As world markets move to smaller and less fuel-hungry vehicles, Big Auto is looking to India for scale and expertise. Maruti Suzuki’s soon-to-debut A-Star has some Indian content, which was played up alongside the Nano’s global outing at the Geneva Motor Show this March. But now Suzuki is planning to step on the gas, outsourcing its costly model development to India for the next-gen small cars.
“These cars will be developed in India and made in India for the world,” said a Maruti official. “By 2012, that line-up should start rolling out.” Suzuki is focussing on R&D in a big way in India to crank up its engineering pool for the purpose.
India will be the small car hub not just in terms of manufacturing but also in terms of product development, the ultimate holy grail in Motown. Other global car majors like Hyundai, Honda and GM are working on both ends of this trend—developing small car models that will be accepted in India and other similar markets and using India as a sourcing hub for parts and skills.
Hyundai, which like Maruti has a big local footprint in manufacturing, is now focussing on R&D in India. The Korean company has set up a $40 million computer-aided design centre in Hyderabad. Says Hyundai Motor India chief HS Lheem: “Our future launches, especially for the compact segment, are being developed keeping in mind the potential of the Indian market.”
For GM, the $60-million technical centre in Bangalore will be its powerhouse for developing future technologies and shaping new cars. “We have lined up a design centre, engineering services and an R&D facility at Bangalore. It will conceive future products for India and other emerging markets,” said GM India vice-president P Balendran.
The second wave of sourcing focuses on skills, particularly in small cars where India has a core competence. As world markets move to smaller and less fuel-hungry vehicles, Big Auto is looking to India for scale and expertise. Maruti Suzuki’s soon-to-debut A-Star has some Indian content, which was played up alongside the Nano’s global outing at the Geneva Motor Show this March. But now Suzuki is planning to step on the gas, outsourcing its costly model development to India for the next-gen small cars.
“These cars will be developed in India and made in India for the world,” said a Maruti official. “By 2012, that line-up should start rolling out.” Suzuki is focussing on R&D in a big way in India to crank up its engineering pool for the purpose.
India will be the small car hub not just in terms of manufacturing but also in terms of product development, the ultimate holy grail in Motown. Other global car majors like Hyundai, Honda and GM are working on both ends of this trend—developing small car models that will be accepted in India and other similar markets and using India as a sourcing hub for parts and skills.
Hyundai, which like Maruti has a big local footprint in manufacturing, is now focussing on R&D in India. The Korean company has set up a $40 million computer-aided design centre in Hyderabad. Says Hyundai Motor India chief HS Lheem: “Our future launches, especially for the compact segment, are being developed keeping in mind the potential of the Indian market.”
For GM, the $60-million technical centre in Bangalore will be its powerhouse for developing future technologies and shaping new cars. “We have lined up a design centre, engineering services and an R&D facility at Bangalore. It will conceive future products for India and other emerging markets,” said GM India vice-president P Balendran.
Subscribe to:
Posts (Atom)