The automotive industry has been on top gear as manufacturers reported robust sales in the wake of new launches. The automotive sector is maintaining its growth trend. The auto industry's growth rate is on a fast track strongly aided by the auto components segment also. The tide has turned in the favour of Indian market as some auto majors launched their vehicles in India first despite their global presence. Rising interest rates were a major deterrent to the auto sector. With their swift strategies, auto majors managed to overcome the crisis and maintained their growth rate. The two-wheeler witnessed a host of new launches.
Two-wheelers
The two-wheeler witnessed a host of new launches to beat the slump in sales. On account of low demand and scarce finance, the two-wheeler industry has been on a downtrend. The motorcycle segment has shown a decline of 14.4% which has led to 8.5% decline in the two-wheeler segment. Hero Honda has given a better performance due to its new launches and a low base last year. Bajaj Auto and TVS Motors have been hit the most. The scooter segment has grown by 18.9%. The 2-wheeler exports showed a strong growth of 24.5%.
Two-wheeler sales registered a negative growth of 8.46% during April-October 2007 over April-October 2006. Though mopeds and scooters grew by 22.35% and 19.57% respectively, motorcycles and electric two-wheelers registered a negative growth rate of 13.68% and 29.66% respectively.
Performance of two wheeler majors
Hero Honda
Despite the slowdown in the two-wheeler industry, Hero Honda's share in the domestic motorcycles market has grown upward of 50%. The company has been successful in maintaining its strong growth momentum across segments. In the premium segment, Hero Honda has more than doubled its volume and share between Jan-Sept 2007. Similarly, Hero Honda's share in the 125-cc segment has risen to almost 40% at the end of September. Hero Honda CD Deluxe has grown by 23% between January-September 2007, while the industry has actually declined by 14% in the entry segment.
Bajaj Auto
Consequently, for the seventh successive year, Bajaj Auto raised its market share in motorcycles to over 33%. Gross sales increased by 24% to an all-time high in excess of Rs.10,600 crore. Its total sales have shown a progress of 5% though it witnessed a decline in the first four months. This has been on account of its exports, which soared 75%.
Bajaj Auto's motorcycle exports grew by 82% to and three-wheelers increased by 87%. It recorded sales of over 150,000 two and three-wheelers in Sri Lanka and of over 100,000 vehicles within a single financial year in Latin America. BAL has commenced production of its new 125 cc DTS-Si motorcycle known as Exceed at Waluj (Aurangabad). With this, almost 75% of Bajaj's motorcycle portfolio would be in the more profitable 125 cc - 250 cc segment.
BAL is targeting sales of 25,00,000 units for FY08. Till date, it has achieved 12,00,000 units and hence now it needs to attain 13,00,000 units, implying an average of nearly 1.9 lakh units every month. This seems to be achievable, however one needs to wait and watch the response it gets for its Exceed model.
TVS Motors
TVS Motors' sales have improved by 4% at 44392 units. But the sales of the mopeds have been depressed (down by 14%) at 37133 units. Exports posted 37% growth over the last year.
The company has entered the three-wheeler segment armed with three two-stroke models of 200 cc, each running on petrol, LPG and CNG. This segment has shown a growth of 18%. The diesel version will come in 18 months. The company also intends to launch four-stroke three-wheelers in six months. It plans to capture at least 30% of the three-wheeler market in the next three years. Currently, Bajaj Auto is the leader with a market share of 42%. The company also aims to export three-wheelers and is looking to assemble them at its Indonesia plant in a year. The company is targeting a growth of 7% - 8% in FY08.
Four-wheelers
In the last few months, four wheeler industry faced many problems such as rising input costs, higher interest rates and soaring fuel prices. Even then, the passenger vehicle segment has shown a growth of 13.6%. The commercial vehicles registered a growth of 3.4%.
Supported by new launches, the passenger vehicle sales have been better than other segments. Passenger car sales grew by 13.5%, utility vehicles by 10.1% and multi-purpose vehicles by 24.4%.
Maruti Suzuki
Maruti Suzuki has outperformed the industry by registering a growth of 19%. Maruti has shown strong growth in A2 and A3 segments due to its launches in this segment. But it has witnessed a slowdown in the A1 segment. In the A2 and A3 segments its market share stands at 59% and 15% respectively. Its exports have soared 60%.
Tata Motors
Tata Motors has been an under performer due to lack of new launches. Its domestic sales plunged by 1% but it has recorded an increase of 8% in its exports. In the commercial vehicle segment, the company has shown a growth of 23%.
At present, the company has 18% share in international business and is targeting to increase it to 25%. Its market share has dipped to 59% as against 64% in the previous year. Inspite of these the company remains second largest player with a market share of 14.9%. The company has allocated a capex of Rs 12,000 crore in the next 3 to 4 years out of which Rs 8,000 crore will be utilized for developing new product and the remaining for capacity expansion.
Mahindra & Mahindra
M&M's total sales have gone up by 22%. Domestic sales grew by 38% on account of its LCV sales. Mahindra launched Logan in April 2007 and the sales were impressive. UVs also registered an impressive growth of 20%, but the three-wheelers were marginally up by 2%. Exports were down by 21% on account of appreciating rupee.
M&M has chalked out a capex of Rs 6,400 crore for the next 3 years which will be utilized for capacity expansion, research and development and product development.
Production
According to the Society of Indian Automobile Manufacturers, the Indian automobile industry has reached double-digit growth for the past three years in a row.
Exports
Automobile exports grew by 17.76% during April-September 2007 over the same
period last year.
Exports were led by two-wheelers, which grew by 24.13%, followed by
commercial vehicles exports at 17.47% and three-wheelers exports at 11.59%. Passenger vehicles exports grew marginally with a growth rate of 2.58%.
Auto components
Auto component industry is quite comprehensive in India. In the organised sector, there are around 500 companies producing automotive components. India's component industry has the capability to manufacture the entire range of auto-components, for example, engine parts, drive, transmission parts, suspension and braking parts, electricals, body and chassis parts, equipment, etc
India has also emerged as an outsourcing hub for auto parts for international companies such as Ford, General Motors, Daimler Chrysler, Fiat, Volkswagon, and Toyota. India enjoys cost advantage. In our country, the manufacturing costs are 25% to 30% lower than western counterparts.
Forecast
By 2010, India will overtake Germany in sales volumes and Japan by 2012. Automobile industry expert predicts that by 2050 every sixth car in the world will be for Indians. The Indian automobile component industry is estimated to triple from $63 billion to $190 billion by 2012. It is said that for every Re 1 spent, the auto sector returns Rs. 2.24 to the Indian economy.
By 2010, India is expected to witness over Rs 30,000 crore of investment.
Friday, December 28, 2007
FM's advisor resigns ahead of Budget
Ahead of the Budget 2008-09, Parthasarathi Shome, Advisor to the Finance Minister, has resigned.
Official sources said the resignation has been accepted. Shome's exit assumes importance as he was essentially a tax expert and was the main think tank on introduction of the Fringe Benefit Tax (FBT) and the Banking Cash Transaction Tax.
Tenure of Shome, who joined as advisor to Finance Minister P. Chidamabaram on October 1, 2004 for three years, was recently extended till October 2009.
Shome was co-convener of a working group on Goods and Services Tax whose report was accepted by official VAT panel.
He was also in the committee working out the rates for GST, propose to be introduced from April 1, 2010.
He was also Union Finance Ministry representative in Empowered Group of State finance ministers on VAT.
With Uttar Pradesh deciding to implement VAT, the new tax system would be implemented across the country.
GST is supposed to be extension of VAT to the national level.
Official sources said the resignation has been accepted. Shome's exit assumes importance as he was essentially a tax expert and was the main think tank on introduction of the Fringe Benefit Tax (FBT) and the Banking Cash Transaction Tax.
Tenure of Shome, who joined as advisor to Finance Minister P. Chidamabaram on October 1, 2004 for three years, was recently extended till October 2009.
Shome was co-convener of a working group on Goods and Services Tax whose report was accepted by official VAT panel.
He was also in the committee working out the rates for GST, propose to be introduced from April 1, 2010.
He was also Union Finance Ministry representative in Empowered Group of State finance ministers on VAT.
With Uttar Pradesh deciding to implement VAT, the new tax system would be implemented across the country.
GST is supposed to be extension of VAT to the national level.
Cos look at new HR hunting grounds
The fast developing economy has created a dearth of quality human resource, with companies searching for talent in unexplored areas. They are now going in for housewives, ex-army men, sophomores and physically challenged people to cope with the situation,
"India has a huge resource of untapped talent. The companies need to adopt a model that helps in harnessing this resource," said Shrinivasan Iyer. CEO, MPower Business Facilitator Ltd while speaking at IBSA-ICON07 conference on "GlobaliSation: Opportunities and Challenges" at Sardar Patel Institute of Public Administration (SPIPA).
"The companies must develop a system to bring these people in the line of production. They must be provided special privileges not as part of corporate responsibility but because of the need of the hour."
At the "Harnessing Human Resource" session speakers discussed the major challenges and shortcomings of HR management by Indian companies.
The faulty and monotonous human resource policy and induction system was held responsible for the high attrition difficulties being faced by companies.
"The earlier attempts by companies to hunt for professionals among their competitors have failed as the new age employees are now changing jobs at a faster pace. The focus should now be on retaining the employee," said professor TV Rao at the conference.
He added that the employees of a company are major asset even if they don't show up on the balance sheet.
"India has a huge resource of untapped talent. The companies need to adopt a model that helps in harnessing this resource," said Shrinivasan Iyer. CEO, MPower Business Facilitator Ltd while speaking at IBSA-ICON07 conference on "GlobaliSation: Opportunities and Challenges" at Sardar Patel Institute of Public Administration (SPIPA).
"The companies must develop a system to bring these people in the line of production. They must be provided special privileges not as part of corporate responsibility but because of the need of the hour."
At the "Harnessing Human Resource" session speakers discussed the major challenges and shortcomings of HR management by Indian companies.
The faulty and monotonous human resource policy and induction system was held responsible for the high attrition difficulties being faced by companies.
"The earlier attempts by companies to hunt for professionals among their competitors have failed as the new age employees are now changing jobs at a faster pace. The focus should now be on retaining the employee," said professor TV Rao at the conference.
He added that the employees of a company are major asset even if they don't show up on the balance sheet.
Inflation rate slips to 3.45%
Inflation rate fell marginally to 3.45 per cent for the week ended December 15, against 3.65 per cent in the previous week, due to fall in prices of fruits, vegetables and textile products.
The annual rate of inflation stood at 5.73 per cent a year ago.
Prices of fruits and vegetables declined by 2 per cent, while textile prices fell by 5.9 per cent and cotton yarn by 7.7 per cent, during the week ended December 15.
However, prices of poultry chicken went up by 2 per cent and that of urad, condiments and spices by 1 per cent each.
The prices of beverages, tobacco, and tobacco products rose by 3.3 per cent due to jump in prices of cigarettes (8 per cent) and potable country liquor (6 per cent).
The prices of malted food rose by 3 per cent and imported edible oil and groundnut oil prices also increased by 1 per cent.
Prices of Manufactured products, which have a weight of 53.75 per cent in the price index, marginally declined by 0.2 per cent.
The fuel power, light and lubricants index, which has weight of 14.23 per cent in the wholesale price index, remained unchanged at its previous week's level.
The annual rate of inflation stood at 5.73 per cent a year ago.
Prices of fruits and vegetables declined by 2 per cent, while textile prices fell by 5.9 per cent and cotton yarn by 7.7 per cent, during the week ended December 15.
However, prices of poultry chicken went up by 2 per cent and that of urad, condiments and spices by 1 per cent each.
The prices of beverages, tobacco, and tobacco products rose by 3.3 per cent due to jump in prices of cigarettes (8 per cent) and potable country liquor (6 per cent).
The prices of malted food rose by 3 per cent and imported edible oil and groundnut oil prices also increased by 1 per cent.
Prices of Manufactured products, which have a weight of 53.75 per cent in the price index, marginally declined by 0.2 per cent.
The fuel power, light and lubricants index, which has weight of 14.23 per cent in the wholesale price index, remained unchanged at its previous week's level.
Thursday, December 27, 2007
123 Life Insurance Planning
Life Insurance is one of the most popular savings/ investment vehicles in India. Ironically, its probably the least understood too.
An insurance policy offers much more than just tax planning and investment returns. It offers you the ability to plan for unforeseen events that could affect your family's financial profile adversely.
Factors to consider
Your financial profile and needs are different from that of your neighbour. And the same is true for your insurance needs.
However, irrespective of the differences, the number of dependents you have and their financial needs are the most important factors to consider.
Issues to consider while evaluating the above factors include:
the wealth, income and expense levels of your dependents,
their significant foreseeable expenses,
the inheritance you would leave them, and
the lifestyle you want to provide for them.
How much insurance do you need?
Obviously the above factors mean nothing to the insurance planning process unless they are quantified.
Globally, the time-tested approach used by insurance and financial planners is the capital needs analysis method. Our Are You Adequately Insured planning tool, based on this approach, will help you arrive at how much insurance you need.
When should you re-evaluate?
Whenever any of the factors discussed above change.
Risk cover versus investment returns
Insurance options range from policies with low premium that offer you almost no returns to those with high premium that effectively offer post-tax returns of around 8% to 9.5% p.a.
These returns are at the lower end of fixed-income returns available today and hence are relatively unattractive.
We recommend you buy an insurance policy skewed towards investment returns only if you are in the high-tax bracket, prefer to invest in low-risk, fixed-income options and have exhausted all the other such investment options available.
Whole life versus limited period
As you grow older, you may not have as many dependents (your children would become self-dependent) or your wealth may reach a level where it can support your dependents’ financial needs in the event of your death.
These possibilities bring us to the interesting question on whether you should insure yourself for whole life or for a limited term. Obviously, the cost of insurance for the latter is lower.
We recommend you insure for whole life only if you never expect your wealth to reach a level where it can support the financial needs of your dependents.
Tax Planning
The premium paid for an LIC policy also qualifies for tax rebate under Section 88 of the Income Tax Act. The maximum premium amount that can qualify for rebate is Rs60,000 per annum and you get a rebate equivalent to 20% of the premium paid, from your tax liability for the year.
Understand how much insurance you need
This is the single most important factor to evaluate before you select a life insurance policy. For this, you must consider the current expense profile of your dependents and the current wealth level of your family. Also, consider what your dependent’s risk tolerance level is. Our Are You Adequately Insured planning tool can take you step-by-step in addressing this issue.
Selecting your Premium Paying Term (PPT)
How long do you want to pay your insurance premium for? Key factors this decision could depend upon are -
How many years you see yourself earning a regular income
The level of your regular savings
The amount you can commit to paying regularly as insurance premium
How long you want to be insured versus how long you expect to pay a premium for?
Other important questions to ask
Besides understanding how much insurance you need and selecting your premium-paying term, you need to consider some other key factors, such as -
Do you want to participate in bonus/ profit share?
What is the primary objective of your seeking insurance - mainly risk cover, mostly investment returns?
Do you want accident cover?
For a detailed understanding of the factors you need to consider while selecting a life insurance policy, and the rationale for the same, use our Insurance Planner.
This planning tool will also take you step by step and arrive at a shortlist of life insurance policies appropriate for you, based on your personal profile.
An insurance policy offers much more than just tax planning and investment returns. It offers you the ability to plan for unforeseen events that could affect your family's financial profile adversely.
Factors to consider
Your financial profile and needs are different from that of your neighbour. And the same is true for your insurance needs.
However, irrespective of the differences, the number of dependents you have and their financial needs are the most important factors to consider.
Issues to consider while evaluating the above factors include:
the wealth, income and expense levels of your dependents,
their significant foreseeable expenses,
the inheritance you would leave them, and
the lifestyle you want to provide for them.
How much insurance do you need?
Obviously the above factors mean nothing to the insurance planning process unless they are quantified.
Globally, the time-tested approach used by insurance and financial planners is the capital needs analysis method. Our Are You Adequately Insured planning tool, based on this approach, will help you arrive at how much insurance you need.
When should you re-evaluate?
Whenever any of the factors discussed above change.
Risk cover versus investment returns
Insurance options range from policies with low premium that offer you almost no returns to those with high premium that effectively offer post-tax returns of around 8% to 9.5% p.a.
These returns are at the lower end of fixed-income returns available today and hence are relatively unattractive.
We recommend you buy an insurance policy skewed towards investment returns only if you are in the high-tax bracket, prefer to invest in low-risk, fixed-income options and have exhausted all the other such investment options available.
Whole life versus limited period
As you grow older, you may not have as many dependents (your children would become self-dependent) or your wealth may reach a level where it can support your dependents’ financial needs in the event of your death.
These possibilities bring us to the interesting question on whether you should insure yourself for whole life or for a limited term. Obviously, the cost of insurance for the latter is lower.
We recommend you insure for whole life only if you never expect your wealth to reach a level where it can support the financial needs of your dependents.
Tax Planning
The premium paid for an LIC policy also qualifies for tax rebate under Section 88 of the Income Tax Act. The maximum premium amount that can qualify for rebate is Rs60,000 per annum and you get a rebate equivalent to 20% of the premium paid, from your tax liability for the year.
Understand how much insurance you need
This is the single most important factor to evaluate before you select a life insurance policy. For this, you must consider the current expense profile of your dependents and the current wealth level of your family. Also, consider what your dependent’s risk tolerance level is. Our Are You Adequately Insured planning tool can take you step-by-step in addressing this issue.
Selecting your Premium Paying Term (PPT)
How long do you want to pay your insurance premium for? Key factors this decision could depend upon are -
How many years you see yourself earning a regular income
The level of your regular savings
The amount you can commit to paying regularly as insurance premium
How long you want to be insured versus how long you expect to pay a premium for?
Other important questions to ask
Besides understanding how much insurance you need and selecting your premium-paying term, you need to consider some other key factors, such as -
Do you want to participate in bonus/ profit share?
What is the primary objective of your seeking insurance - mainly risk cover, mostly investment returns?
Do you want accident cover?
For a detailed understanding of the factors you need to consider while selecting a life insurance policy, and the rationale for the same, use our Insurance Planner.
This planning tool will also take you step by step and arrive at a shortlist of life insurance policies appropriate for you, based on your personal profile.
Steps to get a Permanent Account Number
Steps to get a Permanent Account Number (PAN)
1. Get a copy of form 49A (download here)
2. Affix one recent colored photograph on the form
3. Attach photocopies of proof of identity and proof of address.
Any one of the following will serve as proof of identity:
Copy of school leaving certificate or matriculation certificate or degree of a recognized educational institution or depository account or credit card or bank account or water bill or ration card or property tax assessment order or passport or voter identity card or driving license or certificate of identity signed by a MP or an MLA or a Municipal Councilor or a Gazetted Officer
Any one of the following will serve as proof of address:
Copy of electricity bill or telephone bill or depository account or credit card or bank account or ration card or employer certificate or passport or voter identity card or property tax assessment order or driving license or rent receipt or certificate of address signed by a MP/ MLA/Municipal Councilor / a Gazetted Officer
4. The code of the concerned Assessing Officer of Income Tax department will have to be mentioned in Form 49A. This code may be obtained from Income Tax Office where you submit your return of income. Applicants who have never filed return of income may find out Assessing Officer code with the help of IT PAN Service Center or TIN Facilitation Center or jurisdictional Income Tax Office.
1. Get a copy of form 49A (download here)
2. Affix one recent colored photograph on the form
3. Attach photocopies of proof of identity and proof of address.
Any one of the following will serve as proof of identity:
Copy of school leaving certificate or matriculation certificate or degree of a recognized educational institution or depository account or credit card or bank account or water bill or ration card or property tax assessment order or passport or voter identity card or driving license or certificate of identity signed by a MP or an MLA or a Municipal Councilor or a Gazetted Officer
Any one of the following will serve as proof of address:
Copy of electricity bill or telephone bill or depository account or credit card or bank account or ration card or employer certificate or passport or voter identity card or property tax assessment order or driving license or rent receipt or certificate of address signed by a MP/ MLA/Municipal Councilor / a Gazetted Officer
4. The code of the concerned Assessing Officer of Income Tax department will have to be mentioned in Form 49A. This code may be obtained from Income Tax Office where you submit your return of income. Applicants who have never filed return of income may find out Assessing Officer code with the help of IT PAN Service Center or TIN Facilitation Center or jurisdictional Income Tax Office.
Tax Savings Products - BONDS
Terms of investments
Investment: Infrastructure bonds issued by banks like ICICI Bank and IDBI. Returns: Returns are fixed and in the range of 5-6% per annum.
Availability
Eligibility: Individuals
Tax benefits
IT Section applicable: 80C
Limit on investment: Upto Rs 1 lakh.
Withdrawal: Interest is Taxed
Liquidity
Premature withdrawal: Minimum lock-in of 3 years.
Investment: Infrastructure bonds issued by banks like ICICI Bank and IDBI. Returns: Returns are fixed and in the range of 5-6% per annum.
Availability
Eligibility: Individuals
Tax benefits
IT Section applicable: 80C
Limit on investment: Upto Rs 1 lakh.
Withdrawal: Interest is Taxed
Liquidity
Premature withdrawal: Minimum lock-in of 3 years.
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