Consumer durable firms step up investments

Mumbai: Consumer durable companies are stepping up investments in production and distribution to cash in on the demand the industry is witnessing.

According to a recent report by research agency Crisil, the Rs 25,000-crore consumer durable industry is slated to grow at a rate of 17-18 per cent over the next five years, to touch Rs 60,000 crore. Already, the festive period, stretching from July to November, has been a good one for most consumer durable companies. Sales growth was in excess of 30 per cent compared to last year when it was just half of that.

"Naturally,” says Amitabh Tiwari, National Head, Sales, LG Electronics. “Companies are keen to take advantage of this boom.”

According to industry estimates, investment, close to Rs 5,000 crore, will be made in the next few years in production and distribution alone with an objective to meet the growing demand.

Companies at the fore front of this investment exercise include the Korean Chaebols LG and Samsung, Japanese major Panasonic and Indian companies such as Onida, Godrej Appliances, Videocon, Voltas, Blue Star, Bajaj Electricals and Havells.

LG, for instance, will make investments of over Rs 1,300 crore in the next few years, which will involve setting up a new plant, most likely in Chennai, say company officials. The firm, the largest consumer durables manufacturer in the country, already has two plants — in Pune and Nodia. Of the Rs 1,300 crore capex, Rs 350-400 crore will go towards ramping up infrastructure and capacity at existing plants, company officials say.

Another Rs 100 crore will be invested in expanding LG’s network of brand shops from 1,100 to 2,000 by the end of next year. Its regional sales offices will also be increased from the current 38 to 47 respectively, says Tiwari.

The country’s second-largest consumer durables maker Samsung, meanwhile, has just inaugurated a new plant at Chennai at an investment of over Rs 335 crore, says the firm’s deputy managing director, Ravinder Zutshi. The plant will produce 1.2 million refrigerators and increase its in-house capacity to 2.6 million refrigerators. Earlier this year, Samsung invested Rs 45 crore to set up a new split air-conditioner (A/C) production line in Noida. This came soon after a new line for split ACs was set up in Chennai last year for Rs 22 crore. All of this puts the company’s total capital expenditure in the last one year at around Rs 400 crore, says Zutshi.

“But this is not all, he says. “In the next five years our investment in Chennai alone will be close to Rs 450 crore (or $100 million).” The firm is also increasing the number of its brand shops by 150 in the next one year. Its current strength is 300.

The third largest manufacturer, Videocon, has earmarked Rs 1,600 crore as capex, which will be utilised to set up a plant in Chennai to manufacture LCDs, say company sources.

As the top three players ramp up investments, Japanese major Panasonic is set to plough in over Rs 1,000 crore in the next three years to set up among others its manufacturing plants in the country, which will come up in Haryana. The company will also set up a state-of-the-art research and development (R&D) centre; something the Korean Chaebols are also doing. Samsung, for instance, has just set up a performance innovation centre in India — the fourth after the US, China and UK — which will design and develop new innovative products.

Rival LG is also upgrading its Indian R&D centre so that it can design and develop both white and brown goods for global markets.

Of the Indian companies, Onida, says the firm’s vice-president, sales, marketing and service, K Sriram has commissioned a new plant at Rourkee in Uttar Pradesh to manufacture washing machines. The initial investment will be Rs 60 crore, he says.

Godrej Appliances is investing Rs 100 crore to set up new lines at its Pune and Mohali factories, while air-conditioning majors such as Voltas and Blue Star will pump in Rs 40 crore and Rs 21 crore, respectively, this year towards capex.

Lighting companies such as Bajaj Electricals and Havells are also ramping up production investing Rs 25 crore and Rs 200 crore, respectively. “Consumer sentiment is good,” said R Ramakrishnan, executive director, Bajaj Electricals. “The mood is positive. This is resulting in capacity expansion because most players anticipate growth to be good in the sector.”

Passenger car sales grew by 20.79 per cent in November 2010

New Delhi: The domestic passenger car sales grew by 20.79 per cent to 1,61,497 units in November 2010 as compared to 1,33,703 units in the same month in 2009.

The sales of motorcycle in the country during the month grew by 15.61 per cent to 7,10,182 units from 6,14,274 units in the corresponding month in 2009, according to the latest figures released by the Society of Indian Automobile Manufacturers (SIAM).

Similarly, the two-wheeler sales in November 2010 grew by 17.68 per cent to 9,30,370 units from 7,90,613 units in November 2009. Furthermore, the sales of commercial vehicles increased by 18.26 per cent to 48,314 units in November 2010 from 40,855 units in the year-ago period, as per SIAM.

Moreover, the total sale of vehicles across categories has registered a growth of 17.81 per cent to 12,21,981 units in November 2010 as against 10,37,232 units in the same month in 2009, as per SIAM.

Health insurance grows 42% in H1

Mumbai: Aided by government health schemes and correction in rates, insurance for health and personal accidents recorded highest growth in the non-life insurance segment during the first half of the financial year.

According to the data released by the Insurance Regulatory and Development Authority, the health segment grew 42 per cent followed by personal accident that grew 25 per cent. State-sponsored schemes like the Rashtriya Swasthya Bima Yojana (RSBY) forms a large part of the health insurance segment. “These schemes are contributing to the growth of health insurance,” said S L Mohan, secretary, General Insurance Council. The health insurance space is buzzing with activities, with the government launching various schemes. The government has launched RSBY for people below the poverty line, while implementing other plans like the Employee State Insurance Scheme and Balika Samriddhi Yojana.

Two standalone health insurance companies – Max Bupa and Religare –started operation in the current financial year. Old players like ICICI Lombard are also betting on health in a big way. “Both retail and group health insurance are growing. Group has turned profitable now, as there is a correction in price. Awareness about insuring health and medical costs has also gone up,” said Tata AIG General Insurance MD and CEO Gaurav Garg.

Insurance companies collected Rs 4,898 crore from health in the first six months. Motor, along with motor-own damage and third-party, constituted for most of the pie (around Rs 15,000 crore collectively).

“Growth in the motor insurance will depend on sales and manufacturing,” added Mohan. Fire, which was the highest-growing segment for non-life insurance companies, witnessed 19 per cent growth in the first half, while liability insurance grew 16 per cent.

Marine hull and engineering saw a single digit growth, while aviation grew over 11 per cent. Premium rates on aviation have hardened almost 10-15 per cent since January. During the period, the non-life insurance sector grew 23 per cent to Rs 20,679 crore compared to the year-ago period. The industry experts expect the growth to be close to 20 per cent in the current financial year.

India, France aim for euro 12-bn bilateral trade by 2012

New Delhi: India and France have set the target to achieve euro 12 billion worth of bilateral trade by 2012, with the two countries vowing to forge deeper ties across all sectors and boost two-way investment. More than 100 French companies have also committed to putting in euro 10 billion in the next couple of years.

Some big-ticket investment plans were announced by the visiting French business delegation today. These include the setting up of two new nuclear generation power plants, or European Pressurised Reactors (EPRs), in Jaitapur, to be developed by French nuclear giant Areva and the $1-billion investment by Michelin to set up a radial tyre manufacturing unit near Chennai.

“This year, we hope that the bilateral trade would reach $8 billion. The two countries today had delegation-level talks, which turned out to be substantive and meaningful. We also established institutional engagements. Besides cooperation in nuclear energy, we also identified some priority sectors like infrastructure, ICT, pharmaceuticals, agro-processing and food processing,” Commerce and Industry Minister Anand Sharma told reporters after talks with French Minister of Economy and Finance Christine Lagarde, here today.

At present, around 750 French companies are present in India, employing 200,000 people. The French delegation has also assured India of supporting the feasibility study for a project to clean the Ganga.

The delegation is accompanying French President Nicolas Sarkozy.

Highlighting India’s concerns to protect farmers, Lagarde said there was a need to open the multi-brand retail sector. French conglomerate Carrefour has long been planning to enter the Indian retail.

“The euro 10-billion commitment by French companies to invest in India between 2008 and 2012 could be a lot more, if opportunities come up by the opening of insurance and multi-brand retail. French companies would respond in a rigorous manner,” Lagarde said.

Allaying her concerns, Planning Commission Deputy Chairman Montek Singh Ahluwalia said removing foreign direct investment (FDI) cap on insurance and multi-brand retail was very much on the government’s agenda.

“We are looking into it. However, policy formulations must involve all stakeholders,” Sharma said. India and France also signed a memorandum to boost investment flows. The MoU was signed by Invest India, Invest in France Agency and Ubifrance, the French agency for international business development.

Direct tax collections surge 17.85% in April-Nov

New Delhi: A milestone in direct tax revenue receipts has been achieved with net collections up to end November crossing the 50 per cent mark of the targeted Budget Estimate of Rs 4.3-lakh crore for 2010-11.

For the April-November 2010 period, the Centre's net direct tax collections stood at Rs 2.17-lakh crore, reflecting a 17.85 per cent increase over the Rs 1.84-lakh crore collected in the same period last year, official data released on Tuesday showed.

While corporate tax collections during the same period grew 22.30 per cent, personal income-tax collections (including STT and residual FBT/BCTT) grew 10.66 per cent.

In April-November 2009, the Centre's net direct tax collections recorded 3.71 per cent increase on a year-on-year basis while corporate tax collections grew 3.17 per cent, personal income-tax collections went up 4.53 per cent.

Meanwhile, the Centre's net direct tax collections in November grew 18.33 per cent to touch Rs 12,277 crore (Rs 10,375 crore). While corporate tax collections grew 31 per cent to Rs 4,210 crore (Rs 3,214 crore), personal income-tax collections (including STT, residual FBT/BCTT) grew 13.6 per cent to Rs 8,046 crore (Rs 7,083 crore).

In November 2009, the Centre's net direct tax collections had recorded a 0.3 per cent increase to Rs 10,375 crore on a year-on-year basis.

In April-November 2010, the Centre's securities transaction tax (STT) collections recorded a 0.55 per cent increase to Rs 4,373 crore (Rs 4,349 crore). STT collections in November 2010 stood at Rs 771 crore, reflecting a near 60 per cent increase over Rs 484 crore collected in November last year. STT is a tax on stock market trades.

India is looking to bring in a new Direct Taxes Code that is expected to come into force from April 1, 2012.

The Bill for the new Direct Taxes Code has already been introduced in the Lok Sabha and is now being examined by a standing committee of Parliament.

Exports in November 2010 touch US$ 18.9 billion

New Delhi: Exports from India have increased by 26.8 per cent year-on-year (y-o-y) to touch US$ 18.9 billion in November 2010, urging the Government to exude confidence that overall shipments in 2010-11 may touch US$ 215 billion.

For the April-November 2010 period, exports have grown by 26.7 per cent to US$ 140.3 billion, while imports clocked US$ 222 billion, expanding 24 per cent.

“Exports are doing pretty well... At this rate, four months from now, you are looking at anywhere between $210 billion and 215 billion,” according to Mr Rahul Khullar, the Commerce Secretary. Earlier, the government had set an export target of US$ 200 billion for 2010-11, against the shipments of US$ 179 billion in 2009-10.

JSW Energy to buy Canadian firm for C$422 m

Mumbai: JSW Energy is to acquire Toronto-listed CIC Energy for about Canadian $422 million.

CIC is developing the Mmamabula Energy Complex at its Mmamabula coalfield in south-eastern Botswana.

There are plans to develop coal mines, set up power plants and convert coal to hydrocarbon there.

The deal is expected to be completed by the last quarter of this fiscal.

Coal reserves

Mr Sajjan Jindal, Chairman, JSW Energy, said, “CIC has approximately 2.6 billion tonnes of coal reserves in the Mmamabula region which are NI 43-101 compliant. The reserves have good quality thermal coal with low sulphur content that is adequate to meet all the project requirements of JSW Energy.”

Coal production in the fields is expected to commence in three to five years.

Mr N.K. Jain, Vice-Chairman, JSW Energy, said: “The reserves can be exploited with an exportable surplus of up to 20 million tonnes per annum over the next 40 years. The reserves can also meet the requirement to set up power plants in Botswana with a capacity of up to 2,000 MW.”

The acquisition will be effected by a step-down subsidiary of JSW Energy.

In May, JSW Steel acquired coking coal mines in the US to tie up supplies for its steel plants, besides the acquisition of coal assets by JSW Energy.

JSW Energy has an operational capacity of 1,430 MW. Additionally 1,710 MW of generating capacity is in an advanced stage of completion. The company is targeting an aggregate generating capacity of 12,070 MW by 2015-16.

Tata taps MIT to light up low-income houses

Leslie D'Monte/ Cambridge: The Tata group is investing millions of dollars in Sun Catalytix — an energy storage and renewable fuels company — founded by a Massachusetts Institute of Technology (MIT) professor, Daniel Nocera. The aim is to introduce a low-cost solar contraption to power homes for the poor, primarily in developing countries like India.

The Tata group is well known for its bias towards low-cost innovations like the Nano car and Swach water filter.

Sun Catalytix’s prototype can split hydrogen from any source of water, be it river water, sea water or even human waste. Once the water molecules are split into hydrogen and oxygen, the hydrogen powers fuel cells. Built at a cost of around $20 (around '920), it is expected to hit the market in 18 months. “We have the capability to power a household with just two bottles of water from any source,” claims Nocera, who is also director of MIT’s Solar Revolutions Project and the ENI Solar Frontiers Centre.

The reasoning is simple. Solar power, up until now, has been a daytime-only energy source. But storing extra solar energy for use when the sun sets is expensive. Sun Catalytix also believes batteries have a limitation when it comes to storing electrical energy. The company’s prototype, hence, has taken a cue from nature — the process of photosynthesis — whereby plants and bacteria use energy from sunlight to produce sugar, which cellular respiration converts into adenosine tri-phosphate, or ATP, the ‘fuel’ used by all living things.

It was around two years ago that Nocera and Matthew Kanan, a post-doctoral fellow in Nocera’s lab, had announced the details of the experiment. They have since refined it further. “By eliminating expensive precious metals and substantially reducing costs, our technology promises to enable the conversion of electrical, solar or wind energy into storable energy at low cost,” says Nocera.

The contraption, according to Prof Nocera, has advantages over current electrolysers, which split water with electricity and are often used for industrial purposes. But they are not suited for artificial photosynthesis because they are very expensive (around $12,000 per Kw) “and require a highly basic (non-benign) environment that has little to do with the conditions under which photosynthesis operates”.

Tata Sons Chairman Ratan Tata is understood to be taking a personal interest in the project, while simultaneously providing personnel from his group companies to make this project successful. The Tata group has a joint venture with BP Solar, Tata BP Solar, which is one of the largest solar companies in Asia.

Ralf Speth, CEO of Jaguar Land Rover (a Tata company), is on the board of Sun Catalytix. While the Tata group has officially pumped $9.5 million into the company, people with knowledge of the development say the investment is much more and that Ratan Tata is a co-owner. Other investors include Polaris Venture Partners. Amir Nashat is acting CEO of Sun Catalytix.

In July 2009, the government unveiled a $19-billion plan to produce 20 Gw of solar power by 2020, wherein solar-powered equipment and applications would be mandatory in all government buildings, including hospitals and hotels. Further, in the 2010-11 Budget, the government had announced an allocation of $227 million towards the Jawaharlal Nehru National Solar Mission and the establishment of a Clean Energy Fund.

Currently, though, solar power is much more expensive than power generated by other sources of energy like wind, coal and water. The government, therefore, has to subsidise solar power.

Meanwhile, other companies like Amyris of the US are also developing genetic-engineering technologies that change the way microbes process sugar, turning them into “biorefineries” that could provide alternatives to products derived from petroleum.

India to start power trade with Sri Lanka by 2014

New Delhi: The two countries are likely to sign an MoU for the Rs 2,500-crore project.

The government’s initiative to have trading of electricity with Sri Lanka is likely to bear fruit by mid-2014, with the commissioning of a high capacity power transmission link between the two countries. Power Grid Corporation of India (PGCIL), the country’s largest electricity transmission utility and the implementing agency for the project from the Indian side, is likely to sign a memorandum of understanding (MoU) for developing the Rs 2,500-crore project with the neighbouring country by next month.

The 285-kilometre India-Sri Lanka power link, which includes submarine cables over 50 km, will enable the two countries to trade their surplus power with each other, thereby offering a cheaper option to bridge their power generation deficits and also manage peak demand. “We are going to sign the MoU with the Sri Lankan side for the project in December. After this, it will take us six months to start work on the development of the project. We will complete the project within three years,” Power Grid Chairman and Managing Director S K Chaturvedi told Business Standard.

While India generally reels under an overall 12 per cent peak power deficit currently, minute electricity surplus in eastern and southern grids become available seasonally. “With the commissioning of the Krishnapatnam Ultra Mega Power Project (UMPP) in Andhra Pradesh, tradeble surplus would become available,” Chaturvedi said.

UMPPs are large-sized projects being developed by the private sector. The Krishnapatnam UMPP is being developed by Anil Dhirubhai Ambani-owned Reliance Power and is likely to be commissioned by 2015. The link will help Sri Lanka reduce its use of expensive fuels and import cheaper power from India’s surplus. For India, the link will help open a new market for its projected surplus of power.

The subsea line would initially have a capacity of transmitting 500 Mw, according to Power Grid’s feasibility report. “Later, the power flow could be ramped up to 1,000 Mw, beginning 2016, when the power generation capacities in the two countries improve, with surplus availability especially in the Indian southern grid,” Chaturvedi said.

The completion of the proposed undersea transmission link, however, would also depend on the commissioning of NTPC’s 500 Mw imported coal-based power project being planned to be set up at Trincomalee in Sri Lanka. The undersea project would be useful in evacuation of power from the plant.

“The transmission project is linked to the Trincomalee plant. It takes at least four-five years to set up a coal-based project, while my project takes only three years for completion,” Chaturvedi said. While the work on NTPC’s project has not begun, an official from NTPC said the construction work would begin as soon as all the necessary approvals were obtained.

Powergrid and Ceylon Electricity Board (CEB), the largest electricity company of Sri Lanka, will lay down cables under the Gulf of Mannar between Rameswaram in Tamil Nadu and Talaimannar in Sri Lanka.

Globally, transnational undersea power transmission lines have been laid so far only between the UK and the France for transferring 2,000 Mw of electricity. The Philippines plans to set up similar transmission links to connect its islands through the undersea electricity network.

IIFT to set up institute in Africa

Kolkata: The Indian Institute of Foreign Trade (IIFT) will soon have its foreign counterpart with an “IIFT type institute” coming up in one of the “less developed nations” in Africa, Mr K.T. Chacko, Director, IIFT, said here on Wednesday.

The announcement regarding the location of the institute and other details will be made by the Prime Minister, Dr Manmohan Singh, within the coming months, he added.

Mr Chacko was speaking on the sidelines of the National Trade and Logistics Symposium organised by the IIFT here on Wednesday.

Refusing to call it the IIFT's African campus, the director said that according to the prior commitments made by the Prime Minister an “IIFT type institute” will come up in Africa. The African institute will help in developing the managerial capabilities and knowledge base in the continent.

The decision has been taken keeping in mind Africa's immense growth potential and trade benefits in the coming years.

Initially the Indian government will take an active part in setting up the institute and providing infrastructure facilities such as hostel and library. Faculty will also be provided by the IIFT.

“After the initial years, say around five to 10 years, we will hand over the management and running of the institute to the respective government in the country,” Mr Chacko said.

student intake

Mr Chacko added that the IIFT was planning to take in around 200 students for its Kolkata campus. This will be more than the 180 seats that it has in its Delhi one.

At present, IIFT's Kolkata campus has a capacity of 60 students and operates from rented premises in Sector V in Salt Lake, in North 24 Parganas. The institute has been allotted a 10 acre plot of land, seven acres initially and three later, off Eastern Metropolitan Bypass in Kolkata in 2006. Documentation and obtaining clearances had delayed the setting up of the new campus.

The institute expects to start construction work on its Rs 100-crore second campus within the next month. Ramky Infrastructure will carry out construction work on behalf of the institute.