TVS Motor, BMW tie up to tap technology, market access

Chennai: TVS Motor and BMW AG's motorcycle division announced a deal on Monday to jointly develop bikes that would give the Indian automaker access to BMW technology as it looks to stem its falling market share.

The long-awaited deal should help TVS revamp a dated product pipeline at the company, which has struggled to compete with a recent ramp-up in activity from Honda Motor and Yamaha Motor and could also help BMW gain a foothold in the world's second-largest bike market.

TVS Motor and BMW will develop a series of motorcycles for the 250-500 cc segment. This would mark the entry of India’s fourth-largest two-wheeler company into the above-250-cc two-wheeler space.

For the German premium two-wheeler maker, the agreement is part of its global realigning strategy, which includes a foray into the sub-500-cc segment.

The agreement involves both companies offering individual vehicle derivatives, which would be sold through their own distribution channels across the globe, said Venu Srinivasan, TVS Motor chairman and managing director.

As part of the agreement, TVS Motor would invest ^20 million in India, said Srinivasan. Initially, TVS would develop two products in India---one product for TVS and the other for BMW to sell in global markets. The first product is expected to be launched in 2015.

Srinivasan said while BMW brought technology and products to the venture, TVS would leverage its supply chain expertise and its ability to develop small products in bulk.

Yaresh Kothari, research analyst (automobile), Angel Broking, said in the long term, the tie-up would be positive for TVS Motor. About 95 per cent of India’s motorcylce market is accounted for by the 150-cc segment or segments with engine capacities lower than 150 cc. While the margins in the above-150-cc segment are high, volumes are low — in the near term, there would be no impact of the tie-up on TVS Motor’s ranking, Kothari said.

Stephan Schaller, president, BMW Motorrad, said globally, the company was realigning the two-wheeler business. The company planned to enter the sub-500-cc segment and foray into emerging markets with smaller capacity products and core offerings, he said., adding, “This is an important step towards more profitability and sustainability.”

The tie-up comes at a time when TVS has been losing market share to Honda Motor and Yamaha. For 2012-13, TVS reported a fall of six per cent in sales, compared with a four per cent rise recorded by the overall industry. Experts say it would be difficult for TVS to regain the market share lost to Honda. The Chennai-based company’s two-wheeler sales fell from 1,80,274 units in March 2012 to 1,62,507 units in March 2013.

German software firm enters CAD market

Mumbai: German software company Graebert is entering the Indian market for computer aided design (CAD). According to a press statement, the company has established a wholly-owned subsidiary, Graebert India Software (Noida), to market the ‘ARES’ software. According to a 2011 report from research firm Technavio, the CAD software market in India is expected to grow at a compounded annual growth rate of 26 per cent till 2014. Graebert is keen to collaborate with Indian software companies and channel partners to introduce cost-effective products for CAD users in India, said Mr Wilfred Graebert, the company’s Chief Executive Officer.

The company has an installed base of over four million users in 180 countries, the statement said.

India, location of choice for MNCs' information technology units: Zinnov

Bangalore: Multinational captive centres in India are increasing their capacity, according to consulting firm Zinnov.

In a white paper, Zinnov estimates that 50 per cent of the Fortune 500 companies will have their captive centres in India in the next few years, working on tasks related to business processes, technology, HR and others for their parent companies.

Zinnov attributes this trend to the fact that in the last two years, 10 IT and IT-enabled services (ITeS) centres of Fortune 500 companies set up operations in India. It said India is home to about 200 wholly-owned IT and ITeS centres of multinational companies, thus making it the most preferred offshore destination as compared to 120 other offshoring locations across the globe.

IT modernisation
“Reasons like IT modernisation and rethinking ways in which legacy technologies (like Mainframe computing) can be used are driving this,” said Sundararaman Viswanathan, Manager – Consulting, Zinnov. He added that other reasons such as cost advantages and presence in an emerging market are influencing these MNCs to set up centres in India.

The report added that banking and financial services companies leverage India the most for their IT and ITeS operations and there are close to about 45 such MNC centres last year. Retailers such as Walmart, Tesco and financial institutions such as Northern Trust have added to their India headcount in the recent past.

Further, healthcare and life sciences is emerging as a large category amongst the MNC centres.

Companies such as Royal DSM and Sigma Aldrich recently opened their service centres and existing players such as Novartis and Cerner have grown their India centres in the last few years. Currently India is the IT / ITeS hub for about 125 of the Fortune 500 companies.

Losing momentum?
However, industry watchers feel that despite a large share of MNC captives, the country is losing momentum.

Companies have shifted out of India due to mediocre management talent and an inability to be at the forefront of innovation, said an analyst from a multinational consulting advisory firm who did not wish to be named.

India Inc's March abroad investment at $1.88 billion

Mumbai: Indian companies invested $1.88 billion (around Rs 10,260 crore today) in other countries last month, up from $1.65 billion in February, according to the Reserve Bank of India. Companies committed the money by the way of equity, loans and issuing guarantees to their wholly-owned subsidiaries and joint ventures in foreign countries.

The majority of money was invested in the form of guarantees. Companies issued guarantees worth $1.46 billion, while they had equity contribution of $217 million and gave loans worth $201 million.

Major companies that invested in foreign countries include Escorts Ltd, Videocon Industries Ltd, ILF&S Group and Glenmark Pharmaceuticals Ltd.

Videocon Group, in two different transactions, issued guarantees worth $853 million in its subsidiary Videocon Hydrocarbons Holdings Ltd. This company, which is into mining and agricultural activities, is located in the Cayman Islands in the Caribbean Sea. ILF&S gave guarantees worth $105 million to its subsidiary ITNL International Pte Ltd in the US.

Glenmark invested six different countries in March. Its biggest transaction among the six was the $60.58 million investment it made in its subsidiary Glenmark Holdings SA, located in Switzerland. Out of the $60.58 million, $57 million was in the form of guarantees, while it gave a loan of $3.58 million to this company. Kenya, Mexico, Peru, Russia and Venezuela are the other countries where Glenmark invested during the month.

India among best cement markets in Asia, says Holcim

Mumbai: Holcim, the Switzerland-based cement major, says India is among the robust of markets in Asia. It has said so at a time when the country's cement sector faces rising costs and poorer-than expected demand, despite this being the peak construction period.

The company operates in India through group companies ACC and Ambuja Cements. It has said its outlook for Asia continues to be positive and that India, Indonesia and Philippines rank among the most promising growth markets. Its latest annual report says prospects for the construction industry are very good in these countries, given the high demand for infrastructure expansion projects, as well as the need for low-cost housing.

Both ACC and Ambuja sold more cement in calendar year 2012, primarily in the first half. "In response to mounting inflation, the (Indian) government postponed a number of infrastructure projects in the second half, and higher interest rates reined in demand for commercial and industrial buildings," the report said.

Holcim is expanding its production capacity in India. ACC plans to raise this from the existing 30 million tonnes per annum (mtpa) to 35 mtpa, in a phased manner till 2015. As part of this project, a new plant at Jamul in the state of Chhattigarh is under process. Also at Jamul, grinding capacity is being replaced. Part of the clinker produced in Jamul is earmarked for the expanded Sindri grinding plant (in Jharkhand) and for the new grinding plant in Kharagpur (West Bengal).

ACC and Ambuja have a combined capacity of 57 mtpa, around 16 per cent of India's overall cement making capacity of 360 mtpa.

On the Bombay Stock Exchange, the shares of ACC closed weaker today at Rs 1,127.90, down 0.1 per cent. Ambuja’s closed at Rs 168.20, up 2.4 per cent.

Persistent Systems to open facility in Bangalore

Pune: Software product and technology services major Persistent Systems has announced that it will open a new facility in Bangalore at Sarjapur Road. This is in-line with on-going expansion strategy.

“We are excited about opening our new office in Bangalore, as the city is India’s IT capital and it is time for Persistent to be there,” said Dr Anand Deshpande, Chairman and Managing Director, Persistent Systems.

The Bangalore facility will house over 150 employees and support product development, client delivery and sales. The company plans to recruit locally, leveraging the Silicon Valley-like combination of talent and partnership opportunities.

This will be Persistent Systems’ fifth office in India adding to its presence in Pune, Goa, Nagpur and Hyderabad.

Tech Mahindra expands presence in Turkey

Mumbai: Tech Mahindra has expanded its presence in Turkey by setting up a new branch in Istanbul. Tech Mahindra Turkey will serve as a hub for Turkey and Central Asia.

The move was necessitated after Tech Mahindra won a contract for implementing a billing solution for a large telecom operator.

“We look forward to the support from local Government as we grow our footprint in the region. As a part of our journey in Turkey, we aim to recruit local resources and train them to support Tech Mahindra services over the years to come,” said Girish Bhat, Vice-President, Sales, Tech Mahindra.

Going forward, Tech Mahindra expects Turkey to emerge as a near shore delivery location for clients in the region.

The investment by Tech Mahindra has been facilitated by the Turkish Government which intends to expand the country’s information communication and technology sector to $160 billion by 2023 from $30 billion in 2011.

A dedicated Talent Exchange Program for transfer of skills between India and Turkey will also be initiated in due course of time, M. İlker Aycı, President of Turkey’s Investment Support and Promotion Agency, said.

SAIL sets up Joint venture for titanium sponge production

Thiruvananthapuram: Public sector steel producer Steel Authority of India Limited (SAIL) on Thursday reached an agreement with Kerala State Industrial Development Corp (KSIDC) and Kerala Minerals and Metals Ltd (KMML) to set up a Rs 2,500-crore joint venture to produce titanium sponge and metals.

A memorandum of understanding (MoU) has been signed by the officials of SAIL, KSIDC and KMML in the presence of chief Minister Oommen Chandy, industries minister PK Kunhalikutty, steel ministry special secretary E K Bharat Bhushan, SAIL chairman CS Verma and industries department additional chief secretary V Somasundaran.

The new JV will be second major titanium project in Kerala after the titanium sponge plant at KMML in Chavara in Kollam district. In the first phase of the project, the plant will have the capacity to produce 10,000 tonnes of titanium sponge per year. KMML will supply the titanium tetrachloride required for the production of the titanium sponge, which will be molded to produce titanium metal and other alloys such as rutile and zircon, KSIDC officials said.

The project is also expected to create about 2,000 employment opportunities in the state.

India emerging as an export hub for SUVs

New Delhi: Soon, sports utility vehicles (SUVs) made in India would burn rubber in developed markets such as Europe, Japan, Latin America and Australia. Global automobile majors are looking to leverage India’s cost-competitive manufacturing practices and turn the country into an export hub for utility vehicles.

Domestic automobile major Mahindra & Mahindra (M&M) and French car maker Renault started exporting the XUV500 and the Duster, respectively, to Europe in December 2012. Now, Fiat and Ford India are assessing opportunities to export SUVs to Europe, South Africa and Southeast Asia.

Joginder Singh, president and managing director, Ford India, said, “The European equation works well with the EcoSport. We already export the Figo to 38 countries from India. We would look at a similar scale for the SUV.” While Singh didn’t specify the number of EcoSport units the company had earmarked for exports, industry sources indicated it was planned about 40 per cent of the scheduled annual production of 1,50,000 units would be sold in foreign markets. Overall, 380 variants of the SUV, manufactured at Ford’s Maraimalai Nagar facility, would be shipped to 40 countries.

Italian car maker Fiat, which plans to launch nine new models in the Indian market by 2016, is firming up plans to export some of these to right-hand drive markets abroad. Recently, Enrico Atanasio, former managing director, Fiat Group Automobiles India, told Business Standard, “We are looking at leveraging India as an export hub for right-hand drive models. We have excess capacity available in India and are looking at exporting vehicles from here to the UK, Japan, Australia and South Africa.”

Through the next three years, Fiat plans to introduce the Jeep, the Grand Cherokee and at least two compact utility vehicles with the Fiat badge in India.

Fiat and Tata Motors share a production facility at Ranjangaon (Maharashtra).

Together, the two companies utilise about half the factory’s capacity of 180,000 units.

“India is growing out of a portfolio of small cars for exports and the trend is being driven increasingly by global automobile manufacturers. Sedans and utility vehicles are gaining acceptance among consumers in the Indian market. To gain the requisite volumes for producing a model cost-effectively, companies have started shipping out larger vehicles from India,” said V G Ramakrishnan, senior director (automotive and transportation), Frost & Sullivan.

In the last financial year, M&M exported about 2,000 units of the XUV500 to Africa and Europe. By the first half of this financial year, it plans to raise exports to Latin America.

Abdul Majeed, partner (automotive practice), Pricewaterhouse Coopers, said, “Some exports markets do not have the volumes to justify setting up a manufacturing or assembly unit. India is a low-cost manufacturing hub and automobile makers are leveraging it as a base to grow in derivative markets.”

Renault India’s export strategy adheres to Majeed’s views. The company plans to export 1,000-3,000 units of the Duster to the UK, where it is sold under the ‘Dacia’ brand.

“Like India, the UK is a right-hand drive market. Sourcing the vehicle from here enables us to leverage synergies in manufacturing,” said a senior Renault India executive. The company, which shipped the first consignment of 350 vehicles from India to the UK and Ireland in December 2012, is considering exporting the car to other right-hand drive markets such as Malaysia, Indonesia and South Africa.

Becoming an SUV mart
India can emerge as a supply hub to feed the world demand for SUVs

Fiat
* Fiat is looking at leveraging excess capacity in India to develop it as an export hub for right-hand drive vehicles

* The company is firming up plans to export utility vehicles from India to markets in the UK, Japan, Australia and South Africa

Ford
* Ford EcoSport to be exported to 40 countries out of India

* More than 40% of annual production of 150,000 units of the vehicle is earmarked for exports, say industry sources

M&M
* M&M has exported 2,151 units of XUV500 to South Africa and Europe between April and February FY13

* It is set to start sales in Latin America by September 2014

Renault
* Renault is shipping the Duster to UK and Ireland from India

* It is looking to ship the product to right-hand drive markets in Malaysia, Indonesia and Africa

IRDA removes limit on insurers reverse repo transactions in G-Secs

Mumbai: The Insurance Regulatory and Development Authority (IRDA) has removed the 10 per cent exposure limit on reverse repo transactions by insurers.

Insurance companies will now be free to invest in reverse repo transactions in government securities as per their discretion.

IRDA said reverse repo transactions in Government securities were treated on a par with collateralised borrowing and lending obligation transactions and the 10 per cent investment limit wasn’t applicable to this category, in a circular to the chief executives of all insurance companies

However, in case of corporate bonds, the investment limit would be 10 per cent of all the funds.