Bangalore: Some African countries are offering land on lease for 99 years for free to overseas farmers and India should grab the opportunity, reports PTI quoting the Associated Chambers of Commerce and Industry (Assocham).
Assocham has sent a proposal to the external affairs ministry to consider tapping the emerging agricultural opportunities in Africa and offering to act as a facilitator to help Indian farmers reap the benefits of the huge potential that lie in Africa.
"Hoping to address the huge issue of food shortage, these countries have begun inviting overseas farmers to come and cultivate their lands. These governments are willing to lease land free of cost for 99 years," Assocham secretary general D S Rawat told PTI.
Farmers are free to cultivate the land and raise any crop and sell it to the domestic market and also export.
"It is a win-win situation for the farmers and for the African governments," said Assocham director Om S Tyagi.
"Since the lease is for 99 years, it means that a farmer is in control of the land for his life time. It means land for roughly around three generations," he said.
The countries that were in the forefront trying to attract agriculturists were Sudan and Ethiopia, he said.
Several Chinese farmers have already accepted the offer and begun cultivation of land, said Mr Tyagi.
A number of farmers from Punjab have also on their own initiative migrated to these countries and begun cultivation. However, the chamber was not able to provide statistics on the number of Indians farming in these African countries.
According to J Crasta, chairman Karnataka State Council, "We know of five farmers from Karnataka who have already acquired hectares and hectares of land and have begun farming and are doing well".
Assocham has proposed to the ministry that the chamber was willing to coordinate between these countries and Indian farmers to facilitate those desirous of going overseas for farming.
It has suggested that part of the cost should be funded by the Centre or state governments and partly by it.
It was willing to identify farmers who want to take up the opportunity and to help them network with the embassies of these countries to complete the procedure and fulfil the various requirements, said Mr Tyagi.
"We are keen in taking educated farmers", said Mr Rawat adding the process has begun with over 1,000 farmers in Patiala who have come forward and expressed their intent. Out of these around 300 have been screened and work was on to get them in touch with the required government agencies.
According Mr Rawat, such a move would be specially beneficial for farmers in the country who were working on lands of others to go and have a land piece of their own.
It would also, he said, in some way mitigate the current scramble for agricultural land in India.
The scrip is at an all-time high, but going ahead, Jaguar Land Rover’s performance will hinge on demand from the US and China, favourable currency movements and depressed raw material prices
JLR was a show-stopper
Tata Motor's Q1 performance exceeded the Street's expectations by a wide margin thanks to a stellar performance from Jaguar Land Rover (JLR). Tata bought the British automotive company in 2008 for $2.3 billion in a deal that drew huge criticism at that time. JLR's successful turnaround could be the first step for the Tatas in proving critics wrong - the second, of course, will have to be lowering the massive consolidated debt quicker than expected.
JLR margins: 410 bps improvement
JLR's margins saw a huge 410 bps q-o-q improvement due to a mix of factors such as favourable currency movement, better product mix, and cost control. A weaker pound boosted the profitability of JLR's US exports. A weaker euro lowered costs. JLR also lowered its incentives (discounts) and exercised tighter cost control. Its EBITDA margins now stand at 15.5%. For margins to sustain in the coming quarter, the pound and the euro have to weaken and commodity prices will have to remain lower.
Tata Motors' standalone EBITDA margin was higher than expected due to higher 'other income' and lower amortisation of product development expenses. Ace Truck, Ace Magic and Winger continue to register strong sales. Indigo Manza had a successful launch.
Demand: Strong from US, China
Demand remains strong from China and North America (UK is still lagging). China made up for 11% of sales in Q1 (8% in FY10) while UK declined to 23% (28% in FY10). If demand remains so strong, incentives and discounts should remain low. JLR is launching the new LRX Land Rover and a smaller Jaguar - this should support volumes (next year). For competitors too, demand has been strong - Daimler and BMW recently raised guidance.
JLR inventory and realisations
JLR's inventory (both at the dealer and JLR end) are now down to a comfortable 77 days (102 days in Q1 FY10). It has sustained at current levels for three quarters now. Its realisations have been steadily climbing for a year now and were up 6% q-o-q - they have risen from £31,337 in Q1FY10 to £38,209 in Q1FY11.
Some supply constraints
Tata Motors indicated that with the current manpower, JLR is operating at close to full capacity. It is also encumbered by the supply of engines (from Ford). Hence, most models are on a waiting period of 2-3 months.
JLR sources nearly 20% of its components from low-cost centres like Eastern Europe which it plans to increase to 35% over the next few years. Warranty costs have been much higher for JLR at ~5%, versus ~2% for competitors. JLR says it will work on internal and vendor-related processes to minimise these costs. JLR plans to (eventually) shut down one out of its three operational plants and reduce the number of employees. For now, though, JLR has resumed hiring.
A quick look at some key numbers:
Net sales: Rs270.56 billion (up 65% y-o-y, down 7% q-o-q)
EBITDA: Rs39.5 billion (up 563% y-o-y, up 17% q-o-q)
Net profit: Rs19.89 billion (down 10% q-o-q)
Net sales: Rs104.16 billion (up 63% y-o-y, down 15% q-o-q)
EBITDA: Rs11.75 billion (up 61% y-o-y, down 5% q-o-q)
Net profit: Rs4.4 billion (up 119% y-o-y, up 25% q-o-q)
Most brokerages tracking Tata Motors are completely blown away with JLR's performance and are predictably asserting that it will sustain. However, it faces three key challenges - US and China demand has to sustain at current pace but both economies are showing signs of strain, currency movements have to be favourable, and commodity prices have to be down. For now, the dollar index is showing absolutely no signs of rising, so it may be difficult for even the last two conditions to come true. Tata Motors is at an all-time high today. Retail investors should exercise caution.
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