Companies & Sectors
Auto sales in November weaker than expected across segments

During November, all automakers reported weaker-than-expected numbers due to soft demand

Indian auto industry witnessed weaker sales during November across the segments. While passenger car and medium and heavy commercial vehicles (MHCV) volumes declined tractor sales were the only exception where growth was higher than expected. Two-wheeler volumes increased mainly due to 43% higher sales reported by Honda Motorcycle and Scooter India, Pvt Ltd (HMSI).

 

Nomura feels if the current trend continues, there may be downside risks to its FY14 volume estimates for Bajaj Auto Ltd and commercial vehicles (CVs) Ashok Leyland and Tata Motors. "There could be some upside risks to our volume estimates for Hero MotoCorp Ltd (HMCL)," it said in a research note.
 


During November the demand subdued, however lower commodity prices are positive for profitability of automakers, Nomura said.

 

The note says, "As per our discussion with the companies, demand is soft post the festival season. Discounts came down marginally in the October-November period but can inch up higher in December. However, companies sounded more positive on profitability as commodity prices have come down and thus recent price increases should lead to better margins, we believe."

 

During the month, car industry volumes declined 7%, while two-wheeler volumes increased 6-7%. Nomura said, "HMSI reported a strong set of numbers (up 43%), led by robust growth in both bike and scooter segments. HMCL’s volumes increased by about 6%, below Nomura’s expectations of around 10% growth. Bajaj Auto saw a 29% decline in domestic motorcycle volumes compared to our expectations of 12% decline. As per the company, this was partly due to run-down of inventory and lower production of newly launched Discover 100M. TVS saw 10% decline in domestic two-wheeler volumes while Yamaha’s volumes increased by about 7%."

 

According to Nomura, overall MHCV industry volumes weakened further in November. "Volumes declined by about 35%, much below our expectations of 15% decline. Volumes for Tata Motors declined, by about 28%, while Ashok Leyland saw a 40% decline in MHCV volumes. Eicher’s total CV volumes fell by 44%," the report said.

 

 

User

Kingfisher Airlines is biggest defaulter of public sector banks

Vijay Mallya's Kingfisher owes Rs2,673 crore is the largest defaulter of PSBs while Winsome Diamond and Jewellery Co with dues of Rs2,660 crore is the second biggest defaulter

Vijay Mallya-owned and now defunct Kingfisher Airlines is the biggest defaulter and owes Rs2,673 crore to public sector banks (PSBs), says All India Bank Employees' Association (AIBEA).

 

According to the bank employee association, Kingfisher tops the list of 50 biggest defaulters of PSBs that owes Rs40,528 crore. In order to highlight the increasing bad loans or non-performing assets (NPAs) menace in PSBs, the bank employees are observing 5th December as 'All India Demands Day' by wearing badges and holding rallies.

 

According to the union, Mumbai-based Winsome Diamond and Jewellery Company (erstwhile Su-Raj Diamond India Ltd), with dues of Rs2,660 crore, is the second highest defaulter, followed by Electrotherm India Ltd at Rs2,211 crore.

 

In May 2013, ratings agency CRISIL downgraded the Jatin R Mehta-led Winsome Diamond to a ‘D’ rating while placing it under watch in view of continuous defaults of the company’s overseas customers and consequent development of letters of credit (LoCs). At that time, Punjab National Bank, the lead bank of the consortium, has an exposure of more than Rs1,800 crore to the Winsome Group.

 

Some of the other big-ticket defaulters include, Zoom Developers Pvt Ltd (Rs1,810 crore), Sterling Biotech Ltd (Rs1,732 crore), S Kumars Nationwide Ltd (Rs1,692 crore), Surya Vinayak Industries Ltd (Rs1,446 crore), Corporate Ispat Alloys Ltd (Rs1,360 crore), Forever Precious Jewellery and Diamonds (Rs1,254 crore), Sterling Oil Resources Ltd (Rs1,197 crore) and Varun Industries Ltd (Rs1,129 crore).                                                                                                             

                                                                                                  (Rupees in crores)                                 

 

BORROWER

LOAN NOT REPAID

  1.  

Kingfisher  Airlines

2673

  1.  

Winsome Diamond & Jewellery Co. Ltd.

2660

  1.  

Electrotherm India Limited

2211

  1.  

Zoom Developers Private Limited

1810

  1.  

Sterling Bio Tech  Limited

1732

  1.  

S. Kumars Nationwide Limited

1692

  1.  

Surya Vinayak Industries  Ltd.

1446

  1.  

Corporate Ispat Alloys Limited

1360

  1.  

Forever Precious Jewellery & Diamonds

1254

  1.  

Sterling Oil Resources  Ltd.

1197

  1.  

Varun Industries  Limited

1129

  1.  

Orchid  Chemicals  & Pharmaceutical Ltd.

938

  1.  

Kemrock Industries & Exports Ltd.

929

  1.  

Murli Industries & Exports Limited

884

  1.  

National Agricultural Co-Operative

862

  1.  

STCL Limited

860

  1.  

Surya Pharma Pvt. Ltd.

726

  1.  

Zylog Systems (India) Limited

715

  1.  

Pixion Media Pvt. Limited

712

  1.  

Deccan Chronicle Holdings Limited

700

  1.  

K.S. Oil Resources Ltd.

678

  1.  

ICSA (India) Ltd.

646

  1.  

Indian Technomac Co. Ltd.

629

  1.  

Century Communication Limited

624

  1.  

Moser Baer India Ltd. & Group Companies

581

  1.  

PSL Limited

577

  1.  

ICSA India Limited

545

  1.  

Lanco Hoskote Highway Limited

533

  1.  

Housing Development & Infra Ltd.

526

  1.  

Mbs  Jewellers  Pvt. Ltd.

524

  1.  

European Projects And Aviation Ltd.

510

  1.  

Leo Meridian Infra Projects

488

  1.  

Pearl Studios Pvt. Ltd.

483

  1.  

Educomp Infrastructure & School Man

477

  1.  

Jain Infraprojects Limited

472

  1.  

Kmp Expressway Limited

461

  1.  

Pradip Overseas Limited

437

  1.  

Rajat Pharma/ Rajat Group

434

  1.  

Bengal India Global Infrastructure Ltd.

428

  1.  

Sterling Sez & Infrastructure Pvt. Ltd.

408

  1.  

Shah Alloyes Ltd.

408

  1.  

Shiv Vani Oil And Gas Exploration Limited

406

  1.  

Andhra Pradesh Rajiv Swagruha Corp. Ltd.

385

  1.  

Progressive Constructions Ltd

351

  1.  

Delhi Airport Met Ex Ltd.

346

  1.  

Gwalior Jhansi Expressway Limited

346

  1.  

Alps Industries Limited

338

  1.  

Sterling  Port Limited

334

  1.  

Abhijeet Ferrotech Limited

333

  1.  

Sujana Universal Industries

330

 

 

40,528

List released by General Secretary, AIBEA

                                   
In view of the rising bad loans in state-owned banks, the AIBEA said the government should set up a special investigation team to probe the decisions of their credit appraisal committees in cases where borrowers have turned wilful defaulters.

 

In addition, the bank employee association also wants responsibility fixed on banks’ top brass for the loans that have turned bad, allow banks to share information on NPAs and wilful defaulters under the Right to Information (RTI) Act, and declare wilful loan default as a criminal offence.

 

Pointing out that the credit appraisal committees of public sector banks had powers to sanction single loans up to Rs400 crore in the case of large banks and up to Rs250 crore in the case of small banks, Vishwas Utagi, General Secretary, Maharashtra State Bank Employees Federation, an affiliate of AIBEA, alleged that promoters of large defaulting companies diverted bank loans into real estate and floated cricket outfits for competing in domestic league matches.

 

According to the Union, over the past seven years, there are fresh bad loans worth Rs4.95 lakh crore only in PSBs, while during the same period, these lenders wrote off band debts worth Rs1.4 lakh crore. Top four defaulters of state-run banks constitute Rs23,000 crore of NPAs, the AIBEA said.

 

AIBEA has demanded remedial measures to address the growing menace of NPAs in state-run banks. The Union has demanded PSBs to publish list of bank loan defaulters of Rs1 crore and above, make wilful default in bank loan a criminal offence, order investigation to probe nexus and collusion (between the borrower and officials), amend Recovery Law to speed up the process, take stringent measures for recovering bad debts and not to incentivise corporate delinquency.

 

Last month, the Nitin J Sandesara-led Sterling Biotech, a Vadodara-based Gelatin maker, received approval from lenders to restructure its $250 million (about Rs1,575 crore) bonds. According to a report from Business Standard, Sterling Biotech’s bondholders of Zero Coupon Convertible Bonds which were due in 2012 had agreed to suspend all litigations in India and the United Kingdom, thereby opening a way for the consensual restructuring of the existing bonds.

 

Over the past year, Kingfisher, S Kumars Nationwide and Winsome Diamonds share prices have tumbled by over 60%. Following restructuring of bonds last month, Sterling Biotech shares rose 40% to Rs8.11 from Rs5.8 a year ago.

 

Kingfisher shares have fallen 63% to Rs4.92 as of 4 December 2013, from Rs13.25 as on 3 December 2012. During the same period, S Kumars and Winsome Diamonds shares fell 61% and 80% to Rs5.96 and Rs6.4, respectively.

User

COMMENTS

nagesh kini

3 years ago

Thanks Mr. Utagi for coming out with the data that was always available but deliberately withheld from public scrutiny.
It now up to the Parliamentary Standing Committee to suo moto take it up and ascertain full facts from the poor risk assessment, deliberate low monitoring of the advances, lack of pro-active checks, faulty debt restructuring giving rise to back door write-off without proper approvals.
Since there are high profile big ticket players out to sabotage any enquiry only those with impeccable credentials should be associated with the Inquiry.
There has to be an immediate action in putting up all the charged assets to realize all that is possible and above all immmediately freeze any more funding by insisting that the promoters pump in additional funding right away.
As one paper rigthtly headlines it "NPA - The great bank robbery - thanks to judicial protection to the large wilfull defaulters stake holders of the lenders are in the dark about the loans."
In addition the borrowers and their guarantors ought to be named and shamed by each bank now that the High Court has cleared publishing their mug shots.

REPLY

Vinay Joshi

In Reply to nagesh kini 3 years ago

You are an activist!? Presumably!

WHY CAN'T YOU PETITION RS MP Mr. CHANDRASEKHAR ON THIS ISSUE?!?!

WHO STOPS YOU?? WHY CAN'T YOU PETITION & TALK ON 'RIL INSIDER TRADING' & 'GAS PRICING'??!!

Ashish

3 years ago

surprising most of the top defaulters don't even have a corporate website..

Can Harish Salve bail out Nokia in the Rs6,000 crore tax evasion case?

Nokia India has got itself into a terrible mess over alleged failure to deduct TDS on royalty payments to its parent company. What would have ended with a mere 10% tax rate has now morphed into a horrendous tax liability. It will take all of Harish Salve’s wizardry to pull Nokia out from the deep hole it is in. Can he do it?

“It scarcely lies in the mouth of the taxpayer who plays with fire to complain of burnt fingers”

-- Lord Greene M.R., in Lord Howard De Waldan v. IRC [1942] 1 KB 389

 

Anybody dealing with multinational conglomerates will tell you that their biggest problem is one of overconfidence and lack of accountability, especially when dealing with poverty-stricken third World countries. Deals worth billions of dollars are put through by some expatriate executive, high on adrenalin, sitting in an exotic location like New York, London or wherever, without a second’s thought for the legal and tax implications in the dusty by-lanes of the Third World Country where the deal is to be implemented.

 

Somehow, a feeling seems to have developed amongst the MNCs that because these Third World countries need foreign capital so desperately, the MNCs can do what they want and get away with it, with nobody to pull them up.

 

We saw how this attitude got Rolls Royce, the so-called torch bearer for good corporate governance, into serious trouble with the Indian tax authorities. The Tribunal expressed unhappiness that Rolls Royce concealed the true facts as to its taxable transactions and this finding was upheld by the High Court.

 

Nokia seems to be a victim of the same “Devil may care” attitude. It set up a subsidiary in India, Nokia India Pvt. Ltd, to manufacture mobile phones. It invested over $300 million at the 210-acre plant in Sriperumbudur, near Chennai, and produced 500 million units in six years. Nokia agreed with the Indian subsidiary to provide it with the technology and technical know-how required for this purpose and in return, the subsidiary had to pay it royalty.

 

Continue reading…

 

Courtesy: The Income Tax Appellate Tribunal Bar Association, Mumbai

User

COMMENTS

Vinay Joshi

3 years ago

The top notch experts in any field 'guarantee circumvention', when laws clear. Not India episode. Today Nokia is Bill Gates baby, if it comes thro' all other cases will 'fall off'!

When they fail to deliver they advise 'petition', AS CAN BE MANAGEABLE!

IF GOVT. IS INCLINED TO RECOVER IT ALWAYS CAN!?

FYI, ALL POLITICAL PARTIES LEGAL LUMINARIES ARE HEAVY WEIGHTS & ARE SOUGHT AS LEADING COUNSELS!

In the event you understand international financials vis-a-vis taxation in the originating country possibly you overlook certain aspects.

Why Cyprus has negotiated new tax pact with India? A month earlier it was declared as a 'notified country' [jurisdiction].

So in the talks in Delhi, Nov 26-28, both sides agreed to abide by Article 26, OECD tax convention. So as agreed 94A IT will not prevail.
DTAA aspects yet not clear.

So if MNC's try dodging transfer pricing regulations, the assesses have to prove it to the satisfaction of Indian tax authorities.

With my aspect i can exclude only Shell India, wrongly caught on issuance of shares to parent co.

Irrespective if Indian taxation laws are well understood & NOT TWISTED by certain vested interests ON SAYING OF TAXATION experts the sad,sad aspect of tax litigation's will not arise.

In the battle its the legal experts [counsels] who earn.
Vodafone as of now has spent at least $20mn in UK & in India. [to battle it's 11KCR tax case.]

Yet in next two years it envisages to invest $3bn in India!? Is it a bait? NO!

A survey of 1.6K executives from 72 countries, 20 industry sectors, apart from various other aspects, when asked where they would invest in next 12 months, India ranked at No.1! Germany 15, US 5th, China 3rd, Brazil 2nd!

My aspect straight - experts opine saying manageable!

Why Rolls Royce in doldrums & trying to reinvent itself? Who are the takers? Whereas Tata's have turned around JLR!? OK.
WHERE IS FIAT?

Regards,

jaideep shirali

3 years ago

The Vodaphone case was bad enough, now we have Nokia. MNCs seem to believe in somehow taking advantage of legal loopholes, the law is either not obeyed in letter or spirit, or maybe both. I am not questioning the Vodaphone judgments, but it beats me as an Indian citizen, as to how transfers in assets on Indian soil may not follow Indian law, but can obviously contest it. The solutions these firms use is to employ hotshot lawyers, for whom it seems the lure of money matters more than the flag that they supposedly bear allegiance to. This is somewhat like defending a modern version of an East India Company's efforts to loot this nation. The Nokia case would be interesting given that one of the UPA's so - called "legal luminaries" has taken an interest. Given the UPA's disdain for the Indian legal system with action like loss of critical files, one only hopes that finally the Indian tax authorities win. India is too big a market, if not Voda or Nokia, someone else would be glad to fill in their shoes. Our tax authorities should stare down these bullies and get this nation the money it deserves.

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