Companies & Sectors
Car, two wheeler sales stable; CV continue to deteriorate in September

September auto sales indicate some stability in passenger car and two-wheeler segments but suggest further deterioration in commercial vehicle segment, especially in MCHV

Auto sales during September turned out to be better for passenger vehicles and two-wheelers, while the commercial vehicle (CV) segment deteriorated further.


"As per our calculations, car industry volumes were likely flattish in September (up 1%) as compared to our expectations of 5% decline. A part of this could be led by inventory build up ahead of the festive season, in our view," said Nomura Financial Advisory and Securities (India) Pvt Ltd, in a research note.


During the month, Maruti Suzuki India (MSI) Ltd, the country's largest carmaker, reported 11.7% increase in total sales at 1.05 lakh units as against 93,988 units  same month last year. For other unlisted companies, Korean automaker Hyundai Motor Co unit Hyundai Motor India Ltd’s volumes were flat which is somewhat disappointing while Honda Cars India Ltd volumes increased by 90%, led by Amaze at 6,700 units. During the month Honda Cars sold 10,354 units compared with 5,508 units, same month last year.


Tata Motors, India's largest vehicle maker, reported over 33% fall in its September sales to 50,427 units. While its passenger vehicle sales fell 41% to 12,879 units, CV sales come down 32% to 33,119 units from a year ago period.


Mahindra & Mahindra (M&M), the country's largest utility vehicles (UVs) maker reported a 10.45% decline in its total sales at 43,289 units in September 2013. The company had sold 48,342 units in the same month last year. However, M&M's tractors sales jumped 33% to 26,637 units in September.

In two-wheeler segment, Honda Motorcycle & Scooter India Pvt Ltd (HMCL) reported 35% higher sales due to 44% jump in bike and 28% growth in scooter segment. Hero MotoCorp (HMCL) reported 15.8% rise in total sales at 4.69 lakh units during the month compared with 4.05 lakh units in September 2012. Bajaj Auto reported 2.71% rise in motorcycle sales at 3.24 lakh units in September 2013 compared with 3.15 lakh units in the corresponding month last year.


"Our calculations suggest that domestic 2-wheeler industry volumes were up 17% in September, largely in line with expectations. Note that industry growth has come off a low base (industry volumes down 13% in Sep-12) due to inventory corrections at HMCL last year," Nomura said.


During the month overall volumes for medium and heavy commercial vehicle (M&HCV) weakened further and declined by 39%. Ashok Leyland reported a 32% decline in CV sales to 7232 units compared with 10,620 units a year ago period.


Nomura added, "We see downside risks to our estimates for CVs which is negative for Tata Motors and Ashok Leyland. However, we reiterate our BUY rating on Tata Motors as growth momentum in JLR continues to remain strong. If the current trend continues, there could be downside risks to our volume estimates for HMCL as well while there could be some upside to M&M’s tractor numbers."




3 years ago

Largest players not covered in each of the segment. Like Maruti in Cars, Hero Motors in Two Wheelers & Tata motors in Commercial Vehicles.

Would have loved to see the trends on a representative data.

Nifty October futures hit 5,996 in yet another freak trade

Thursday’s freak trade, the third such incident in 2013, in Nifty futures happened with multiple contracts changing hands with a peak level of 5,996

In yet another freak trade, the National Stock Exchange (NSE)’s October futures surged 2.8% to near 6,000 levels before paring gains. At the 5,996 level, the near month contract (October futures) was priced higher than even the November future prices, which made a high of 5,984.

Multiple contracts in the Nifty October futures changed hands on the NSE, with a peak level of 5,996, a gain on the day of as much as 2.87%. They quickly dropped back for a gain of about 1.5%.

The reason behind this freak trade is yet to be discovered by the exchanges, it can be system failure or any unusual trading activity which creates this price movement.

This is the third such incident of freak trade on NSE in 2013. Earlier in February, share prices of Tata Motors and Ultra Tech fell by 10% in a jiffy, where trade from brokerage Religare Securities had caused the crash.

Earlier on 5 October 2012, the Nifty crashed by over 900 points when a dealer for stockbroker Emkay Global punched a wrong order. While NSE quickly blamed Emkay for the crash, but has not bothered to explain why its market-wide circuit filters failed to work. And now, NSE is seeking approval from the market regulator for its proposal under which brokers will have to collect margin money upfront from investors for trading in shares or the cash segment, similar to futures and options (F&O) trading.

At present, Exchanges collects upfront margins from brokers, but brokers do not ask clients for money in advance in the cash segment. In short, brokers are funding the clients, who settle the trades on next day using the ‘T+1’ settlement. The NSE move follows a show cause notice issued by SEBI, after the 5 October 2012 flash crash.

NSE blamed 'abnormal' orders, worth $126 million, placed by the stockbroker in multiple trades of various stocks at low prices, for the crash. NSE claimed there were no technical glitches in its system and the crash was due to 'erroneous' trade orders worth over Rs650 crore by Emkay, which was disabled by the bourse for trading. Both, Emkay and Religare have challenged the decision of the exchange in the Securities and Appellate Tribunal.

As Moneylife has already said, the NSE as well as the BSE seems to have ignored every check prescribed by market regulator Securities and Exchange Board of India (SEBI). Trading was not halted in both bourses and across market segments; but the regulators’ only reaction was to launch an investigation.

The NSE has always successfully evaded a close scrutiny of all technology issues for over a decade. In its initial years, especially under the leadership of the late Dr RH Patil, the NSE was seen as an extension of the regulator and the government system. Not any more. Today, the NSE is driven by profits, pay and perquisites of senior executives, which are tied to a desperate need to maintain market share.



Urgent need for RBI to focus on quality and impact of financial inclusion efforts

While Dr Raghuram Rajan, the new governor of RBI emphasising on inclusive growth and development is good news, the central bank needs to focus on quality and impact of financial inclusion services that would be easy to access and  compatible with the needs of customers

Dr Raghuram Rajan, the governor of Reserve Bank of India (RBI) in his inaugural speech, talked about the central bank’s “two other important mandates; inclusive growth and development, as well as financial stability. As the central bank of a developing country, we have additional tools to generate growth – we can accelerate financial development and inclusion. Rural areas, especially our villages, as well as small and medium industries across the country, have been important engines of growth even as large company growth has slowed. But access to finance is still hard for the poor, and for rural and small and medium industries. We need faster, broad based, inclusive growth leading to a rapid fall in poverty.”


This needs to be strongly appreciated as it brings into focus the critical issues of quality and impact of financial inclusion, which have hitherto been ignored so far. But before we get to this, let us first understand the scope of financial inclusion in India, as of today. Typically speaking, the scope of financial inclusion (FI) in India involves the following and related services (not exhaustive):

  1. Access to accounts: a) Savings (No frills etc); and b) Current accounts.
  2. Access to  deposits: a) Fixed deposits; and b) Recurring deposits
  3. Access to transaction banking: a) Use of cheques, demand drafts and other such instruments; b) Receiving of social security (NREGA and other) payments through bank accounts; c) Transfer of money through RTGS or NEFT and remittance services; d) Debit cards and ATM usage; e) Credit cards including KCC and GCC; f) Bill payments through technology banking - mobile banking, internet banking etc
  4. Access to credit facilities: a) Typical priority sector loans for agriculture and allied areas etc; b) Post harvest, post production loans; c) Loans for marketing of agricultural and other produce etc; d) Traditional working capital limits; e) Traditional MFI loans under priority sector; f) Traditional SHG bank linkage program loans; g) Loans from specialised credit and other cooperatives; h) Traditional MSME loans backed by credit guarantee from Government of India; i) Housing/mortgage loans; and j) Various kinds of overdraft facilities and so on;
  5. Access to risk management services: a) Life insurance; b) Health insurance; c) Asset insurance; d) Crop and weather insurance; e) Livestock insurance; f) Other such products such as credit insurance; and g) Micro-pensions
  6. Access to other Services: a) Deposit insurance; b) business facilitators (BF) and business correspondents (BC); c) financial literacy services and credit counseling (FLCC) centers; d) grievance redressal, ombudsman and legal aid services; e) credit bureau; and f) Other services

The above services can be acquired through various institutions such as (but not limited to) the following: Commercial Banks, Regional Rural Banks (RRBs), Cooperative Banks, Local Area Banks (LABs), Post Offices, State Cooperatives, Mutually Aided Cooperatives, Multi-State Cooperatives, Investment Grade NBFCs, NBFC MFIs, BCs/BFs, Other MFIs, SHGs and so on. Not all services can be provided by all institutions but that is an issue that I deal with later, in a separate article


Having set the broad context, I want to emphasise the fact that we urgently need comprehensive baseline data regarding the number/proportion of mutually exclusive individuals/households (among low income people) and mutually exclusive small businesses who have accessed the above financial inclusion services from various institutions in any given year! Apart from serving as an important baseline, such data would also help us understand which of these financial inclusion services and institutions are preferred by different groups of low income people. So, this is an important task for the RBI under Dr Rajan. Therefore, instead of wasting time on organizing yet another financial inclusion committee and managing its cumbersome administration, the RBI would perhaps serve the nation better by setting in motion processes that would help in the above. That is not all.


When we say (or imply) that financial inclusion would lead to inclusive growth and therefore, the RBI must enhance its thrust on financial inclusion, I would like to transparently understand from Dr Rajan and the RBI as to what is the relationship between financial inclusion and inclusive growth? Put differently, I am yet to understand ‘how access to a savings account or credit bureau or even a loan or some form insurance would facilitate inclusive growth’? In fact, this unabashed support for MFI priority sector loans, as part of RBI financial inclusion drive that started in 2005, led to disastrous growth in the Indian micro-finance sector in subsequent years (especially, April 2008 – March 2010). This irresponsible growth of MFIs culminated in what is now famously called as the 2010 AP micro-finance crisis, which, as its ultimate impact has resulted in the financial exclusion of thousands of low income people it sought to financially include (in the first place). This needs to be noted by everyone.


Therefore, in my opinion, for us to come to some meaningful conclusion with regard to the relationship between financial inclusion and inclusive growth, we need data on two important parameters: a) the quality of the financial inclusion services delivered; and b) how access to the various financial services have been of some benefit to these mutually exclusive low income individuals/households, small businesses and others? Both of these critical issues are very rarely talked about even globally and transparent data on these aspects is almost non-existent! And both quality and impact are very important and much wastage of precious national resources has occurred (especially, in India) because of our lack of attention to these.


Therefore, it is about time that we started to understand quality and impact of financial inclusion, with a focus on the following:

  1. Ease in accessing financial inclusion services: How easy is it for a low income individual/household or small business to access the concerned financial inclusion service (s)? What are the physical and psychological barriers to access? What procedural aspects and cost related issues (both affordability and transactions cost) prevent the financial inclusion service (s) from being accessed by the target segment?
  2. Compatibility of financial inclusion services: How tailor made (adaptability) are the concerned financial inclusion service(s) to needs of the customers? Do the service attributes meet the needs of the customers? Are customer needs considered when financial inclusion service(s) are being developed and introduced?
  3. Actual usage of various financial inclusion services: What can be said about the actual usage of the concerned financial inclusion service (s)? How regularly are they used? What is the frequency of usage? For what length of time are the various services used?
  4. Impact of different financial inclusions services: What is the impact of the different financial inclusion services? Have they reduced vulnerability in the livelihoods of the customers or enhanced their ability to cope with crisis situations, life cycle events and emergencies? Have they acted as a consumption smoothing mechanism? Have they helped in improving productivity in their livelihood and so on?

While the first three aspects given above (ease of access, compatibility and actual usage) relate to the quality of financial inclusion services, the fourth one concerns the impact of financial inclusion. And it should be noted that these are just starter variables and not necessarily exhaustive.


To summarise, financial inclusion services must be easy to access and should be compatible with the needs of the customer and if both of these are true, there will be greater usage of the concerned financial inclusion services (other than for the one time services). It is under such circumstances that we can expect some tangible impact (ceterus paribus) on the livelihoods of the customer or productivity of the small business and so on and so forth.


Therefore, unless we have some understanding about the quality of financial inclusion and the related issue of impact, making unsubstantiated claims about financial inclusion leading to inclusive growth is certainly not appropriate! If indeed, the RBI is serious about financial inclusion as an instrument to achieve inclusive growth, it must start to focus more on ‘quality and impact’ of financial inclusion services (as part of its larger mandate) rather than just look at the mere numbers that it has so far been emphasizing! And I hope that Dr Rajan’s presence at the helm will spur quick action on these fronts at the RBI in the near future!


(Ramesh S Arunachalam has over two decades of strong grass-roots and institutional experience in rural finance, MSME development, agriculture and rural livelihood systems, rural and urban development and urban poverty alleviation across Asia, Africa, North America and Europe. He has worked with national and state governments and multilateral agencies. His book—Indian Microfinance, The Way Forward—is the first authentic compendium on the history of microfinance in India and its possible future.)




3 years ago

Financial inclusion has reached such crazy proportions that it has become mere tokenism as there is no clarity at the grass roots level

nagesh kini

3 years ago

An extremely well written brief.
The Governor ought to stick to his inaugural speech of taking forward on his mandate of inclusive growth and financial stability. We've had enough of the so-called 'High Powered Committees' that spend hours writing minutes. No further Cammittees please.
In RBI appointed Damodaran Committee, its Chairman dilly dallayed in signing its report that required a RTI query to affix his signature!

Ravi Saini

3 years ago

There should be special cell within RBI to invite NBFC's to help bringing in non Repatriation basis investment in the country. We are ready to volunteer such initiative as we have the right answers. Ravi saini

[email protected]

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