Companies & Sectors
February car sales growth tumble to 12-year low; even UVs take the hit

During February, while weakness persisted across most segments, it was more prominent in MHCV, tractor, passenger car, and two-wheeler segments. The UV segment, which had so far remained insulated from the slowdown, also witnessed initial signs of weakness

Automobile sales during February 2013 continued to suffer from extreme weakness, with utility vehicles (UVs) and sports utility vehicles (SUVs), the only segment that was growing, too taking a hit. During the month auto sales remained weak across most segments, led by continued weakness in domestic demand on account of high interest rates, inflation and slowdown in economic activity. High base effect due to pre-budget buying in February 2012 also impacted the growth.

 

“The decline in car sales in February was the biggest since December 2000, when sales declined by 39.86%. The market continues to be extremely difficult as high fuel prices, interest rates and overall macro economic factors are adding to low consumer sentiments,” Sugato Sen, deputy director general of Society of Indian Automobile Manufacturers (SIAM) told reporters in New Delhi.

 

According to the data released by the SIAM, during February, overall sales fell by 5.45% to 14.51 lakh units from 15.34 lakh units same month last year. Domestic passenger car sales fell 25.71% to 1.58 lakh units compared with 2.13 lakh units same month of 2012 taking the total passenger vehicle sales 16.67% down.

 

The automobile sector has witnessed a shift in demand in almost all the segment of vehicles. In the passenger vehicles segment, the gradual shift towards UVs against cars is evident as they are powered by cheaper fuel and have space to accommodate more people. UVs’ contribution in the total sales of passenger vehicles has increased to 20% from 14% last year.

 

While weakness persisted across most segments, it was more prominent in the medium and heavy commercial vehicle (MHCV), tractor, passenger car, and two-wheeler segments. The UV segment, which had so far remained insulated from the slowdown, also witnessed initial signs of weakness.

 

Maruti Suzuki India’s UV sales declined 2% mom (month-on-month). While passenger vehicle sales for Mahindra & Mahindra (M&M) grew 14% during February, Tata Motors’ domestic UV sales and car sales tumbled 57% and 73% to 2,844 units and 7,769 units, respectively, compared with a year-ago period.

 

Post Union Budget, both M&M and Tata Motors have increased prices of their SUVs in line with the increase in excise duty, which may impact sales for the only segment that was witnessing growth in automobile industry.

 

During the month, total sales of commercial vehicles declined by 11.1% to 68,388 units from 76,891 units in the year-ago period. In February, M&HCVs sales tumbled 34.72% due to hike in diesel prices and slow down in industrial activities. 

 

Total two-wheeler sales in February 2013 slipped by 2.77% to 11.12 lakh units from 11.43 lakh units in the same period last year. Motorcycle sales during the month fell 4.48% to 8.00 lakh units from 8.37 lakh a year ago period, SIAM said.

 

In this segment, there is gradual rise (2.55%) in the sales of scooters over motorcycles. Scooters contribute around 21% in the total sales of two-wheelers, an increase of 3 percentage points from last year. Honda is a leader in scooters which is impacting sales of Hero MotoCorp and TVS Motors.

 

“Going ahead, we expect the demand environment to remain weak in fourth quarter of FY13 as a slowdown in economic growth coupled with higher interest rates and fuel expenses continue to dampen consumer sentiments,” said one brokerage in a research note.

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COMMENTS

Urvish Chitalia

4 years ago

I decided to take advantage of the supposed desperation of car makers to sell their cars. I stay in Mumbai and was looking to buy a car within the 6-8 lakhs range (and maybe even more if the deal was good). I was open to full cash payment and was eligible for a loan for the full purchase price. Based on my experience, the car makers and their dealers could not care less..... I kind of agree with Veeresh Malik's views that car makers should consider selling cars directly to consumers.

My experience:
++++++++++++++++++++
Fiat showroom at SV Road, Kandivali – This one is just 5 minutes from my house …….. Closed on Sunday evening… very strange….Entered a request on their website for a test drive..... no response .....

Honda showroom – I reached there at 1830 … Linkway Honda near Infinity Mall, Malad …. They were closing down the showroom……… the salesman shouting at the watchman to not let people in …. Managed to get in the showroom …. Cars crammed in a small space…. Could not even open the doors of the car….. nobody interested … salesman just keep watching us as if they are being nice by not kicking us out…… not even an attempt to sell the car……. Do I look so poor?...... asked the price … was told the sticker price and also the fact that it is not negotiable……. Is it typical arrogance of Honda dealers? .... I also inquired about Honda Jazz ... dealer says that they have stopped manufacturing it for the last 6 months.... I tell them that the Honda website still shows Jazz as available..... my sister calls up Honda customer helpline.... the executive says he has no idea about availability of Jazz...... ask dealers.... after calling another dealer, we got the same response.... my sister called up the Honda customer helpline again... the executive at the other end chided my sister for calling up again for the same problem.... sounded irritated... that takes the cake for customer support......

Tata showroom – this is near Bikaji… Conconrde Motors …… wanted to have a look at the Linea …. The guys said Linea available only at Prabhadevi showroom….. again the salesman just keep looking at us…….. no attempt to sell the car…….. I started looking at the Club class Manza…. Very spacious …. Has all goodies…….. everyone in family likes it……. It is diesel… I ask if Petrol is available… the sales man says no….. petrol is not manufactured now a days !!!!!!! .. he thinks I am a fool in addition to being poor…… I ask the price … he tells me the sticker price … price not negotiable…….. by then the salesman seems to be interested ….. shows us the Limited edition nano……. To be honest… it is a very spacious car…… it has ac, music system, alloy wheels ……. 20 kmpl….. very easy to get in the car… mom likes it very much…… salesman says only 2.46 lakhs all inclusive………. Mom very very happy……… then he shows me Indica Vista …. This is the first time I am seeing a salesman trying to sell a cheaper car when the customer is looking for a more expensive car…. Either he is very honest or I don’t look like a person who will buy a big car……… as a consolation… took my contact number and said someone from Prabhadevi showroom will call for the Linea testdrive…… no call yet…….

Maruti showroom – Shivam Maruti ... SV Road, Kandivali …… I tell them I want to buy Swift or SX4 ……..show room guys ask me to wait.. salesman comes…… opens his laptop …. Shows me a PPT of the new version of SX4…… I think even I can watch a PPT at home……. Sleepwalks through the presentation …….. tells me the price……. Again … it is not negotiable….. car will have to be booked…. No car in stock……… Swift petrol waiting period of 2 months….

Somethings I don’t understand …..

The papers are shouting aloud that car makers are not able to sell their cars……. Here is a person who is looking to buy a car……. Sedan… even willing to pay cash in case of a good deal…… and these guys are just not bothered to sell to a confirmed buyer….. price not negotiable…….

++++++++++++++++++++

REPLY

Veeresh Malik

In Reply to Urvish Chitalia 4 years ago

Dear Urvish - head for the showrooms of the cars you don't want about 5-7 days before the end of a month or even better, a quarter. Leave a visiting card or phone number, pick up their brochures, go to the next dealer, repeat, go to the dealers of the cars you want last with all the brochures in a folder. Wait for them to call you. Good luck. VM

Rebirth of Investment Allowance

Section 32AC introduced in the Union Budget has come as a blessing to a manufacturer. The manufacturer is free to take allowance of 15% at the time of acquisition of asset and can claim depreciation for the entire life of the asset. It’s a kind of double benefit

The Budget 2013-14 introduced a Section 32AC in the Income Tax (I-T) Act which provides one time investment allowance of 15% on the actual cost of the asset. Section 32AC as reproduced below –

(1) Where an assessee, being a company, engaged in the business of manufacture or production of any article or thing, acquires and installs new asset (emphasis ours) after the 31st day of March, 2013 but before the 1st day of April, 2015 (emphasis ours) and the aggregate amount of actual cost of such new assets exceeds Rs100 crore (emphasis ours), then, there shall be allowed a deduction—

  1. for the assessment year commencing on the 1st day of April, 2014, of a sum equal to 15%. of the actual cost of new assets acquired and installed after the 31st day of March, 2013 but before the 1st day of April, 2014, if the aggregate amount of actual cost of such new assets exceeds Rs100 crore; and
  2. for the assessment year commencing on the 1st day of April, 2015, of a sum equal to 15% of the actual cost of new assets acquired and installed after the 31st day of March, 2013 but before the 1st day of April, 2015, as reduced by the amount of deduction allowed, if any, under clause (a).

(2) If any new asset acquired and installed (emphasis ours) by the assessee is sold or otherwise transferred, except in connection with the amalgamation or demerger, within a period of five years from the date of its installation, the amount of deduction allowed under sub-section (1) in respect of such new asset shall be deemed to be the income of the assessee chargeable under the head “Profits and gains of business or profession” of the previous year in which such new asset is sold or otherwise transferred, in addition to taxability of gains, arising on account of transfer of such new asset.

(3) Where the new asset is sold or otherwise transferred in connection with the amalgamation or demerger within a period of five years from the date of its installation, the provisions of sub-section (2) shall apply to the amalgamated company or the resulting company, as the case may be, as they would have applied to the amalgamating company or the demerged company.

 

(4) For the purposes of this Section, “new asset” means any new plant or machinery (other than ship or aircraft) but does not include—

  1. any plant or machinery which before its installation by the assessee was used either within or outside India by any other person;
  2. any plant or machinery installed in any office premises or any residential accommodation, including accommodation in the nature of a guest house;
  3. any office appliances including computers or computer software;
  4. any vehicle; or
  5. any plant or machinery, the whole of the actual cost of which is allowed as deduction

(whether by way of depreciation or otherwise) in computing the income chargeable under the head “Profits and gains of business or profession” of any previous year.
 

What does the Section mean

New asset acquired in the financial year 2013-14 & 2014-15 will allowed 15% investment allowance along with depreciation benefit. For example, if a company acquires plant & machinery in financial year 2013-14 then investment allowance will be available in the assessment year 2014-15 relating to the previous year in which the “new asset” is acquired and installed after satisfying all the conditions mentioned below:

  1. Cost of acquired and installed new plant & machinery should be more than Rs100 crore;
  2. Investment should be made after 31 March, 2013 but before 1 April, 2015; and
  3. Companies specifically engaged in the business of manufacture or production of any article or thing.

The provision of Section 32AC is explained hereunder with the help of examples:
 

Example 1:
 

Company X (engaged in the business of manufacture or production) acquiring new asset costing Rs 50 crore in AY 2014-15 and Rs50 crore in next assessment year, when will be the investment allowance available?
 

The company shall be eligible to take investment allowance in the AY 2015-16 on the entire amount of Rs100 crore.
 

Example 2:
 

Company X (engaged in the business of manufacture or production) acquiring new asset costing Rs100 crore in AY 2014-15 and Rs50 crore in next assessment year, when will be the investment allowance available?
 

The company shall be eligible to take investment allowance @15% on the entire amount of Rs100 crore in AY 2014-15. In the next year i.e. in AY 2015-16 the company is eligible to take investment allowance @15% on Rs150 crore minus allowance already taken in AY 2014-15.
 

Withdrawal of allowance
 

However, this investment allowance shall be withdrawn, where:

  1. The new asset is sold within five years from the date of acquisition and installation. In such scenario the amount of allowance availed shall be chargeable to income tax under section head ‘Profit & Loss account’ in the yeat of sale.

In case the company which has acquired new assets and merges with another company, the five year provision shall be applicable to the resultant amalgamated company as well.
 

What does Section 32AC offer leasing companies?
 

The new Section provides impetus to leasing business to generate more leasing business in the plant & machinery segment as additional investment allowance shall have implications on the economics of leasing as well. The lessor can claim 15% deduction if he satisfies the condition mentioned above. However, in leases of less than five years, this benefit will not be available.
 

There are several case laws where the leasing companies were allowed additional depreciation u/s 32(1) (iia) of the I-T Act. In case of Shaan Finance1, the Supreme Court held that notwithstanding the fact that the assessee is a leasing company and the plant and machinery leased out by it are not used by the assessee in any industry the assessee is entitled to investment allowance.
 

Conclusion

This Section is come as a blessing to the company basically engaged in the business of manufacture or production of any article or thing. Acquirer is free to take allowance of 15% at the time of acquisition and can claim depreciation for the entire life of the asset. It’s a kind of double benefit which will surely affect the business of manufacturing & production

 

User

About 13,000 signed online petition for Dr V Kurien's Bharat Ratna, PMO says received just 23!

About 13,000 people have signed an online petition demanding Bharat Ratna for Dr V Kurien, the country's milkman. All these petitions were sent to president Pranab Mukherjee and all members of the Padma Awards Committee. However, according to an RTI reply, the PMO has received just 23 petitions in favour of Dr Kurien 

 
An online petition seeking Bharat Ratna for Dr Verghese Kurien, India's milkman has so been signed by 12,969 people, including prominent personalities like Shekhar Kapur, Rajdeep Sardesai, Meera Sanyal and Nirmala Kurien, the daughter of Dr Kurien. However, according to an article in the Economic Times, the Prime Minister's Office (PMO) has received just 23 petitions in favour of the milkman. This also raises big question on the selection procedure for the awards whether it is done by the president, the Padma Awards Committee or just by the prime minister. The irony is, on one hand the government wants the aam aadmi to pay all taxes online but on the other hand, does not even seem to consider an email petition signed by thousands of people. 
 
The petition on Change.org (http://www.change.org/en-IN/petitions/bharat-ratna-for-verghese-kurien-india-s-milkman ) is addressed to Pranab Mukherjee, president of India. Every time somebody signs the petition, the president receives an email. The same mail goes to other members of the Padma Awards Committee like Jamshed N Godrej, Amal Allana, Leela Sampson (chairperson, Sangeet Natak Adademy), Dr R Chidambaram (principal scientific advisor to Govt of India), Pulok Chatterjee (principal secretary to the PM), Omita Paul (secretary to the president), Ajit Kumar Seth (cabinet secretary), RK Singh (home secretary) and Girish Karnad.
 
While the Committee is supposed to recommend names for the awards, it appears that their views and recommendation may not be considered by the decision makers. It is said that the PMO takes a call on the name of awardees including for Bharat Ratna and the Padma awards. According to Wikipedia, the recommendations for Bharat Ratna are to be made by the prime minister to the president.
 
Coming back to the online petition, it received support from all over India and from abroad too—cutting across all geographical, religious and ethnic boundaries. Some people who had signed on the online petition have even forwarded it to Sonia Gandhi, the chairperson of United Progressive Alliance (UPA).
 
After receiving support from over 10,000 people for the online petition, @ManyuShakti put it on twitter: Happy to hear that finally 10,000 squirrels built a bridge to reach Rashtrapathi Bhavan to submit Bharat Ratna petition :-)
 
According to a reply received by the newspaper from the PMO under the Right to Information (RTI) Act, the petition in favour of Dr Kurien, the winner of the World Food Prize and the Magsaysay Award and celebrated around the world for his contributions in making India self sufficient in milk and edible oil, even topped those for cricketer Sachin Tendulkar. It says, while Dr Kurien received 23 recommendations, Tendulkar, on the other hand received 20. 
 
The recommendations for Bharat Ratna are made by the prime minister to the president. No formal recommendations for this are necessary.
 
So far, India awarded Bharat Ratna to 41 people. The last time, it was awarded to Pandit Bhimsen Joshi in 2008.
 
In 2011, the Government of India modified the eligibility criteria to allow sportspersons to receive the award and opened the award for performance of highest order in any field of human endeavour from the earlier criteria for the highest degrees of national service. This service includes artistic, literary, and scientific achievements, as well as recognition of public service of the highest order.
 
Here are 10 reasons why India must recognize Verghese Kurien’s contribution with a Bharat Ratna
 
1. His breadth of vision was stunning. No matter how familiar we may be with his work it is awe-inspiring: He transformed India from a milk-deficit country to the world’s largest milk producer and did it through the cooperative route so that women and small farmers were empowered and found an additional source of revenue to augment their farm income.
 
 2. In doing so he brightened the future of a millions of children by ensuring they had access to milk in when they needed it the most, in their childhood.
 
3. Operation Flood or the White Revolution worked, not because it was a social experiment, but because of Dr Kurien’s shrewdness and strategic vision in creating a national marketing machine that matched wits with the best multinationals.
 
4. It also worked because he built Amul into one of India’s biggest brands since independence. Its mascot, the Amul girl has charmed the nation for half a century.
 
5. Dr Kurien had the ability to recognize and nurture the finest talent and give them room to deliver—he did this with his advertising agency, to create an iconic outdoor campaign with the “utterly butterly Amul” tagline. It comments on everyday events.
 
6. In building Amul, Dr Kurien demonstrated that efficiency isn’t dependent on profit motive alone, as is the modern belief. He remained unaffected by the mountain of money that he controlled in the 1970s and 1980s—over Rs 2,000 crore in liquid cash at one stage.
 
7. Importantly, Dr Kurien’s genius at the Gujarat Cooperative Milk Marketing Federation (GCMMF) and the National Dairy Development Board (NDDB) and the creation of an iconic brand in Amul happened in a closed and highly restrictive economy.
 
8. India has no other brand of a similar stature even from the private sector in the 50 years since Amul or even in the 20 years after economic liberalization.
 
9. History will remember Dr Kurien as India’s real Bharat Ratna because no individual has impacted the lives of ordinary and rural Indians the way he did in the last 50 years.
 
10. By giving Dr Kurien the recognition that he richly deserves, the government will demonstrate that our highest civilian award goes to a person who has truly lived up to the socialist ideals that India embraced at independence.
 

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COMMENTS

CA PRADEEP AGARWAL

4 years ago

Actually, what is Govt. Conveying is they will do what they want-Hell with everybody

manoharlalsharma

4 years ago

Instead 13000 PMO recives only 23 means all are PHD in calculations and can not dought because it's PM and with seal of ITALIAN..Thank s.. for artical.

M G WARRIER

4 years ago

Answers to Parliament Questions and RTI petitions are drafted in a different way. The question is first dissected. Loopholes are identified in the question itself to withhold information. A hypothetical possibility in the instant case is that all petitions with identical content might have been treated as one petition. 13,000 petitions mailed are therefore considered as one! They would have received 23 differently worded petitions. Such tactics help powerful people to divert issues. This is happening day in, and day out.
We must pursue the demand mustering more support. Perhaps, the response from PMO to RTI petition will serve to drw attention of more people and media to this issue.

CA PRADEEP AGARWAL

4 years ago

Do you believe in PMO, we have lost all faith in PMO, PM, CONGRESS PRESIDENT/Vice President and its ALLIES, some is left in NaMo

nagesh kini

4 years ago

When ML initiative has 12,969 signatures do we aught to call for many more signatures on RTI petitions to both the PMO and President's Secreteriat to ascertain where the missing signatures got lost in the Delhi red tape of babudom.
Possibly outsource the job to Sam Pitroda. DOT under Kabil Sibal will possibly loose those few that are already there.
Sucheta we shouldn't rest till Dr. Kurien is duly honoured.
The GOI had to give in to Bhimsen Joshi and send the award to him at his home in Pune.
It is politically incorrect to award the dead and foreigners when we have so many deserving Indians around.

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