Maruti strike costs exchequer Rs350 crore in excise duty

It is estimated that per car on an average, the government is losing Rs68,000 in the form of excise duty, thereby, resulting in a total loss of Rs349 crore. The Haryana government is also losing out Rs6,000 per car on an average as sales tax, resulting in a total of Rs30.80 crore so far

New Delhi: A series of strikes at the country’s largest carmaker Maruti Suzuki India’s (MSI) Manesar plant since June this year has resulted in excise revenue losses to the tune of nearly Rs350 crore for the government, while the company has already suffered a hit of up to Rs1,540 crore, reports PTI.

Since the first round of strike for 13 days in June this year to the 33-day-long standoff from 29th August to 1st October and the fresh strike at the Manesar plant from 7th October, MSI has suffered a total production loss of 51,375 units.

According to the industry calculations, it is estimated that per car on an average, the government is losing Rs68,000 in the form of excise duty, thereby, resulting in a total loss of Rs349 crore.

The Haryana government, on the other hand, is also losing out Rs6,000 per car on an average as sales tax, resulting in a total of Rs30.80 crore so far.

The revenue loss to the company from the series of strikes since June is estimated at Rs1,540 crore.

When contacted, a company spokesperson confirmed the production loss due to the series of strikes but declined to comment on the financial losses.

The year 2011 has proved to be a tough one for India’s biggest carmaker. In June, the workers at the Manesar plant had gone on a 13-day-long strike demanding the recognition of a new union—Maruti Suzuki Employees Union.

After it was resolved, a standoff broke out between the workers and the management on 29th August over the issue of signing of a good conduct bond, a prerequisite made for permanent workers to enter the factory premises.

On 1st October an agreement was reached to end the standoff with MSI agreeing to conditionally take back 18 trainees who were suspended. However, it refused to take back 44 regular employees against whom disciplinary action was taken and who remain under suspension.

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Shares prices to dip: Tuesday Closing Report

There is no strength in the upmove. Watch whether the Nifty closes below 4,950

The market snapped its two-day gaining streak as negative cues from Europe in the second half of the day pushed the indices into the negative territory and led to a flat close. After the market opened in the positive, the Nifty went on to make a 12-day high (including today) at 5,045. Although the index traded in the positive till the pre-noon session, each time it made a lower high, ultimately slipping into the red. The index made a higher high and higher low but ended in the red on global worries. Yesterday, we had mentioned that the Nifty would move in the range of 5,030 and 5,135. It crossed this level through the intraday high. We now feel that the market is headed down, at least in the short run.

The domestic market opened in the positive on support from its global peers on signs of easing of debt worries in Europe. The Nifty opened 40 points up at 5,020 and the Sensex resumed trade at 16,668, a gain of 111 points over its previous close. Buying in consumer durables, banking, metal and realty stocks boosted the market in initial trade. The Sensex touched its intraday high in the first 15 minutes at 16,774.

Profit-booking set in after the market touched the intraday high, resulting in the indices paring some of the early gains as trade progressed. The market entered the negative terrain in the noon session on a lower opening of the European markets on nervousness ahead of the European Financial Stability Facility (EFSF) expansion vote in the Slovakian Parliament later today.

Dipping to the day’s low in the post-noon session, the Nifty fell to 4,967 and the Sensex touched 16,513. While buying in select stocks lifted the market into the green, the indices flirted near yesterday’s closing levels in subsequent trade. The market closed flat with a negative bias, ending its two-day gaining spree. At close, the Nifty lost five points at 4,974 and the Sensex settled at 16,536, down 21 points. The National Stock Exchange (NSE) saw a volume of 63.32 crore shares.

The advance-decline ratio on the NSE was 997:706.

The broader indices outperformed the Sensex with the BSE Mid-cap index closing 0.49% higher and the BSE Small-cap index adding 0.22%.

In the sectoral space, BSE Consumer Durables (up 1.16%), BSE Metal (up 0.97%), BSE Auto (up 0.87%), BSE Capital Goods (up 0.75%) and BSE Power (up 0.58%) were the top gainers. On the other hand, BSE IT (down 2.70%), BSE TECk (down 1.44%), BSE Oil & Gas (down 0.56%), BSE Fast Moving Consumer Goods (down 0.40%) and BSE Realty (down 0.04%) were the losers.

The top performers on the Sensex were Sun Pharma (up 4.47%), Tata Motors (up 3.64%), NTPC (up 3.49%), Bharti Airtel (up 3.18%) and Jindal Steel (up 2.71%). The losers were led by Infosys (down 3.17%), TCS (down 2.26%), Wipro (down 2.04%), ONGC (down 1.88%) and Hindustan Unilever (down 1.76%).

The top-five gainers on the Nifty were Sun Pharma (up 3.88%), NTPC (up 3.22%), Sesa Goa (up 3.17%), Tata Motors (up 2.64%) and SAIL (up 2.41%). The main losers were Infosys (down 3.50%), HCL Technologies (down 2.95%), TCS (down 2.79%), Wipro (down 2.41%) and ONGC (down 2.11%).

Markets in Asia closed trade in the green on the optimism in Europe while the Chinese market climbed after a unit of Beijing’s sovereign-wealth fund increased its stake in four of the country’s biggest banks. Retailers in South Korea got a boost after data showed that wholesale inflation in September eased off a four-month high.

The Shanghai Composite rose 0.16%; the Hang Seng jumped 2.43%; the Jakarta Composite climbed 2.34%; the KLSE Composite gained 1.05%; the Nikkei 225 advanced 1.95%; the Straits Times settled 0.93% higher; the Seoul Composite surged 1.62% and the Taiwan Weighted rose 2.59%.

Back home, foreign institutional investors were net buyers of stocks worth Rs211.71 crore on Monday. On the other hand, domestic institutional investors were net sellers of equities worth Rs37.13 crore.

Pharma major Aurobindo Pharma has received final approval from the US health regulator to manufacture and market generic Gabapentin tablets, used in the treatment of central nervous system (CNS) disorders, in the American market. Gabapentin tablets are the generic equivalent of the Neurontin tablets of Pfizer Pharmaceuticals. The company plans to launch the tablets soon in the US market. Aurobindo Pharma settled 0.94% higher at Rs128.65 on the NSE.

Heavy equipment manufacturer BEML on Tuesday announced its entry into dredging with a technology tie-up with Netherlands-based Vosta LMG. The new stream of business would generate an additional Rs 220 crore in revenue for BEML in the next two years. The stock declined 0.52% to Rs487.05 on to NSE.

The country’s largest power producer NTPC said coal shortage is hurting the performance of several of its plants, including Dadri and Vindhyachal, resulting in lesser electricity generation. Going by estimates, coal shortages are impacting over 4,000 MW of NTPC’s power generation capacity. Despite the setback, the stock gained 3.22% to close at Rs176.10 on the NSE.

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COMMENTS

Rahul

5 years ago

Absolute crap report. Yesterday said - that it will oscillate between certain Nifty level ( 5000+ levels)

Did not happen

REPLY

Moneylife Digital Team

In Reply to Rahul 5 years ago

Thanks for your posting. One small correction, in your outburst, humbly presented: We were right yesterday. Nifty went above 5030. Short term market market movement is random and any prediction weighs the probabilities of different scenarios. Nobody is right all the time. We are more right than wrong. Follow this space. :)

Public issue mop-up down 22% in first half of current fiscal

“The biggest disappointment for the primary market has been the lack of divestment by the government. Only one divestment (PFC) took place in the first half of the current fiscal. The pipeline of divestment/PSU offerings continues to become larger by the day, yet nothing of it seems to be materialising,” Prime Database CMD Prithvi Haldea said

New Delhi: Indian companies raised Rs9,582 crore through public issues in the first half of the current fiscal, a decline of 22% over the corresponding year-ago period, reports PTI quoting primary market tracking firm Prime Database.

“The first half of the current fiscal has ended with mobilisation of only Rs9,582 crore through public equity issues... This mobilisation is lower than Rs12,280 crore in the corresponding period of the preceding year, representing a fall of 22%,” the report said.

In terms of the number of issues, however, the first half of FY11-12 was similar to the previous fiscal. Thirty-one public issues were witnessed in the April-September period of 2011, compared to 32 issues in the year-ago period.

Out of the Rs9,582 crore raised through public issues in H1, FY11-12, Rs5,004 crore was mopped up through 30 initial public offers (IPO) and Rs4,578 crore was garnered via one follow-on public offer (FPO).

“The biggest disappointment for the primary market has been the lack of divestment by the government. Only one divestment (PFC) took place in the first half of the current fiscal. The pipeline of divestment/PSU offerings continues to become larger by the day, yet nothing of it seems to be materialising,” Prime Database CMD Prithvi Haldea said.

“This is as good a time as ever for the government to enlarge the investors’ base and the capital market and to raise money that it so desperately needs. For this, besides IPOs, it should change the method of FPO offering by first doing a closed auction for QIBs and then a fixed price issue for retail,” he said.

The average deal size fell to Rs309 crore in the first half of FY11-12, down from Rs353 crore in the corresponding period of the preceding year. There were only two issues worth more than Rs1,000 crore during the period. On the other hand, there were 11 issues worth less than Rs50 crore, the smallest of which raised Rs23.25 crore.

The banking and financial services sector dominated the public issue space, with seven companies raising Rs7,621 crore, followed by electronics - consumer and media industry, with two issues garnering Rs324 crore, and electric/electronics equipment, with two issues raising Rs320 crore.

In terms of the methodology for the offers, 30 of the 31 issues during the period were executed through the book-building route, cornering over 99% of the total amount raised, with only one small issue adopting the fixed price method.

The option of roping in anchor investors was only exercised by four companies.

Looking ahead, the report said that the future outlook appears uncertain, despite the fact that there is no shortage of issuers. There are as many as 109 companies either with the Securities and Exchange Board of India (SEBI) approval or are awaiting approval for their public offers.

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