New orders boost manufacturing output to 52 in October

HSBC Factory PMI rose to 52 in October from 50.4 in September on account of a rise in new business orders in the month

Manufacturing output, as measured by the HSBC Factory Purchase Managers’ Index (PMI), rose to 52 in October from 50.4 in the previous month. The improvement comes on the back of a rise in new business orders during the reporting month. While the rate of growth was modest, it was stronger than in the previous survey period, HSBC Markit said in a release.

However, demand in key export countries continued to be affected by softening global economic conditions, the release added.

The HSBC India Manufacturing PMI is based on a survey of purchasing executives in over 500 manufacturing companies. An index reading above 50 indicates an overall increase in that variable, below 50 an overall decrease.

The data suggests that on a month-on-month basis, the September data was the worst since March 2009, when output shrank to 50.4.

Power outages witnessed in various parts of the country had limited the extent of the rise in production. This was seen by an accumulation in levels of outstanding business and also a depletion of finished goods stocks, which were utilised to help fulfil order requirements.

Meanwhile, input prices faced by manufacturers rose substantially during October. The rate of cost inflation was broadly unchanged since September and strong in the context of historical data. Higher raw material and transport costs were the main drivers of the increase in costs. Output prices rose markedly, although the need to remain competitive limited the extent of the increase.

Commenting on the India Manufacturing PMI survey, Leif Eskesen, chief economist for India & ASEAN at HSBC said, “The Indian manufacturing sector rebounded in October, with rising orders boosting output. Tight capacity is evident from rising backlogs of work, lengthening supplier delivery times and difficulties filling vacancies. Not surprisingly, input and output prices continued to rise at a rapid pace.”

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Maruti Suzuki’s October sales down 53% due to labour unrest

“The labour unrest at company’s Manesar plant during October adversely impacted the production and sales numbers. The company lost production of over 40,000 units (Gurgaon and Manesar) in the month,” Maruti Suzuki said in a statement

New Delhi: The country’s largest car-maker Maruti Suzuki India (MSI) today reported a 53.25% fall in sales in October to 55,595 units due to labour unrest at its Manesar plant, which severely affected production, reports PTI.

The company had sold 1,18,908 units in the same month last year, Maruti Suzuki India (MSI) said in a statement.

“The labour unrest at company’s Manesar plant during October 2011 adversely impacted the production and sales numbers. The company lost production of over 40,000 units (Gurgaon and Manesar) in the month,” it added.

The Manesar facility rolls out MSI’s high volume compact car Swift, which currently has undelivered booking orders for about one lakh units. The plant also produces hatchback A-Star and sedan SX4.

The simultaneous strike at Suzuki Powertrain, which makes engines and transmissions, in support of MSI’s Manesar plant’s workers, affected production at the Gurgaon facility also.

The national capital-based company recorded sales of 51,458 units in the domestic market last month, a 52.16% fall from 1,07,555 units in October 2010.

In a similar manner, MSI’s exports decreased by 63.56% in October to 4,137 units from 11,353 units in the year-ago period, the company added.

Total passenger car sales in the domestic market dipped by 55.11% to 41,192 units in October from 91,754 units in the same month of 2010, it added.

Sales of the company’s mini-segment cars, including the M800, A-Star, Alto and WagonR model, fell by 54.86% to 25,009 units from 55,404 units in October 2010.

In the compact segment (comprising the Estilo, Swift and Ritz models), MSI witnessed a 56.09% dip in sales to 10,859 units from 24,729 units in the same month a year ago.

Sales of MSI’s DZiRE model decreased by 48.14% to 5,001 units from 9,644 units in the corresponding period a year ago.

In addition, MSI’s mid-sized sedan SX4’s sales slipped by 83.81% to 320 units from 1,977 units in the year-ago month. Luxury sedan Kizashi witnessed sales of three units.

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Global major Omnicom picks up 51% stake in Mudra Communications

Mudra Communications, among the top five ad agencies in the company and owned by the Anil Ambani controlled ADA Group, will be snapped up by Omnicom, the second-largest global advertising group

Mudra Communications, among the top five ad agencies in the company (which started operations in 1980) and owned by the Anil Ambani controlled ADA Group, will be snapped up by Omnicom, the second-largest global advertising group.  

Mudra Communications—which has major clients like Bennett Coleman & Co, Godrej, Dabur, Aditya Birla Nuvo, Union Bank of India and Bank of Baroda, will sell its stake to Omnicom. The global major already had 10% stake in Mudra. By acquiring 51% stake, the ADA Group has effectively handed over control to Omnicom.

Omnicom has been scouting for a major overseas buyout for a long time now. The American communications industry is highly fragmented and intensively saturated—and there is fierce competition from majors based in Madison Avenue. Omnicom’s strategy to grow and diversify could only have been taken via global acquisitions.  Reports indicate that the cash-strapped ADA Group could have made around Rs700 crore from the deal.

Talks between both the agencies have been on for a long time now. The acquisition by Omnicom of 51% could be the first step towards picking up complete ownership of Mudra, as part of the global major’s growth strategy.
 
There has been considerable churn at the top at Omnicom. Various senior executives like Michael Goldberg have been shunted around Omnicom’s various arms. Mr Goldberg had recently taken over at a New York arm of the Omnicom Group, as a senior partner and chief marketing officer. According to a statement issued by the agency, “the post had been vacant for some time”. Mr Goldberg had been executive vice president and chief marketing officer at Zimmerman Advertising (another Omnicom arm) based in Florida.

A few media reports indicate that this is Omnicom’s single biggest investment in India so far.

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