Normal production levels at Manesar only by Dec-end: Maruti

Maruti Suzuki is in the process of ramping up output at the Manesar unit following a tripartite agreement between the management, workers and Haryana government to end a 14-day strike on 21st October. However, production is expected to reach normal levels only by the end of December this year, a company spokesperson said

New Delhi: Hit by repeated incidents of labour unrest, Maruti Suzuki India (MSI) expects car production at its Manesar plant to reach normal levels only by the end of December this year, reports PTI.

Speaking to analysts today, a MSI spokesperson said the company was ramping up output at the Manesar unit following a tripartite agreement between the management, workers and Haryana government to end a 14-day strike on 21st October.

“The situation at Manesar is normal... By the end of this quarter, we will reach the normal level of production at the plant,” the official said.

The Manesar plant was rolling about 1,200 cars every day before the first strike hit in June. The unit produces Maruti Suzuki’s Swift, A-Star and SX4 models.

The 14-day-long strike at the plant, causing an estimated over Rs700 crore loss, was called off following a tripartite agreement that reinstated 64 dismissed permanent workers and took back 1,200 casual workers. However, 30 permanent workers remain suspended.

“Lots of initiatives were taken while reaching the agreement, which is targeted for a long-term solution. The atmosphere was positive and constructive when it was signed,” the spokesperson said.

As per the agreement, a ‘Grievance Redressal Committee’ and a ‘Labour Welfare Committee’ would be set up.

Talking about work practices at the Manesar plant, the official said: “Fundamentally, there is nothing wrong in the practices, as the same have been there in Gurgaon for the last 30 years. Probably there was some misunderstanding and miscommunication... We could have done a better job there.”

Earlier, in June, workers at the Manesar plant went on a 13-day strike demanding the recognition of a new labour body, Maruti Suzuki Employees Union. The stir had resulted in a production loss of 12,600 cars, valued at about Rs630 crore.

From 29th August, the company again witnessed a 33-day standoff when the management prevented workers from entering the plant without signing a ‘good conduct bond’.

Talking about sales, MSI managing executive officer (marketing and sales) Mayank Pareek said sales in October will be low due to the labour unrest.

In addition, rising interest rates and high fuel prices are affecting consumers’ decisions to purchasing cars.

To push its sales, the company offered heavy discounts in the last quarter. The average discount during the July-September period increased to Rs13,500 per car from Rs9,500 per car, MSI chief financial officer Ajay Seth said.

On production capacities, Mr Pareek said MSI was hiking the output of its compact car Swift to 16,000-17,000 units per month from the existing 10,000-12,000 units a month.

MSI is also ramping up the production capacity of its sedan DZiRE to 10,000-11,000 units a month from 7,000-8,000 units.

When asked about demand for diesel cars, Mr Pareek said the industry has witnessed demand for diesel cars rising by 24% in the last six months, while the same for petrol cars has fallen by 11%.

Last week, MSI posted a 59.81% fall in net profit to Rs240.44 crore for the quarter ended 30th September, mainly due to production losses at Manesar because of the labour unrest and foreign exchange losses.

Total income from operations during the quarter under review also declined by 14.38% to Rs7,831.62 crore.

Mr Seth said the company suffered an impact of about Rs100 crore due to forex losses.

“We were under cover for the second quarter as we had hedged our yen exposure, but we are not hedged beyond 30th October. Fortunately, yen is correcting now. So we may not have much impact in coming quarters,” he added.

The company’s board, meanwhile, has approved the purchase of up to 1,500 acres of land in Gujarat to set up manufacturing facilities.

User

Paying high prices for onion, garlic? Blame it on the retailer

Despite adequate production, prices had soared mainly on festive demand. But benefits of adequate production, lowered wholesale rates and dip in exports are not being passed on to the customer

If rising interest rates are not enough to spoil your party, soaring prices of essential commodities, mainly onion and garlic, will surely make you cry. Surprisingly, the production of both commodities has been good and prices have come down in the wholesale market. But the prices remain high for the ordinary consumer because of retailers who charge high prices (citing issues like ‘increase in demand amidst festivities’ and ‘general price rise situation’.)

The price of onion is in the range of Rs20 per kg in Mumbai, while the price of garlic has doubled since two months, to Rs100-150/kg (depending on the quality). While in the wholesale market the prices of onions are at Rs10kg-Rs12/kg and garlic in the range of Rs40-Rs85/kg.

Analysts confirm that farmers are selling their stored produce at a price less than production cost because of the adequate production of this year and arrival of the new crop in the market. Even exports have been low, which has added to the current availability.

RP Gupta, director, National Horticultural Research and Development Foundation (NHRDF) told Moneylife, “Stored onion was supplied in the market in addition to fresh production that arrived in the market. The wholesale prices are in the range of Rs800-Rs900 per quintal in Lasalgaon market. Those who stored the crop in anticipation of a price rise are now selling in the market at lower price. Farmers are forced to sell lower than production cost due to general price rise.”

He added, “Nobody has control over the retail market, so consumers pay the price of whatever is being charged.”

Shashi Panikar, professor of economics at the University of Mumbai says, “There is a political class which is hand-in-glove with the middlemen and traders. The farmers can’t even get their basic production prices, while consumer continues to pay at a higher price. It was reported that there is a bumper crop, still the prices are unbelievable. Unless this political nexus is broken, people will keep paying higher price.”

The prices of garlic have also doubled since September. According to NHRDF, the modal price of garlic at the start of September was Rs4,000 per quintal in Mumbai. It has now increased up to Rs9,000 per quintal as on 27th October.

“As per our projection, the expected production of garlic is good. There could be plenty of supply,” added Mr Gupta.

Rajendra Bhatka, a trader at APMC, Vashi (Navi Mumbai) said, “There is an increase in demand. So the prices have climbed up. There has been export of garlic to countries like Sri Lanka and Bangladesh.”  

“I recently bought garlic at Rs120/kg—at the same time there are reports of bumper harvest of most of the crops. Such short-term prices are common during festival time. I don’t mind paying extra to farmers but not the retailers who charge over and above famers’ margin,” said Nilima Jadhav, who runs a food-service business.

However, wholesale prices are expected to remain stable. “At least for the near-term, the current price level will prevail. Nothing can be said about the prices in the retail market,” said another trader from Mumbai.

User

COMMENTS

Vikas Gupta

6 years ago

The right idea is to break this Political Nexus by bringing the Farmers directly accessible to consumers. Can somebody use RTI in this context to break this Nexus? Can somebody ask Mr. Sharad Pawar about this?

Anil Agashe

6 years ago

This is a know thing. In Pune I have observed that retail prices can be 100 to 200% higher than that of wholesale market depending upon locality. It is because there are people who buy irrespective of prices, me included. There is no control on profiteering by retailers. The food inflation is therefore partially at least man made and retailers as a class have benefited because of this. I have always believed that inflation has made some people happy and rich! High time we improved supply chain in food and give direct access to farmers to consumers.

Savings bank interest-rate deregulation makes liquid funds irrelevant

Banks are now offering 6% on savings accounts, more than what a liquid fund would, on an average

With the deregulation of savings interest rates, it has become even more evident that liquid funds of mutual funds are not meant for retail investors. Usually companies (which do not earn any money by keeping their money in current accounts), and high net-worth individuals (HNIs) invest in liquid funds. Retail investors are still averse to parking their money in such funds. They prefer savings bank accounts.

After the recent deregulation of interest rates, banks are supposed to now offer 5.5% for deposits up to Rs100,000 and 6% above Rs100,000. This makes liquid funds unattractive for retail investors—because most often liquid funds earn between 4%-6%.

The biggest plus that a savings bank deposit has over a liquid mutual fund scheme (short-term) is that people don’t have to take the trouble of selecting the right scheme and go through the cumbersome paperwork imposed by the market regulator. Bank deposits fetch a uniform rate of interest and, after the recent diktat of the Reserve Bank of India (RBI), interest is calculated in a manner friendly to the depositors. On the other hand, there are dozens of liquid funds and you have to choose which one to invest in and their performance can vary widely depending on interest-rate movements.

If you are not on the right side of the market trend, your returns are not going to be more than 6% which your savings account now guarantees you. Your money is totally at the mercy of the short-term demand and supply of money. On several occasions, returns from liquid schemes fetch you lower than 6%.

Liquid- and money-market funds allow the crucial liquidity advantage to corporate investors to park their surplus cash for the short term. Their short-term cash is normally lying in a current account which fetches them no interest. Liquid funds are ideal for them. This is evident from the fact that corporates and other institutions account for nearly 90% of the total assets under management (AUM) in liquid- and money-market funds. For retail investors, liquid funds have just become irrelevant against a guaranteed 6% in savings bank accounts.

User

COMMENTS

KA Prasad

6 years ago

I don't think your conclusion is correct.
First of all, the higher interest is only for sums above 1 lakh. Anybody who keeps more than 1 lakh in the SB account, just to earn more interest, is not doing the right thing. Secondly, the liquid funds are giving more than 8.5 % these days. Thirdly, liquid funds may be more tax efficient. This analysis may not of a quality we expect from Moneylife.

Ashok Misra

6 years ago

I expect a magazine like Money Life to present a holistic view of entire things. I am a regular subscriber of your magazine but I find you a bit biased against mutual funds since inception of the magazine. Your article that increase in interest rate on SB accounts will make Liquid Funds irrelevant is again a half truth. Interest earned on SB will be taxed, while dividend under Liquid Funds would not attract any tax. That is the benefit. If I put Rs.1 lakh is SB at 6%, my net benefit will be 4200 p.a. while in Liquid Funds declaring even 5.5% dividend, it will be 5500. With a little care,it can go up to Rs.7500. That is a big difference.

REPLY

ramkumar

In Reply to Ashok Misra 6 years ago

liquid funds are taxed at 22.66%. they are not tax free

Vaibhav Dhoka

6 years ago

Deregulation of savings interest will have alternate route for high net-worth individuals.But in India we are that is common people are not e.savvy and avoids paper work .Therefore RBI has rightly mandated for uniform interest up to 1 lakhs and it is 24 X 365 liquid(For ATM holders) on the other hand liquid funds are less liquid that is holidays reduces its liquidity and in India there are more than 100 non liquid days and therefore there wont be much change in corpus of Banks or Mutual funds,

REPLY

Srikanth Matrubai

In Reply to Vaibhav Dhoka 5 years ago

For the liquidity part, there are some mutual funds who give you ATM,,,,wherein you can withdraw from any Visa enabled ATM....

prabeesh

6 years ago

Wow i am amazed to read a article by someone who doesn't want liquid MF to exist.

First point to note Saving Account interest is de-regulated which means now if the bank has set the interest rate at 6%(increasing interest rate scenario) .It can also reduce below 3.5% also when interest rate dives low.

Liquid Fund has advantage of getting bigger ticket interest for high amount investing which can be utilized by retail investors who cant afford it

REPLY

ganesh

In Reply to prabeesh 6 years ago

liquid funds would cease to exit without concessional tax rate - which will go after DTC

Vikas Gupta

6 years ago

Dear Madhusudan Ji,
About Debit Card & ATM Facility of Liquid Funds, I think u r not updated at all. One of the Leading AMCs is already providing this facility which is far superior than Bank Debit Card & ATM Facility that too free of any Transcation Charges. Please update urself.

REPLY

Madhusudan Thakkar

In Reply to Vikas Gupta 6 years ago

Are all AMCs providing this facility?.For ordinary people it is much more convenient to operate SB account.

P M Mathai

6 years ago

Liquid fund interest comes as dividents, which does not attract income tax. Savings bank interest attracts income tax. So the liquid fund dividents of 6%, is like receiving an interest of nearly 9% from a bank. So liquid funds are still better.

REPLY

Madhusudan Thakkar

In Reply to P M Mathai 6 years ago

Are returns from liquid fund GUARANTEED? Does liquid fund offer debit card & ATM facility?.As far as liquid funds are concerned majority of AUM is from Corporates/Institutution/HNI.I would once again request to go through below link of FirstPost and listen to interesting views of Rana Kapoor of Yes Bank

Vikas Gupta

In Reply to Madhusudan Thakkar 6 years ago

Dear Madhusudan Ji,
About Debit Card & ATM Facility of Liquid Funds, I think u r not updated at all. One of the Leading AMCs is already providing this facility which is far superior than Bank Debit Card & ATM Facility that too free of any Transcation Charges. Please update urself.

Rajan

In Reply to Vikas Gupta 6 years ago

Liquid funds are always better than saving bank account. Vikas can you please let us know which AMC is providing this facility of debit card against mutual fund?

nagesh kini

In Reply to P M Mathai 6 years ago

Tax exempting dividends worth crores and taxing Rs.10,000 bank interests of elders/retirees/widows is wholly inequitable and discriminatory and needs to be put an end to either in the DTC or Budget of 2012.

Srini

6 years ago

I like to differ, still liquid and liquid plus schemes give superior returns. The average return for the last 6 months on these are around 8%. Net of tax they still give a tax free return between 5 to 6 %. The paper work is just a one time issue as even opening a bank account u have to do paper work. Now Sebi has introduced slew of measures which makes the portfolio of these in tandem with the shorter yield curve. In liquid funds there are no mark to market instruments because the maturity has to be less than 91 days. I think the banks will not be able to maintain these kind of returns on the Savings Bank account for long. I think the author should have done more homework before writing this article.

REPLY

moneylife team

In Reply to Srini 6 years ago

there will always be a gap of 1% in favour of liquid funds. but it is not enough to lure the average saver. they are not focused on maximising every penny. they are lethargic and go for easy options. its not about arithmetic. its about psychology. wait and watch.

Srini

In Reply to moneylife team 6 years ago

Appreciate your reply. My only request is that media persons like you should also shoulder the responsibility of making the investors aware of the usefulness of liquid funds. I am aware that Moneylife takes lots of initiatives in such issues may be this can be one such initiative.

Madhusudan Thakkar

In Reply to Srini 6 years ago

As regards to usefulness of liquid funds,What is SEBI doing ? What about the commission for agents in liquid funds?In our country GUARANTEED returns always score over market-linked returns

Chandramohan

6 years ago

Only a couple of private banks have increased the interest rate on saving's account. This is because the cost of funds has gone up. In tandem, liquid funds are also giving a return of over 8% pa. Once the returns on liquid funds drops, the savings bank interest rate will also come down.

Madhusudan Thakkar

6 years ago

This will also make so- called traditional policies of life insurance companies redundant . Gang- War read Bank War is in offing .Please go through this link also.http://www.firstpost.com/fwire/yes-bank-raises-savings-deposit-rate-to-6-stock-up-9-116975.html

Pradeep N

6 years ago

Also - I wonder what happens to Sweep - In or Flexi Deposits accounts? Will they become irrelavant too?

REPLY

Sundaram

In Reply to Pradeep N 6 years ago

Since the F.D. A/cs linked to the SB A/cs for the purpose of "Sweep-In" A/cs would be offering a higher interest rate,such A/cs would continue to be a viable option.

SUMIT NAHATA

6 years ago

Nonsense. Liquid funds historically have always earned more than 6%. In today's time they yield more than 8%. Also they more Tax efficient.

REPLY

Chetan

In Reply to SUMIT NAHATA 6 years ago

your absolutely right Sumit.
the author of this article completely missed talking about the tax efficiency of Liquid funds over bank interest which is much higher.

bhushan

In Reply to Chetan 6 years ago

irrelevant. you guys have no idea about indian investor psychology. if the choice is:
1. guaranteed 6%
vs
2. floating 8% plus tax advantage.

option1 will win hands down

Madhusudan Thakkar

In Reply to Chetan 6 years ago

Friends please tell me.How much percentage of population pay tax?How many of them are exposed to mutual funds? This is a sort of REVOLUTION in personal finance. Bank Branches of better reach than other channels FUN IS JUST BEGINNING

Srini

In Reply to Madhusudan Thakkar 6 years ago

Let us see for how long.

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