Companies & Sectors
Over 20,700 Ford EcoSport units may be recalled

Ford to recall EcoSport units made at Chennai plant between January 2013 and September 2014

 

Ford India announced that it would recall 20,752 units of its popular compact-sports utility vehicle, branded EcoSport. The recall has to do with multiple issues in units that were assembled at their Chennai plant between January 2013 and September 2014.
 
The company's statement on the recall said, “The safety of our customers is always a priority at Ford India. For their peace of mind, we have initiated a Field Service Action to correct product concerns on 20,752 Ford EcoSport vehicles in India. This is a proactive, voluntary recall action to ensure customers’ safety and satisfaction.”
 
The company said the recall was to test for concerns of fuel and vapour line corrosion in the long-term. Another issue to be looked into in the cars is regarding the possibly incorrect airbag deployment.
 
The company is writing to customers and asking them to contact their local Ford dealer so that the necessary rework can be carried out free of cost.
 
Ford and other auto-makers have initiated recalls of products for defects, since the Society of Indian Automobile Manufacturers (SIAM) adopted the voluntary recall code in 2012.

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Will revised ethanol price bring relief to the sugar industry and save sugarcane farmers?

Although the government had made it mandatory for oil companies to blend 5% ethanol with petrol, it was not fully implemented due to the high prices of ethanol

 

The uncertain conditions in the Sugar Industry received an unexpected boost when the Cabinet Committee on Economic Affairs (CCEA ) approved and announced the upwardly revised price of ethanol to Rs49.50 per litre (or Rs48.50), depending upon the distance between the sugar mill and the oil marketing companies depots.  Last year, around this time, it was Rs29 and this had moved up to Rs47.50 in October this year.
 
Although the government had made it mandatory for oil companies to blend 5% ethanol with petrol, it was not fully implemented due to the price factor, as sugar mills reportedly found it more profitable to supply ethanol to distilleries.  The initial plan was to progressively increase this blending rate from 5% to 10%, so as to save on the high cost of imported oil, but in actual practice, the blending is reported to be about 1.45% only.  
 
The demand for ethanol, for which Oil Marketing Companies (OMCs) had floated tenders earlier, amounted to 156 crore litres and got a lukewarm response from sugar mills that bid for only 62 crore litres.  Even this quantity was not fully "accepted" and OMCs finalised contracts for about 35.5 crore litres, slated  for delivery from October this year.
 
Based on a 5% blending of ethanol, the savings in foreign exchange would have been at least Rs5,000 crore a year.
 
The target of reaching 10% ethanol blending is still just a pipe-dream!
 
In the meantime, OMCs have been hoping that as a result of the fall in oil prices internationally, they could renegotiate with sugar mills for a reduction in the price of ethanol.  The oil price had steeply fallen from $114 in July to a shade above $60 per barrel on the London ICE, chances are that it may fall further.  OPEC does not expect to reduce their production and so far have not indicated their plans for the next year.
 
Now that the government has fixed the ethanol price, it is likely to benefit the farmer. Sugar mills are not likely to be able to renegotiate the ethanol price with OMCs. In any case, their own sugar stocks are piling up and they have a mountain of debt to settle including arrears to farmers and other bank dues. On the top of these, non-moving stocks of sugar are also hurting them financially, in terms of holding costs.
 
According to Indian Sugar Mills Association, the sugar production till November end (2014-15 season) has been estimated at 17.81 lakh tonnes. In the meantime, the new government of Maharashtra has recently set up the Sugarcane Price Control Board but it is yet to take a decision on cane pricing for this season, even though cane crushing has started and the first instalment payment to sugar cane farmers will come due soon.  Ex-factory price of sugar is coming down and millers are still hoping that the government would look into their plight by extending subsidy for sugar exports.
 
Suggestions have also been made, that it may be worthwhile for the government to create a buffer stock of sugar of about 4 million tonnes, the quantum needed for Public Distribution System (PDS) by States for 2 years, this will remove the surplus stocks from mills and possibly bring stability in price levels in the market.  But who will be given the responsibility of warehousing and storing the stocks?  FCI (Food Corporation of India) are themselves in a mess by holding foodgrains, and they do not have additional specialised storing space for sugar.
 
Whether it is Maharashtra, UP, Karnataka or even Tamil Nadu, the sugar industry is in trouble due to various causes that are too well known for elucidation.  Each State has its own logistical and local problems in dealing with the industry, particularly when dual pricing systems are in place. This issue has to be settled once and for all; it is worthwhile for the government to re-examine the recommendations made by the Rangarajan committee to revive the "linkage formula," so that these issues do not crop up year after year.  Export subsidy has been sought time and again, and this also needs to be thoroughly investigated in relation to the world market conditions, if any assistance is needed, it should be fixed for the entire duration with a firm export target, rather than doing it every couple of months as it currently is done.
 
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)

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SpiceJet sinks further into financial trouble

Can the DGCA and the government act in time to save the ailing carrier or will they let it fail?

 

Spicejet representatives met Aviation Minister Ashok Gajapthy Raju today to look for ways to keep the airline from going bust.

 

As reported by Moneylife earlier, (http://www.moneylife.in/article/why-cant-the-spicejet-management-be-changed-like-satyams-was/39638.html) “If the promoters don’t put in the capital, who will? SpiceJet seems certain to go the Kingfisher way, since the wealthy Marans seems to have thrown up their hands. In the process small investors and employees would suffer.”

 

Spicejet had been asked to clear its dues amounting to around Rs1,600 crore, which includes fuel costs, dues to the AAI and salaries to passengers, by today.

 

NDTV reported that an internal email said, “Meeting (between DGCA and SpiceJet) will effectively determine future of our company. If all goes well, we can expect to continue operations smoothly and as planned. If for any reason, all does not go well, then expect the following. You will get a call from a senior management pilot. He will brief you in detail as to the situation and necessary further action to be taken. Please do as briefed.”

 

In another manifestation of the soup SpiceJet finds itself in, it reportedly stopped serving meals on board its flights from Sunday onwards.

 

In a reply in Parliament today, minister of state for civil aviation Mahesh Sharma told the house that, “All private Indian airlines are suffering from financial stress as found in financial audits carried out this year by aviation regulator DGCA.”

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