RNRL to merge with Reliance Power; board meeting on 4th July

While the companies did not disclose any details of the proposed merger, some brokers said that rumours are about a share-swap deal with four shares of RNRL for every one Reliance Power share

Anil Ambani-led Reliance Power's (RPower) board will meet on 4th July to consider merging another group firm Reliance Natural Resources (RNRL) with itself, reports PTI.

A meeting of RPower's board of directors has been called on Sunday to consider the merger, the company said in a statement.

The statement was released after the close of stock market, but speculation about the deal pulled down the shares of both the companies sharply in the last minutes of trading.

While the companies did not disclose any details of the proposed merger, some brokers said that rumours are about a share-swap deal with four shares of RNRL for every one RPower share. Currently, the two stocks have market values in the ratio of about 1:3.

The two companies together command a market capitalisation of Rs50,000 crore.
 

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RBI raises short-term rates by 25bps to contain inflation

The central bank raised both the repo and reverse repo rates by 25 basis points to 5.50% and 4%, respectively. The move would raise the cost of funds for banks and temper demand for loans, and in turn, consumer spending

The Reserve Bank of India (RBI) today raised the short-term lending and borrowing rates by 25 basis points (bps) with immediate effect to contain inflation, reports PTI.

The move comes weeks ahead of the scheduled policy review by RBI on 27th July and a day after the government announced that food inflation dipped by about a quarter to about 12% cent. Overall wholesale prices-based inflation too is in double digits.

The central bank raised both, repo and reverse repo rates (the rates at which the RBI lends and borrows short-term funds from commercial banks), by 25 bps to 5.50% and 4%, respectively.

The move would raise the cost of funds for banks and temper demand for loans, and in turn, consumer spending.

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Auto sales in June remain strong despite a few constraints

Despite supply constraints and annual maintenance schedules, automakers reported growth in June. However, on a month-on-month basis, volumes have come down

Automobile sales in June recorded decent growth compared with the same month last year mainly because of strong demand environment and a low base and incremental volumes due to new launches in spite of supply constraints. However, compared to the previous month, sales volumes in June were lower mainly due to the higher sales recorded during the marriage season in May.

"The strong demand environment in the sector has led to a better pricing power for the automobile companies, which have not shied away from hiking product prices. After the excise duty rollback and sharp increase in commodity prices, automakers hiked the prices of their products by 4%-5% during the quarter to protect their margins. Thus, we expect the first quarter FY11 results to be good and (to) be driven by volume growth," said Sharekhan Ltd in a research note.

The passenger car segment has continued to put up a good show during the month, surprisingly led by Tata Motors Ltd, instead of Maruti Suzuki India Ltd or Hyundai Motor India Ltd. Tata Motors, the country's largest vehicle maker, recorded a 63% jump in passenger vehicle sales because of last year's low base as well as increase in volumes of the Indigo Manza and Tata Nano. During June, Tata Motors' total commercial and passenger car sales, including exports, rose 49% to 67,730 units compared with 45,440 units sold in June last year.

Despite a planned maintenance shutdown for a week during June, the country's largest carmaker, Maruti Suzuki, reported that sales grew 17.9% to 72,812 units, excluding exports. Similarly, Hyundai Motor, the second-largest carmaker, also recorded 18.9% growth in the domestic market. However, its total sales, including exports, declined 2% to 46,254 units. Hyundai India's exports fell by over 22% to 18,888 units from 24,250 units, in the same period last year.

India's largest utility vehicle maker Mahindra and Mahindra Ltd (M&M) said that during June, its auto sales rose 20% to 27,562 units, despite its annual shutdown in the first week of the month. In the three-wheeler segment, M&M recorded robust growth with its newly launched Gio and Maxximo range of vehicles. In June, its three-wheeler sales increased 125% to 7,559 units from 3,357 units a year ago.

General Motors India Pvt Ltd, a unit of the world's largest automaker, General Motors Corp, saw its sales climbing over two-fold to 9,539 units last month compared to 4,492 units in the year-ago month, mainly on account of good performance by its latest offering, Beat. SkodaAuto India, the unit of Czech Republic-based SkodaAuto, also reported a 43% growth in sales at 1,638 units as against 1,145 units in the same month last year. During June, Toyota Kirloskar Motor Pvt Ltd (TKM), a subsidiary of Japanese Toyota Motor Corp recorded 41.5% jump in auto sales to 6,180 units from 4,367 units.

However, Honda Siel Cars India Ltd's sales dipped by 9% at 4,595 units, down from 5,048 units last June. Similarly, Fiat India Automobiles Ltd (FIAL) a 50-50 joint venture between Fiat Group Automobiles SpA and Tata Motors reported a lower growth. During June, its sales fell 11.5% to 2,274 units from 2,568 units a year ago.

In the two-wheeler segment, market leader Hero Honda Motors Ltd reported modest growth, but Bajaj Auto Ltd and TVS Motor Co Ltd, the number two and three in the market, respectively, recorded robust growth in June. Hero Honda reported 16.6% increase in its sales at 4,26,454 units. It had sold 3,65,734 units in the corresponding month last year.

Bajaj Auto said that despite some production constraints, it recorded a 63% growth; its highest, during June. In the month, the company sold 2,82,808 units of motorcycles compared to 1,67,945 units, in the same period last year. Bajaj Auto's three-wheeler sales rose 32% to 32,614 units. In a release, the company said its production capacity is expected to go on stream to 3 lakh units per month from this month.

India's third largest two-wheeler maker, TVS Motor's sales also rose 35.7% in June to 1,56,685 units compared to 1,15,448 units in the corresponding month last year. Honda Motorcycle & Scooter India reported a 41.5% growth in sales at 1,46,073 units as against 1,03,209 units in the same month the previous year. India Yamaha Motor's sales increased 32% to 28,155 units. It had sold 21,278 units in the same month last year.

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