Sumitomo denies stake sale in Swaraj Mazda

A few reports have said that Tata Motors is eyeing Sumitomo’s stake in Swaraj Mazda. Although Sumitomo has denied these stake sale reports, analysts say that the move by Tata Motors should be looked more as a technology takeover rather than consolidation of its market share

Japan's third-largest trading house Sumitomo Corp on Thursday denied that it was in talks with Tata Motors Ltd for selling its stake in Swaraj Mazda Ltd.

"Certain news agencies have today reported that Sumitomo Corp is in talks with Tata Motors for the sale of stake of Swaraj Mazda. However, this news report is not true," Sumitomo said in a note.

Established in 1983, automobile company Swaraj Mazda is owned by the Sumitomo Corp and Punjab Tractors Ltd with a technical collaboration with Isuzu and Mazda of Japan. Earlier in 2009, Sumitomo purchased Punjab Tractors' stake taking its shareholding to 53.5% in Swaraj Mazda.

Earlier, media reports said that Tata Motors, India’s largest vehicle maker, was negotiating to acquire Japanese conglomerate Sumitomo’s 53.5% stake in Swaraj Mazda and Tata Motors’ stake would go up to 73.5% if the open offer, which has to be at least 20% of the target company’s equity capital, is fully subscribed.

In the wake of new players—such as General Motors (GM) and its Chinese partner Shanghai Automotive Industry Corporation (SAIC) and a joint venture between Ashok Leyland and Nissan—entering the light commercial vehicles (LCV) segment, the move from Tata Motors was seen as a technology takeover rather than consolidation of stake in Swaraj Mazda.

Tata Motors has a market share of around 65% in the Indian commercial vehicle (CV) segment. Its share in the LCV market is higher, at around 68%. Swaraj Mazda, on the other hand, is a small player with just 3% share in the Indian LCV market, with a presence mainly in north India.

The Indian LCV market, valued at around Rs9,000 crore, is growing at 40% on an annual basis, faster than the commercial vehicle market as a whole. The Indian CV market is around Rs22,000 crore.

"Swaraj Mazda, which has a minuscule market share of 3% in the LCV market, will not help to increase Tata Motors’ share by a considerable amount. However this move will help to improve its presence in the northern region. Also, in the long term, Tata Motors will have access to Isuzu’s technology since Isuzu has an edge in diesel and hybrid technology," said Sandeep Patil, research analyst, Kisan Ratilal Choksey Shares and Securities Pvt Ltd, in a note.


Pension fund regulator D Swarup retires; GC Chaturvedi takes charge

D Swarup, the man responsible for ushering in Indian pension fund reforms, has retired

Pension fund regulator D Swarup, the man responsible for ushering in Indian pension fund reforms, has retired. Girish Chandra Chaturvedi, currently additional secretary of the Department of Financial Services, has been given the additional charge as chairman, Pension Fund Regulatory and Development Authority (PFRDA).

The PFRDA is still waiting for its statutory powers due to non-clearance of the PFRDA Bill by Parliament. In the absence of statutory powers, the PFRDA has been functioning as an acting regulator.

In May 2009, the interim regulator, then headed by Mr Swarup, launched the New Pension Scheme (NPS) for government employees who had joined service on or after 1 January 2004, which was subsequently extended it to all citizens.

Mr Swarup was heading PFRDA since 2005 when the pension fund regulator was established. The PFRDA Bill, initially introduced in March 2005 with the objective of establishing the NPS, has been languishing for four years. It has now been scheduled to be reintroduced in the current session of Parliament.

India has a workforce of about 4.5 crore, out of which about 85% do not have any access to a formal pension plan. The remaining 15% are mostly government employees, who could avail civil service pensions like Employer Provident Fund (EPF) or Employer Provident Scheme (EPS). However, with these schemes, people often found their savings locked into government bonds for as long as 40 years. The more recent EPS scheme is already in deficit and unsustainable in the long-term. This has led to a debate on reforming pension schemes across the workforce in the country.

Last week, Mr Swarup, as head of the Committee on Investor Awareness and Protection, recommended elimination of commission structure from the financial markets with effect from April 2011. The committee said that after the cut-off date, financial sector intermediaries should be paid a fee that is negotiated with the consumer of the product.


Crashing of servers affects RTGS across banks

RTGS, which was designed to provide real-time settlement of payments, is failing to do so due to crashing and hanging of servers across banks

The growing incidence of real time gross settlement (RTGS) servers hanging or crashing across banks has resulted in a delay in transactions, so much so that lenders have to complete these transactions on the next day.

According to banking sources, RTGS systems have been hanging or crashing frequently, causing a delay for customers as well as bank employees.

“The reasons behind the servers hanging are the lack of connectivity between the Reserve Bank of India (RBI) and other banks, and bad networking between the servers of banks as well as the central bank,” said an official from a State-run bank.

There are also problems related with leased lines, routers and modems while transmitting messages. Since RTGS requires all the concerned parties to work simultaneously, any minute error can cause problems with the systems, the official added.

He further said that the RBI insists that deals are settled on the very same day, but at times these deals are being delayed due to server problems, and there is no assurance over the proper functioning of the system.

According to an official from the RBI, the recent problems with the servers have been happening because the apex bank has installed a new software patch in the RTGS system. However, many bankers said that the problems have been around since the past few months.

RTGS is a centralised payment system set up in 2004 by the RBI where inter-bank payment instructions are processed and settled, continuously throughout the day, as and when the instructions are received and finally accepted by the system. As a funds transfer mechanism, it is probably the fastest possible money transfer system through the banking channel.

The number of bank branches offering the RTGS service has increased from 43,512 to 55,000 during 2008-2009. The daily average volume of transactions is 90,000 for about Rs1,200 billion, of which 82,000 transactions worth Rs980 billion pertained to customer transactions as of end-August 2009.




7 years ago

Yet another symptom of the Central bank going ahead o its capabilities. The RTGS has worked beautifully but theRBI has been callous about expanding the abilities of the system. RBI is and should behave like a regulator instead of tryign to run all the banks by itself through its frequent pronouncements. The entire Reserve Bank has become very arrogant since the economic crisis has engulfed the world. People like your magazine have given them accolades for things they didnt do!! Let me state it here that the economic engine of India being so much more dependent on the domestic demand was never going to be a basket case in the recession hit world. The RBI's actions or inactions have been instrumental in holding back the entrepreneurial energies of the country by limiting the ability of small players to get meaningful credit. I think Moneyliife needs to be a lot more critical of the Central Bank than it is. This is no different than the role you profess to play in the stock market/mutual fund industry. Sucheta and Debashis, I urge you to please throw away the glares with which you view the RBI's actions. Only your meaningful analysis and reporting can move the Central Bankers to come out of their Ivory Tower and take meaningful actions which would enable us to plan our finances and investments and not keep paying off the higher and higher property and food prices.


7 years ago


Vijay Meghani

7 years ago

I regret to have to state that I believe that RBI's decision to completely discontinue the High Value Clearing facility is a very retrograde step in fact an ill-advised and Giant Step Backward. This is particularly so given the absolutely rudimentary state of the cheque clearance systems in the country together with the ridiculous pace and cost of legal redress that face the world of commerce. RBI's action is a classic case of throwing the "Baby out with the Bathwater". The sooner the RBI reverses this decision keeping in mind the ground realities & again bring in a system of same day clearing of high value cheques the better. I wouls alos urge the Chambers of Commerce to take up this issue strenuously with the RBI.

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