Tyre companies expect rapid growth, plan bigger investments in 2010

In line with the pickup in business growth, tyre companies are likely to make significant increases in their capex plans in 2010-11, to expand capacity and meet product demand

A healthy pickup in demand from the auto sector in the face of a visible economic recovery is likely to help the country's tyre industry to clock a 7% to 8% growth in FY11, reports PTI.

Also, in line with the pickup in business growth, tyre companies are likely to make significant increases in their capital expenditure (capex) plans in 2010-11, to expand capacity and meet product demand, top players said on Tuesday.

"The Indian tyre industry may grow at around 7%-8% at Rs27,000 crore in the next financial year from Rs25,000 crore presently, on the back of high demand from the automobile sector," AS Mehta, director (marketing), JK Tyre & Industries, told PTI.

JK Tyres, which is one of the leading players in the domestic market, is targeting a growth of 20% in the next one year. It has chalked out an investment plan of Rs1,200 crore over the next two years to expand production in its car and truck radial segment.

"Year 2010 is going to be a happening year for us. We plan to invest Rs1,200 crore over the next two years to increase car and truck radial production in India," Mr Mehta said.

Echoing a similar view, another leading tyre manufacturer Ceat Ltd said that it has targeted a revenue of Rs3,500 core in the next financial year.

"The industry is likely to grow over 7% and we are expecting over Rs3,500 crore revenues next year from both the domestic and global markets," said Ceat's executive director for marketing, Anarb Banarjee.

Ceat plans to set up a new plant by spending over Rs650 crore in the next financial year, besides expanding its existing plant in Nashik, he said.

"We will invest over Rs650 crore in 2010 to set up a new plant and will expand our existing plant in Nashik. The new plant is likely to start operations by September 2010," Mr Banarjee said.

The company expects the demand in the domestic market to pick up in the New Year and was hopeful of achieving a rapid growth in its business.
 

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SCI set to buy three container ships for $225 million

SCI plans to purchase three new container vessels along with its existing joint venture partner Mediterranean Shipping Company

State-run Shipping Corporation of India (SCI) plans to acquire three new container ships in the New Year, and has set aside $200 million-$225 million to fund these purchases, a top company official said.

"SCI plans to purchase three new container vessels, along with its existing joint venture partner Mediterranean Shipping Company (MSC). These (orders) will be executed after securing the necessary Board approval," a senior SCI official told PTI.

Presently, SCI has a total fleet strength of 76, which includes five container vessels.

The shipping major decided to strengthen its fleet strength taking into account a visible pick-up in trade volumes in the recent past, the official said.

"We have seen a significant pick-up in volumes in the recent past, on account of the recovery in the domestic and global markets. Volumes are expected to pick up further in the months ahead," the official said.

Reflecting the recovery and the corresponding revival in the export trade from Europe to Asia, shipments in the Europe-Asia trade route increased by 12.6% in October to 4,64,689 twenty-foot equivalent units (TEUs), from 4,13,249 TEUs a year ago.

“In the long term, there is a huge potential in this business. The recovery in freight rates is most notable on the Asia-Europe routes, with all container routes showing signs of improvement," the official said.

A decline in vessel prices in the past few months could also facilitate the corporation to acquire more vessels in the near future, the official said, without giving further details.

However, SCI and its Geneva-based JV partner, MSC, have not decided on whether the latter will co-fund the proposed acquisitions of three container vessels, the official said.

In May, SCI had entered into an agreement with MSC to run its European service. "The discussions with our JV partner are on and it is too early to comment on the matter," the official said.

Presently, the five container vessels of the corporation cover the Far-east, China, UK and the Middle-east. The Middle-east covers Jebel Ali and operations in all the upper Gulf regions.

SCI also operates its feeder cargo vessels on the west coast of the country, besides operating Indian coastal cargo vessels in the coastal regions, pan-India.
 

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Indian firms are using health cover for hiring, retaining employees

Almost 41% of the companies use healthcare cover as a talent attraction and retention tool, while 11% use it to minimise losses arising out of employee health issues

Despite a hike in health premium costs, over 40% of Indian companies consider healthcare cover as a value differentiator for employees and use it in their hiring and retention strategy, a survey has said.

"Rising premium costs have not reduced the importance of healthcare cover as an employment value differentiator. Indian companies continue to use it as a part of their hiring and retention strategy," Watson Wyatt, a global consultancy firm, said in its Health Care Benefits survey.

"Almost 41% of the companies use healthcare cover as a talent attraction and retention tool, while 11% use it to minimise losses arising out of employee health issues," the survey said.

The survey covered 125 of India's largest employers and from across industries, mainly from the private sector, reporting an average revenue of more than Rs400 crore.

According to the survey, most Indian companies providing healthcare cover to their employees are grappling with an average 10% rise in premiums over the last three years.

"Rising healthcare costs are making corporates strive to strike the balance between increasing premium costs and their talent management strategies," Watson Wyatt India head of benefits practice, Kulin Patel, said.

To achieve this objective, it is crucial that companies constantly review and customise healthcare plans, Mr Patel said.

"It is vital that employers design appropriate healthcare plans, employ efficient ways to manage them and ensure that employees understand their value," he said.

Corporates are constantly devising different strategies to control healthcare costs, the survey said. The survey found that 74% of the companies are stressing on employee education around healthcare.

Despite rising premium costs, economic turbulence and the difficulty in maintaining an affordable healthcare cover, 58% of the companies surveyed did not deduct any premium costs out of employee salaries, it said.

"Importantly, over 46% of those surveyed did not plan to share the costs with the employees even in the coming year," the survey said.

The survey revealed that only 17% of the companies cover post-retirement medical expenditure. Post-retirement medical benefit is mainly provided by companies in the public sector, while a very small proportion of private sector companies provide such long-term benefits.

Commenting on the rise in premiums, the survey said that one of the main reasons for the rise was the advent of sophisticated medical technologies. However, employees seeking excessive care and malpractices like over-recommendation of services are also contributors to this hike in premiums, the survey said.
 

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