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Winners and losers from the 10th Auto Expo

The tenth edition of the Auto Expo just concluded. Here is a look at the winners and losers... and there were a few from both sides at the show

The just concluded 10th edition of the Auto Expo in New Delhi witnessed the launch of more than 100 vehicles from global as well as domestic automakers, including 15 concept vehicles. Even the number of visitors, at about 1.2 million, surpassed all the previous editions of the Auto Expo.

Although there were launches in all categories like passenger vehicles, commercial vehicles (CVs) and two-wheelers, small car launches by global auto companies coupled with media hype turned out to be the main attraction of the show.

Global auto majors like Volkswagen (VW), Toyota and Honda entered the compact car segment in India. The small car category saw the unveiling of the VW Polo, Toyota Etios and the Honda small car. Most of the new launches are likely to be positioned in the premium range of the A2 segment, with reasonable levels of localisation initially—VW Polo at 50% and Toyota Etios at 65%-70%. Other models which will hit the market this year include the Ford Figo, GM Beat and the Nissan Micra.

"While most new launches would be pegged against the mid and premium end of Maruti's A2 segment product portfolio, ramp-up in Nano volumes from mid-CY10, and launch of the Nano diesel in CY11, could disrupt Maruti Alto's dominance in the lower A2 segment that has a current run-rate of about 18,000 units," said Ambit Capital Pvt Ltd in a research report.

Maruti Suzuki's show was limited to its Eeco, which is an upgraded variant of its Versa, and its multi-purpose vehicle (MPV), the R-III concept. Eeco, the low budget MPV, is priced at Rs2.59 lakh to Rs2.99 lakh and is capable of ruffling some feathers. On the other hand R3, the indigenously designed MPV, is an impressive vehicle considering that the company's engineers developed this concept vehicle in just nine months.

"Although we believe the new car launches would expand the existing compact car market, over the medium term, we believe Maruti Suzuki, which holds 57% of the domestic compact car share (YTD December 2009), would concede some share in the segment," said Ambit Capital.

In the CV space, incumbent Tata Motors Ltd and Hinduja group company Ashok Leyland Ltd displayed some high-powered vehicles or trucks. Tata Motors showcased their world truck range, Prima, that spans from 10 tonnes (T) to 75T, with greater than 49T used for off-road applications. The Tata group company is also planning to launch a 49T tractor trailer and 31T tipper in this calendar year.{break}

Ashok Leyland displayed its U-truck platform that would have an option to use either the new Neptune series or older H series engines. The company is planning to launch vehicles based on the new platform from its Pantnagar facility and may adopt an aggressive pricing policy to leverage the tax benefits it gets from the facility.

The joint venture between India's largest utility vehicle maker Mahindra and Mahindra (M&M) and Navistar of the US, Mahindra Navistar Automotive Ltd, displayed its range of trucks in the 25T and 31T segment. Mahindra Navistar is planning to launch two more trucks in the higher tonnage range during the current year. It is also planning to establish a distribution and service network along the golden quadrilateral, where 60%-65% of the freight movement takes place.
"We believe the new entrant (Mahindra Navistar) could become a formidable player in the next two to three years, considering its product strength (renowned MaxxForce engines), competitive pricing (BS-III range) and M&M's lineage," said the Ambit Capital report.

Tata Motors is giving nightmares to three-wheeler automakers, like Bajaj Auto and TVS Motors. Earlier, Tata Motors took away a major chunk from three-wheeler CVs with its mini truck, ACE and now the company is all set to launch a new vehicle in the passenger carrier segment. The company displayed its passenger carrier Magic Iris that is based on its ACE platform. Tata Motors plan to price the Magic Iris in the range of Rs125,000.

Ambit Capital, in the report said, “In our view, the commercial vehicle industry is set to adapt to the altering business models in the logistics industry. Implementation of GST is expected to promote the hub and spoke model. CV manufacturers are therefore focusing on introducing higher powered trucks, which would increase the frequency of trips. The LCV range is also witnessing increased segmentation across various payloads to cater to inter- and intra-city movement.”

In the two-wheeler category, there were no new launches at the Auto Expo this time. Automakers, however, displayed their recently launched bikes. TVS Motors, the third largest two-wheeler maker in the country, displayed its 110cc, clutch-less motorcycle Jive, while Honda Motors and Scooters India Ltd (HMSI) showcased its entry level 100cc bike, Twister. Both the bikes are priced between Rs41,000 to Rs42,000.

Mahindra and Mahindra (M&M) Two Wheelers Ltd displayed its existing range of three power scooters in the 125cc category, mostly developed by Kinetic Motor Co Ltd, whose assets were bought over by M&M.

Integration issues with Kinetic having been over and done with, the company expects to achieve sales of 100,000 units in the next 18 months. In the forthcoming year, M&M Two Wheeler is planning to launch motorcycles across all product segments.

The gainers from this year's edition are from the passenger car segment, which is set to create waves over the next few years. And since two-wheeler makers could not offer much in the show, they remained at the bottom during the 10th edition of the Expo.
 

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MF schemes: Skewed, concentrated and similar

Moneylife’s study of the pattern of stock picks by mutual funds’ equity schemes finds that stock picks are highly concentrated among a few hundreds with portfolios mimicking each other.
 
The study also underlines the lack of depth and diversity in Indian markets There are 1,477 stocks listed on the National Stock Exchange and 4,946 stocks listed on the Bombay Stock Exchange, but mutual funds find only a few hundred of them as investment-worthy. Moneylife’s analysis of equity diversified schemes of mutual funds as on December 2009 shows that 203 schemes of mutual funds have just 659 stocks in them. The other key findings of the study are:
 Funds are mimicking each other’s portfolios. Just a handful of large-cap stocks are present in most of the funds. At the top of this list of fancied stocks as on 31 December 2009 is ICICI Bank, which appears in 130 schemes across 203 equity diversified growth schemes. This is followed by Reliance Industries and Infosys Technologies, which have made an appearance in 125 and 120 schemes respectively. Oil and Natural Gas Corporation (ONGC) and State Bank of India (SBI) round up the top-5 popular stocks. Of the 203 schemes, 113 currently have exposure to ONGC, followed by SBI which is a favourite among 108 schemes.

 Most schemes are dominated by mega-cap and large-cap stocks. Of the 659 companies, ITC, Bharti Airtel, Larsen & Toubro, Tata Consultancy Services and Bharat Heavy Electricals are also among the top 10 popular stocks. Banking and engineering sector companies are currently among the favourites of most equity diversified schemes.

 The companies that found the least preference with equity schemes include Gayatri Projects, Great Offshore, JK Lakshmi Cement, Mahanagar Telephone Nigam Ltd (MTNL) and National Aluminium Company (NALCO).

 Our study also finds that within these 659 companies, 434 companies make an appearance in 10 or fewer equity schemes; clearly, in that case, the investible sphere shrinks further to a mere 250-odd stocks. Of the remaining 225 companies in the fund portfolios, only 39 companies appear 50 or more times, while the number of companies appearing in 25 or more schemes are a little over 100. This is further evidence of the concentrated and highly skewed nature of stock picks across fund schemes.

 The skew of the fund is evidenced by the fact that of the 659 companies in the fund portfolio, 168 stocks appear in a single scheme and 71 stocks appear in two schemes.

 A total of 203 schemes had 8,542 stocks in all schemes put together. Therefore, the average portfolio size is of 42 stocks and yet the total universe of unique stocks was 659.

 The fact that only 659 companies make up the portfolio across 203 equity diversified growth schemes underlines the apparent lack of depth and diversity in Indian capital markets.

In short, after seven years of robust economic growth in all segments and sectors; a long bull run and a plethora of initial public offerings (IPOs), Indian mutual funds have a very small list of stocks to buy from. They prefer to buy the same stocks and have your money concentrated on a few large-cap stocks.
 

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COMMENTS

Alok Bhola

7 years ago

Anybody who knows anything about the Indian stock market should already know that even though total listed stocks number about 5000, there is no meaningful liquidity beyond top 600 - 700 stocks. Quite a few of the remaining are not even traded daily. Hence its not feasible for Mutual Funds to invest outside the universe of top 700 or so stocks.
Further, no more that 100 stocks can be classified as large cap even by Indian standards. Hence, large cap oriented funds have their options limited to these 100 stocks anyways.
Hence, the reason for the relatively smaller investment universe is inadequate availability more than anything else.

Awesome

7 years ago

Thanks good and useful analysis. Definitely our equity markets lack depth, if the fund managers are not ready to take risk what can we expect from an individual investor, this also shows HOW MUCH FUNDS MANAGERS WORK ;-)
(just sticking to safe havens). Even most of the financial newspapers and magazines are merely wasting ink by typing just the news. NO ANALYSIS or fresh ideas, or original articles.

M.R.Borkar

7 years ago

Then he does not have to do much use of his s.picking skills. If u see what these so called MF experts, as we are made to believe, have delivered in last ten years. If I have remained a passive investor, my returns are more than theirs. Therefore I say thank u Sir. - Borkar

Roopsingh

7 years ago

this is absolutely true-fund managers act as mere brokers for few stock to pile in few amc's-this does not show their experstise-portfolios r mere duplications for many funds-so called expert fund managers just cant find right sectors or right stocks-may be due to lack of will or some hidden reason?

SUNIL GUPTA

7 years ago

So, the obvious conclusion seems to be that most fund managers are conservative and pick the most stable stocks. No wild flights. So, what's the problem with that? As a retired person with limited capital, I prefer it this way with regard to my own portfolio of mutual funds.
Or have I missed the point? The article has just stated a fact. It has not said that what was happening was wrong and, if so, why it was wrong.

Technology via SMS becomes a helping hand for Haiti victims

The US government has got major mobile operators on board to allow people to very easily donate $10, through a text message to the Red Cross, to help with the disastrous situation in Haiti following the major earthquake

Setting a good example of using technology as a helping hand, the Obama administration has come out with an extremely simple—but fantastic idea. Anyone from the US, who wants to contribute to the victims of Haiti, can do so, simply by using a mobile handset.

The Obama administration has set up a unique number ‘90999’ to receive the $10 donation. The government has got major US carriers on board to allow people to very easily donate $10 to the Red Cross to help with the disastrous situation in Haiti following the major earthquake.

Till today, the SMSs have raised $5.20 million from over 5.2 lakh mobile phone users. Users based in the US just have to type ‘HAITI’ and send the message to 90999 to donate the amount. Users will be charged this amount in their next billing cycle.

According to Techcrunch.com, this texting drive, being run through mGive, a non-profit organisation working with the Red Cross, is also leveraging Twitter and Facebook to help get the word out there. Donations are said to be coming in to the tune of $200,000 each hour, so they are very likely coming close to $6 million raised at this point, it added.

Although there may be some questions regarding the utilisation of this fund, when it comes to providing help and support for any disaster victim across the world, no organisation does it better than the Red Cross. The initiative by the Obama administration is surely noteworthy, especially for countries like India, where there is hardly any information available about funds collection for any natural disaster and the details of the actual utilisation of these amounts.
 

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