Auto Cos Report Healthy Sales on Low Base, Pent-up Demand
Base effect, along with a slight rebound in domestic demand, led major automobile players to report healthy sales numbers for August.
 
Other factors such as healthy monsoon, pent-up demand and preference for personal mobility over public transport during the pandemic have aided in the upswing, said analysts.
 
Automobile major Maruti Suzuki's total sales during August 2020 rose 17.1% on a year-on-year basis.
 
The company's total off-take increased to 124,624 units from 106,413 units sold during August 2019.
 
"This is a growth of 15.3% over July 2020 and 17.1% over August 2019," the company said. The total sales include 115,325 units off-take in the domestic market and 1,379 units to other OEMs.
 
"In addition, the company exported 7,920 units in August 2020, a drop of 15.3% over August 2019," the statement said.
 
Similarly, Hyundai Motor India's August domestic sales rose by 19.9%.
 
The auto major's total domestic off-take increased to 45,809 units from 38,205 units sold during the corresponding month of last year.
 
However, the auto major's exports fell to 6,800 units during the month under review from 17,800 units from August 2019.
 
Consequently, cumulative sales declined to 52,609 units from 56,005 units sold during the like month of last year.
 
"We would like to carry on with cautious optimism as uncertainty still surrounds the pandemic," Tarun Garg, Director (Sales, Marketing & Service), Hyundai Motor India said in a statement.
 
Other auto makers saw the decline in overall sales narrow-down on a YoY basis.
 
Mahindra and Mahindra (M&M) reported a fall of 16 per cent in its total sales during August, on a year-on-year basis.
 
The company sold 30,426 units, including exports, last month, compared to 36 ,085 vehicles sold during the same period last year.
 
It reported a fall of 13% in domestic sales last month to 29,257 units from an off-take of 33,564 units in August 2019.
 
Commenting on the performance, Veejay Nakra, Chief Executive Officer, Automotive Division, M&M said: "At Mahindra, we continue to see good recovery in demand both for SUVs and Pick-ups in the Small Commercial Vehicles segment."
 
"For the month of August, we have registered growth in both SUVs and Pick-ups. We have been able to meet the uplift in demand by managing the supply chain challenges and going forward will continue to keep our focus on it."
 
Premium automobile manufacturer Toyota Kirloskar Motor's sales rose to 5,555 units in August 2020, thereby exceeding sales volumes as sold in Jul y 2020.
 
The company had clocked 5,386 units in the month of July 2020.
 
It had sold a total of 10,701 units in the domestic market in August 2019 and had exported 843 units of the Etios as well.
 
Another premium car manufacturer Honda Cars India registered monthly domestic sales of 7,509 units in August 2020. The total number of domestic sales in August 2019 stood at 8,291 units.
 
Two- and three-wheeler manufacturer TVS Motor Company registered a sales gro th of 14% in August 2020 with 287,398 units as against 252,744 units in July 2020.
 
It had registered sales of 287,398 units in August 2020 as against 290,455 units registered in the month of August 2019.
 
In terms of two-wheeler segment, Hero MotoCorp reported a rise of 7.55% in its total sales including exports for the month of August.
 
The company sold 584,456 units of motorcycles and scooters in August 2020 from an off-take of 543,406 units in the corresponding period of last year.
 
The two-wheeler major's total domestic off-take increased to 568,674 units from 524,003 units sold during the corresponding month of last year.
 
However, the company's exports fell to 15,782 units during the month under review from 19,403 units from August 2019.
 
On its part, Suzuki Motorcycle India made a substantial comeback in the month of August 2020 by recording a sale of 57,909 units.
 
It registered a sequential growth of more than 46 per cent in August sales as compared to July 2020 due to enhanced production levels.
 
"In line with expectation, the sales momentum in the two wheeler segment continued to improve in August 2020 both on a sequential and YoY basis. Recovery in the 2W segment is driven by healthy offtake from rural markets, ramp-up by OEMs to improve channel inventory and increasing preference for personnel mobility," said Shamsher Dewan, VP & Sector Head - Corporate Ratings, ICRA.
 
"ICRA expects the recovery trend to continue in a gradual manner. However, rising instances of disease outbreak outside the metros and supply chain disruptions remain key monitorables."
 
According to Sridhar V, Partner, Grant Thornton Bharat LLP said: " The passenger vehicle sales are experiencing an upward momentum if one were to go by the numbers OEMs have reported for August 2020. Even if it were to be seen over a low base of the previous year indications are that the festival season could turn out to be a positive one for the sector on the back of good monsoon and new introductions and a pent up demand."
 
"It may still not be time to cheer considering the contraction economy has reported."
 
In addition, Suman Chowdhury, Chief Analytical Officer at Acuite Ratings and Research said the despatch volumes of two bellwether companies in the Indian automobile sector - Maruti Suzuki and Hero MotoCorp reflect a revival in consumer demand which can go a long way in improving the overall demand environment.
 
"Although the lower base in the previous year has been a factor in the growth numbers, such data is surely encouraging in the context of the significant contraction in Q1 GDP," Chowdhury said.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    Issue Rs625 Cr from SWAMIH Fund for 6 Amrapali Projects: SC Tells SBI Capital
    The Supreme Court on Tuesday said the SBICap will issue funds to the tune of Rs625 crores from the SWAMIH Investment Fund for six Amrapali group projects and directed it and the court-appointed receiver to finalise the legal framework for this purpose.
     
    A bench, headed by Justice Arun Mishra and comprising Justice UU Lalit, directed the receiver and SBICap to finalise the legal framework to regulate the funding of Rs625 crore and submit the report to the court within a period of four weeks.
     
    SWAMIH Investment Fund is a special window for completion of construction of affordable and mid-income housing projects.
     
    Senior advocate, Harish Salve, appearing for SBICap, submitted before the bench that the financing by it is primarily stuck on the issue of internal rate of return (IRR) of 12% and the supervision mechanism of the projects to be financed.
     
    The receiver left the issue of IRR of 12% to the court and stated that NBCC has set up the mechanism to regulate and supervise the projects under the supervision of the receiver's committee.
     
    After hearing the parties, the apex court directed that the SBI Caps will issue fund to the tune of Rs625 crore from the SWAMIH Investment Fund for 6 projects, namely Silicon City 1 & 2, Crystal Homes, Centurian Park Low Rise, O2 Valley and Tropical Garden, which will cover 6,973 units in total.
     
    SBICap will be paid 12% IRR but no payment would be made for professional expertise or monitoring the project which would be the exclusive domain of the NBCC (formerly known as National Buildings Construction Corporation) and and the receiver's committee.
     
    Kumar Mihir, counsel representing the home-buyers, said financing from SWAMIH will infuse goodwill among other financial institutions to consider financing stalled Amrapali projects. "The top court also allowed the receiver to approach the RBI and explore the possibility of raising funds from other banks and their consortium," he added.
     
    Advocate ML Lahoty, representing the home buyers, said finally the apex court is able to resolve the issue of SBICap funding the Amrapali projects, and the legal framework would be submitted to the court within a period of four weeks.
     
    On Monday, the apex court had asked the Centre to intervene to reduce the interest rate, as SBICap insisted on 12% interest on funds allocated for the stalled projects.
     
    The court has posted the matter for further hearing on 7th September.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    Fertiliser Sales To Moderate in 2HFY21, but Still Grow at a Healthy Rate in FY21: Report
    Second half (2H) of FY20-21 is unlikely to see the momentum witnessed in fertiliser sales so far in H1FY20-21, despite healthy water reservoir levels and better monsoon prospects, owing to the likelihood of increase in the COVID-19 spread to rural areas and higher systematic inventory. While fertiliser sales would moderate during the second half, it will still show health growth for FY20-21, says India Ratings and Research (Ind-Ra)
     
    In a report, the ratings agency says, "Fertiliser sale is likely to grow in the range of 10%-15% year-on-year (yoy) for the full FY20-21, supported by the increase in 1HFY20-21 sales due to increased sowing and acreage in the ongoing kharif season, better labour availability, favourable monsoon prospects for the upcoming rabi season, an increase in reservoir levels across key fertiliser consumption areas and better fund availability with farmers."
     
    India’s monthly fertiliser sales have spiked on a y-o-y (year-on-year) basis since the COVID-19 led lock-down came in to effect at end-March 2020. The fertiliser volumes sold during April-July 2020 were 57% y-o-y  higher at 22.2 million metric tonnes (mmt).
     
     
    Furthermore, nutrient-wise urea was the major contributor to the absolute fertilizer sales increase during April-July 2020, owing to lower pricing and varied applicability compared to other non-urea fertilizers. 
     
    "However, from a growth perspective, nitrogen-phosphorous-potash-sulphur (NPKS) saw strong growth of 86%, followed by di-ammonium phosphate (DAP) and muriate of potash (MoP). This was in line with the industry push towards nitrogen (N), phosphorus (P) and potassium (K) or NPKS fertilisers which are better for improving soil nutrient balance and soil health than other forms of fertilisers," the ratings agency says.
     
     
    The increase in sales is attributable to factors like higher availability of funds with farmers,  increased crop acreage and higher area sown during ongoing kharif season, panic buying,  fear of further rupee depreciation and consequent price hikes, and spill over of March sales to April.  
     
    The government of India (GoI) identified agriculture as the essential sector during the COVID-19-led lock-down beginning March 2020. Accordingly, the government spending on agriculture & rural development increased 126% y-o-y to Rs1,247 billion during 1QFY20-21 by various means such as better minimum support prices (MSP) for key products harvested during 4QFY20-1QFY21, higher procurement of key rabi crops, timely payments of rabi crops as well as various fund transfer schemes. In the wheat marketing year 2020-2021, the government has so far procured 38.9 million tonnes of wheat through state governments and all procuring agencies led by Food Corporation of India.
     
    Farmers utilised these funds to either purchase agri inputs such as fertilisers, seeds and pesticides or farm equipment such as tractors, the ratings agency says.
     
     
     
    The area sown during the kharif season till end-July 2020 increased by a hefty 14% yoy whereas the crop acreage is also 9.9% yoy higher.
     
     
     
    The increase in sowing and acreage was governed by two factors, the ratings agency says. First factor was better labour availability triggered by the reverse migration of labour during April-May owing to the lock-down and secondly, better monsoon rainfall during the pre-monsoon season in FY20-21 as well as during monsoon season June-July 2020 which prompted farmers to increase the sowing. 
     
    Rainfall across the country during June-July 2020 was 6% y-o-y higher while it was 1% y-o-y higher than the long period average, partly due to the early arrival of monsoons in multiple regions
     
     
    At the beginning of lock-down in end-March 2020 and early-April 2020, retailers and farmers were gripped by the fear of shortage of fertilisers for the upcoming kharif season owing to the expected plant shut downs and supply chain disruptions and had somewhat resorted to panic buying of fertilisers. 
     
    However, Ind-Ra says, these concerns were only short-lived as the GoI had soon declared fertilisers as essential commodity. However, this factor led to higher even than usual fertilisers being bought in April.
     
    The rupee had depreciated sharply in relation to US dollar during March and early-April 2020. A higher rupee depreciation generally leads to an increase in the retail prices of imported non-urea fertilisers. The fear of further currency depreciation owing to the continued spread of coronavirus, leading to likely higher fertiliser prices, led to the higher stocking of agri-input products by farmers and retailers, the ratings agency says.
     
     
    The lock-down was implemented in the last week of March 2020 due to which sales booking in the point-of-sale machine did not happen while the actual retail sales continued. This sale was recorded via the machine during April, leading to overall higher fertiliser sales.
     
    Ind-Ra says it expects the y-o-y higher fertiliser sales will continue during the balance of kharif season, albeit at a lower growth rate, supported by the higher sowing and crop acreage and better farmer liquidity aided by continued government efforts on increasing farmers’ income. 
     
    This will also positively rub on to the fertiliser sales of upcoming rabi season which, in addition, would be supported by forecast of a normal monsoon during the current southwest monsoon season as per the Indian Metrological Department (IMD), leading to better crops and continued demand of fertilisers and higher level of reservoirs across the country at end-July 2020 than at end-July 2019. A higher reservoir storage level leads to better water availability for the upcoming Rabi season and thus higher sowing and cultivation as well as increased fertiliser demand
     
     
    However, Ind-Ra says the fertiliser sales growth is likely to moderate in the rabi season despite above positives. This is due to increase on COVID-19 spread and higher stock availability with retailers and end users. 
     
    There are signs of increasing spread of coronavirus in rural areas, which has so far been largely immune. If the virus were to spread in rural geographies the way it has spread in urban areas, it is likely to lead to labour as well as funds shortage with farmers in the upcoming rabi season and affect the fertiliser demand, the ratings agency says.
     
    In addition, there is higher systemic fertiliser stock with retailers and end-users as a result of the panic and fearful buying during the kharif season.
     
    "A lower-than-expected rainfall in the remaining monsoon season, or a higher-than-expected rainfall, leading to flood-like situation in key cropping areas, or a change in the fertiliser policy impacting end-product prices significantly will remain the key monitorables and could lead to a lower-than-expected fertiliser demand in the country," Ind-Ra concludes.
     
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