July auto sales plunge 19%, highest in 19 years
The automobile industry on Tuesday sought revival measures amidst the data showing 18.71 per cent decline in off-take in July, recording the highest monthly sales de-growth in the last 19 years.
 
According to industry observers, high cost due to the goods and services tax (GST) and lack of adequate liquidity are the main reasons for sales decline.
 
The Society of Indian Automobile Manufacturers (SIAM) data showed sales in July declined by 18.71 per cent to 18,25,148 units from 22,45,223 units sold in the year-ago month.
 
"We hope the government would soon come out with a revival package to arrest the de-growth and bring the industry back to a growth path," SIAM Director General Vishnu Mathur said. "We are hoping the Finance Minister will issue some kind of measures to bring the industry back on the track," he said.
 
Last week, automobile sector representatives met Finance Minister Nirmala Sitharaman to apprise her of the situation and proposed reduction in GST rates, scrappage policy and resolution of the liquidity and the non-banking finance company (NBFC) crisis.
 
The collapse of some large NBFCs has been cited as a factor for sales downturn as they used to provide the bulk of automobile financing.
 
According to data, passenger cars sales plunged by 35.95 per cent to 122,956 units against 191,979 units sold in July 2018. The utility vehicles' sale declined by 15.22 per cent to 67,030 units against 10,804 vans sold last month. It went down 45.68 per cent against the year-ago month.
 
Overall, passenger vehicle sales declined 30.98 per cent in July to 2,00,790 units against 2,90,931 units in the year-ago month. In the commercial vehicle segment, sales were down by 25.71 per cent to 56,866 units.
 
The sale of three-wheelers declined by 7.66 per cent to 55,719 units in July. In case of two-wheelers, which include scooters, motorcycles and mopeds, the sale edged lower by 16.82 per cent to 15,11,692 units.
 
However, exports across categories were higher by 4.22 per cent to 4,14,596 units.
 
The sales decline had dented production, causing job losses. The domestic passenger car production has fallen by 20.08 per cent to 2,05,194 units from 2,56,760 units.
 
Similarly, the commercial vehicle production has comde down by 26.44 per cent to 66,943 units. The two-wheeler production has edged lower by 9.56 per cent to 20,35,056 units.
 
The automobile production declined by 11 per cent in July to 25,08,860 units across segments and categories.
 
"July 2019 has been one of the worst months for passenger vehicles, which reported its first YoY de-growth in December 2018 for passenger cars and has gone on decline for the straight eighth month now and the lowest since last 4 years or so," Grant Thornton India LLP Partner Sridhar V told IANS.
 
According to Rahul Mishra, Principal, A.T. Kearney, while the broader sentiment and factors remain same, the impact on retail (secondary) sales may also be impacted due to rain/floods in some states and people postponing their purchase to festive season.
 
"The de-growth in production would be less pronounced in coming months as production will increase to fill the dealership with stock for festive season," Mishra 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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    IL&FS cuts nearly 50% staff since October for cost cutting
    The crisis-ridden IL&FS Group has either laid off or separated 43 per cent employees as a cost cutting measure since its new board was appointed in October last year.
     
    In its fifth progress report on the group's resolution process and the way forward, submitted to the Mumbai-bench of the National Company Law Tribunal (NCLT), the company said that the measure has helped reduce its wage bill by nearly 47 per cent.
     
    "The manpower optimisation initiatives which have been implemented across the group have cumulatively resulted in head count decrease of 43 per cent between October 1, 2018, and June 30, 2019, leading to a saving of nearly 47 per cent in the annualised wage bill," it said.
     
    As per the fourth progress report submitted earlier to the tribunal, the new board headed by Uday Kotak had conceptualised manpower optimisation measures for the infrastructure lending major in two phases.
     
    "Phase-I contemplates on initiatives on salary rationalisation of employees, separation of superannuated consultants, and phase-II initiatives include talent restructuring, amalgamation of roles and responsibilities etc," said the affidavit quoting the fourth report.
     
    As per the fourth report, phase-I of "manpower optimisation" measures have been completed for four verticals of the group.
     
    The latest progress report says that the board has identified redundant roles and functions in respect of eight more verticals or entities, including IL&FS, ITNL, IFIN, IL&FS Energy Development Company and IL&FS Engineering and Construction Company Ltd (IECCL).
     
    "The approach used for rationalisation of manpower in these entities involved undertaking an assessment of viability and continuation of projects being undertaken by these business verticals," said the fifth progress report.
     
    In the case of IECCL, the manpower on the rolls of the company has reduced by 57 per cent from October 2018 to June 2019, leading to a reduction of the wage bill by 58 per cent. Apart from the manpower on the rolls, cost of contract staff at IECCL has reduced by 90 during the period, the report added.
     
    The IL&FS board has also started the Phase-II of the initiative in the four entities which have completed the first phase.
     
    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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    Fifth IL&FS Progress Report Lists Asset-sale Plans and Also Complains About Coercive Acts by Banks, Defying NCLT orders
    The government appointed board of Infrastructure Leasing & Financial Services (IL&FS) released its fourth and fifth progress reports outlining action taken with regard to sale of assets, recovery of money, liquidation of assets and other issue. 
     
    It says that the assets for which sale process has been launched so far (except certain non- core assets) account for approximately Rs50,000 crores of the total outstanding fund based debt exposure of Rs94,000 crores. It has also listed developments in IL&FS’s overseas operations where several of its employees had been kidnapped and harassed. 
     
    The progress report is, however, largely a list of actions taken and issues faced, which do not explain the reason for the slow progress that had led to a rap from the NCLAT (National Company Law Appellate Tribunal) last week. 
     
    According to the report, State Bank of India (SBI), Allahabad Bank and Punjab National Bank have been refusing to release money in escrow accounts, while also adjusting and appropriating receivables, with the result that vendors and supplier payments as well as salaries and operational payments are delayed. This, it says, could affect the viability of some of the road projects.  
     
    According the report, these actions are in defiance of an interim order of the NCLAT’s (National Company Law Appellate Tribunal) restricting banks and institutions “from setting off or exercising lien over any amounts lying with any creditor in any account of any entity in the IL&FS Group”. The table below lists the banks, companies and amount withheld.
     
     
    In the absence of funds, there will be a deterioration in the quality road maintenance which could increase liabilities due to accidents and could lead to termination of the maintenance contracts by the road authority, it says.
     
    According to the report, a consortium of banks (comprising of Punjab National Bank, Canara Bank, Indian Bank, Bank of India, Bank of Baroda, State Bank of Mauritius, Punjab & Sind Bank, Union Bank and Oriental Bank of Commerce) have been adjusting receivables of IL&FS Tamil Nadu Power Company Limited and refusing to release payments to suppliers and vendors (under the working capital limits). This could affect the company’s ability to remain a going concern. 
     
    In addition, IL&FS is also facing hassles in receiving tax refunds for the years 2007-08 to 2015-16 adding up to Rs53.6 crore. 
     
    Meanwhile, IL&FS, as a group, has statutory liabilities of a massive Rs434.63 crore pending as of November 2018 and has no funds to pay the dues. The effort to sell off road assets for which advertisements have been issued, have attracted 30 expressions of interest (EOIs). They include: 
     
    (a)  Seven operating annuity based road projects in the different locations across India aggregating approximately 1,774 lane kilometres; 

     
    (b)  Eight operating toll based road projects in different locations across India aggregating approximately 6,572 lane kilometres; 

     
    (c)  Four under construction road projects in different locations across India which would aggregate approximately 1,736 lane kilometres upon completion; and 

     
    (d)  Three  other assets and businesses, which are engineering, procurement and construction (EPC) and operations and maintenance (O&M) businesses of IL&FS Transportation Networks Limited and a Sports Complex in Thiruvananthapuram. 

     
    The board has sought buyers for IL&FS Education & Technology Services Limited (IETS), Skill Training Assessment Management Partners in the education and vocational training fields as well as IL&FS Cluster Development Initiative Limited, which provides advisory and project management services to Central and State governments and industries. It has issued advertisements for the sale of the Alternative Investment Fund as well as luxury cars and immovable properties and assets. 
     
    International Projects: 
     
    ITNL International Pte. Ltd. (Singapore), or IIPL, is a 100% subsidiary of IL&FS Transportation Networks Ltd. (ITNL), is the holding company of all international investments of ITNL. It has subsidiaries in UAE, USA and China. These include ITNL Infrastructure Developers Ltd. (IIDL), which has a 51% shareholding in Parkline LLC and is developing the Dubai Supreme Court Complex with Robotic Car Park. This project has apparently received 11 EOIs. The 49% stake of IIPL in Chongqing Yuhe Expressway Co. Ltd. (CYEL), China which is a maintaining a 232 lane-kilometres road project. 

     
    IIPL USA LLC, which has some road maintenance projects in Texas. 
     
    Elsamex SA was handling three output-based performance and rehabilitation projects in Ethiopia through joint venture with ITNL for the Ethiopian Roads Authority. Its failure to pay wages and other liabilities had led to the arrest of employees in that country, which made headlines in India. Of the three employees arrested, two were acquitted and one is on bail.
     
    IL&FS and the Exim Bank in Ethiopia arrived at a settlement with the local labour to have funds released for settlement of dues for wages. Over the next few months it hopes to be able to release funds for 200 workers and secure the return of four Indian employees who remain stranded there. 
     
    The board believes that assets with a book value of US$13.54 million lying at various project sides will cover the outstanding dues and liabilities of the three Ethopian joint ventures. This also has been progressing slowly. Sources say there may be some institutional guarantees from Indian institutions for these projects. 
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