Mopeds zoom ahead after demand picks up

Segment sees strong growth, but sales of electronic two-wheelers have stagnated

The domestic sale of mopeds for April-October 2009 grew nearly 27% on the back of availability of finance, lower interest rates and the festive season. TVS Motors, which is the only company to manufacture mopeds, sold 320,207 vehicles compared to last year’s 250,896, according to a report from the Society of Indian Automobile Manufacturers (SIAM).
 
“TVS Motors is heavily dependent on financing for the sale of (its) vehicles. In 2008-2009, the overall financing had reduced to 40% as compared to 66% in 2005-2006. Now with financing conditions improving, the sale of mopeds has increased,” said Sandeep Patil, an auto analyst from Kisan Ratilal Choksey Shares and Securities.
 
The sales of mopeds are dominant in semi-urban and rural areas especially in southern states like Andhra Pradesh, Tamil Nadu and Karnataka which account for 85% of the total market share.
 
Another factor which has boosted the sales of mopeds was the good monsoon in the southern peninsula which had been at 96% of the long-term average, according to the Meteorological Department. Agriculture output, which depends on the rainfall, provided an indirect boost to the sales of mopeds, the analyst added.
 
Again, the Bharat Stage IV (BS IV) implementation in April 2010 would mean lower levels of vehicular emissions—comprising hydrocarbons, nitrous gases, sulphur, carbon monoxide and particulate matter—which will ensure pre-sales in the months of February and March next year and increase the sales of mopeds to 538,000 units, an increase of 22% over 2008-2009.
 
These factors might not lead to significant rise in the domestic sales of mopeds in the long-term as there are signs of interest rates tightening, a view which is being maintained by a SIAM official.
 
However, if mopeds exhibited a stellar performance for the first seven months, Electronic Two- Wheelers (ETWs) put up a disappointing show. The domestic sales of ETWs for April-October 2009 dropped 83.8% to 3,001 units. Electrotherm (India) Ltd, the largest manufacturer of ETWs, did not respond to an email sent to it by Moneylife.
 
A factor which has affected ETW sales is the good performance put up by non-geared scooters (below 100cc), which are becoming increasingly popular among urban women and younger customers.
 
“The ETW market is still in the nascent stage, with its usage limited to urban areas only. There are other limitations also like infrastructure problems related to battery charging, total running capacity and maximum speed going to only 50-60 km per hour,” Mr Patil added.
 
The problem facing ETWs is that the market has not yet stabilised. Further, this segment is dominated by regional players and it is waiting for the entry of big brands like TVS and Hero Honda, the SIAM official said.

- Aaron Rodrigues [email protected]

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The shine fades from wine

Winemakers see stocks piling up for want of takers due to the ongoing slowdown

Although Cyclone Phyan hit Nashik a week back and damaged a major portion of the grape crop under cultivation, consumers might not have to pay much for their bubbly in the coming months as last year’s recession has left unsold stock of wine at various wineries across Maharashtra.

The unsold wine stored in tanks will result in winemakers selling their produce at a lesser price. Sula Wines still has over 40%-50% of its wine lying unsold in its tanks, while Indus Wines has around 90% of its wine still in its inventory.

“Because of the recession and the terrorist attacks, the hospitality industry was hit hard. People stopped patronising hotels or visiting Mumbai. The food and beverage industry also took a hit with a result that our wines could not be sold,” said Violet D’souza, director, Indus Wines.

For winemakers, the season from Diwali to the end of the year is the peak season which sees maximum wine sales taking place.

The market for wine before 2007 was growing at 28%. However, since 2008, the market has dropped by 30%.

The problem facing the industry is not only reduction in sales and demand, but also the restricted marketing structure—both domestic and international—for Indian wine firms, according to Nasik Valley Grape Promotion Association president, Pradeep Panchpatel.

Adding to this, winemakers are a part of the agriculture industry, but are made to pay 20% sales tax as wine is considered as ‘hard liquor’ which impacts the annual bottom-line of various winemakers.
 
According to Sula Wines vice president Neeraj Agarwal, the prices of grapes will increase by at least Rs10/kg as there will be a shortage in the fruit output this year.

“The production cost will increase by about 10%-20% as the wines are still in our tanks. Holding cost will go up,” Mr Panchpatel said, adding that due to the cyclone the production of grapes will decrease.

Even with this scenario, winemakers will not increase prices of their product as their main objectives for this year is to promote the product, Mr Panchpatel added. This view is maintained by Indus Wines which has launched Mumbaai Dreamz, a low-priced wine category.

- Aaron Rodrigues [email protected]

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New index launched for realty market

Liases Foras has launched Ressex, a real-estate sensitivity index that will capture trends in price, inventory, sales and demand in six cities.

Real-estate research firm Liases Foras has launched its Real Estate Sensitivity Index, or RESSEX, which will provide data on price, inventory, sales and demand changes in six cities—Mumbai Metropolitan Region, Pune, National Capital Region (NCR), Bengaluru, Chennai and Hyderabad.
 
This Index will increase transparency in real-estate transactions by providing timely, accurate and relevant data to investors, developers and financial institutions, said Pankaj Kapoor, founder and chief executive officer of Liases Foras.
 
“Ressex data are collected through primary surveys and include detailed micro-research of the six cities,” he said.
 
“This type of a tool was needed in the industry for a long time and we are working closely with Pankaj. It will bring more transparency in the market,” said Renu Sud Karnad, joint managing director of housing finance major HDFC.
 
Subscribers will be charged a quarterly fee of Rs25,000 for access to this website, while yearly access will cost Rs 75,000, Kapoor said, adding that a separate service will be launched for individual investors to select projects using analytical tools.
 
 The website provides calculators that allow the user to tweak various parameters such as prices, gestation period, location, etc. to compute key valuations like fair value, net present value and even Ressex futures.
 
“Developers will benefit a lot from such a sensitivity index because it will be easy for us to know which sector is enjoying more demand and work accordingly,” said Niranjan Hiranandani, managing director of real-estate developer Hiranandani Constructions.

Pallabika Ganguly, [email protected]

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