Chinese biggies want to enter Indian car market

The Chinese dragon has set its eyes on the Indian car market. Two biggies Chery Automobile and Great Wall Motors are planning to enter India soon through joint ventures, senior company officials told TOI at Shanghai Motor Show.

"We are looking at a joint venture partner for India as it holds a good potential for car sales in the coming time," Chery Automobile president Yin Tongyao said. He termed India as a "very important" market and said the company was looking at "several proposals" for finalising a local partner.

Chinese carmakers are shifting focus from their main markets like US and Europe as volumes there are shrinking due to the global slowdown. At the same time, India's rising status as one of the fastest-growing car markets in the world, spells opportunities.

Chery was believed to be in talks with tractor maker Sonalika's car venture, International Cars & Motors Ltd (ICML), around three years back to roll out its small car in India. But the talks never fructified into a joint venture. Chery, famous for its small car QQ, is eyeing sales of 4.19 lakh units in 2009, an 18% increase over 2008. The QQ comes in two petrol engine sizes 0.8-litre and 1.1-litre.

Gavin Chen, marketing specialist with Chery's international division, said the company plans to sell cars in India by 2010. "While initially we will look for a distributor, the final plan is to build a factory in India." Chen said the company saw India as a big market due to its huge population and thus wanted to develop some specific models. "The plan is to make cars at good price with good quality," he added.

Great Wall Motor (GWM) listed on the Hong Kong Stock Exchange is China's largest privately-owned car maker and specializes in SUV and utility models, while recently expanding into the multi-purpose vehicle and hatchback segment.

Chris Guan, GWM's South Asian region GM, said the company wanted to launch at least one or two models in India this year. "We are currently evaluating partnerships. Initially, we are looking for a distributor for which we have been contacted by some companies," he said.
On 100%-plus import duties, he said the company wanted to have a partner that can assemble the models. "If the partner has a factory, the customs duty can be reduced," he said. GWM sold 1.25 lakh units in 2008 and exports cars to countries like Russia, Ukraine, Egypt, Senegal and the Middle-East region.

DSP BlackRock to shut down part of Portfolio business in India

Leading asset manager, DSP BlackRock Investment Managers has decided to close down a part of its portfolio management services (PMS) business in India by June end. DSP BlackRock decided to scrap the segment primarily owing to a stagnant growth seen in the division in last 12 months and taking into account the small size of the portfolio, a company official said.

"The growth in PMS segment has been stagnant in the last 12 months. Besides, the segment's contribution to the total business is not significant. Hence we decided to shut down the unit," the official said.

DSP BlackRock's PMS portfolio comprises Rs 60 crore in discretionary assets and Rs 188 crore structured products. While the Rs 60 crore discretionary assets will be liquidated in the next four to six weeks, the company would retain the structured product asset part, the official said.
"DSP BlackRock will go ahead with our expansion plans, primarily increasing our presence in the country by opening new branches," the official said.

(Source: Economic Times)

Top-level rejig at Aditya Birla Nuvo; Rakesh Jain named MD

The Aditya Birla group on Tuesday announced top-level reshuffle at Aditya Birla Nuvo. The Birla group, one of India’s largest conglomerates, said it had appointed Rakesh Jain as managing director of Aditya Birla Nuvo, due to the completion of the tenure of the current MD Bharat Singh.

Mr Singh is likely to be given a new responsibility to look after the various trusts of the group. Although this wasn’t immediately confirmed, the Birlas have a precedent of moving their senior executives into advisory roles or as part of in-house thinktank, post retirement.

When contacted, group HR director Santrupt Mishra said: “We are looking for a new role for Mr Singh. Nothing has been finalised as yet.” The group’s corporate norms stipulate 62 years as the retirement age for executive directors. Mr Singh is scheduled to retire in July.

Mr Jain had come from one of the largest conglomerates, General Electric, and is hence considered apt for Aditya Birla Nuvo that has a presence in varied businesses such as textiles, life insurance and telecom.

Adesh Gupta, CFO and whole-time director at Aditya Birla Nuvo, has been appointed as CFO of Grasim Industries from May 1, 2009. Sushil Agarwal, who is currently the president of Birla Global Finance, will be taking over as CFO of Aditya Birla Nuvo.

Pranab Barua, the business director for garments for Aditya Birla Nuvo, has been inducted as whole-time director on the board of the company. “We have always appointed people from within the organisation as part of the senior executive team,” said Mr Mishra who has also been appointed as head of the carbon black business of the company.

Source: Economic Times

Britannia Ind to buy Fonterra's stake in NZ JV

Britannia Industries Ltd has informed BSE that the company has entered into an agreement dated April 28, 2009 with Fonterra Brands (Mauritius Holding) Ltd, Mauritius, for acquiring the latter's 49% Equity and Preference shareholding in Britannia New Zealand Foods Pvt Ltd (BNZF), their joint venture company engaged in Dairy business. This acquisition is subject to Reserve Bank of India approval. With this acquisition, Britannia along with its wholly owned subsidiary will hold the entire equity and preference capital of BNZF.

Source: Business Line

Vedanta says buys 9.5 percent stake in HudBay

Indian mining group Vedanta Resources Plc (VED.L) said on Monday it had bought a 9.5 percent stake in Canada's HudBay Minerals Inc (HBM.TO) but gave no reason for the move. London-listed Vedanta, India's largest base metals miner, confirmed a Globe and Mail newspaper report that it had bought the stake, 14.5 million hudBay shares, through a subsidiary, Lakomasko BV, a privately-held company based in Amsterdam. "They do control that stake. It (Lakomasko) is an organisation that is controlled by Vedanta Resources," Vedanta spokesman Robin Walker said in London, declining further comment. HudBay shares were up 3.3 percent to C$7.83 by 1515 GMT, adding to a 9 percent rise on Friday. The shares have more than doubled in 2009 since ending last year at C$3.06. The Globe identified K. Coimbatore Venkatakrishnan as the principal and top executive of Lakomasko. He was the chief executive of Vedanta's Konkola Copper Mines in 2006. KCM is Zambia's largest copper producer. Vedanta, which has been aggressively expanding outside its home base in India, last week got approval from a U.S. bankruptcy judge to go ahead with a plan for its unit Sterlite (STRL.BO) to buy copper miner Asarco LLC for $1.7 billion. [ID:nN22274894] HudBay chief executive Peter Jones began his second stint as CEO last month after a failed attempt to take over fellow Canadian miner Lundin Mining (LUN.TO) prompted a shareholder revolt that forced the company's former board and management to step down. Jones's first turn as CEO ended when he was pushed out in January 2008 for not seeking acquisitions aggressively enough. He said in March that HudBay would try to expand through takeovers, and may be open to overtures from larger players. Jones was part of a slate put forward by shareholder SRM Global Master Fund, which wanted HudBay to distribute its war chest of approximately C$700 million to shareholders. Jones has said the company will only do that if attempts to expand through acquisition fail.

Source: Reuters

Marico scouts for buys in domestic market

As part of its inorganic growth strategy, FMCG major Marico Ltd is aggressively scouting for acquisitions in domestic markets. The company is planning to acquire two regional brands in the beauty & wellness sector in India. Currently, the company is in talks with two players based in southern states in this space, informed industry sources. Incidentally, Marico has decided to divest its entire stake in its wholly owned subsidiary Sundari LLC which is engaged in the manufacturing and marketing of skincare cosmetics in the USA. According to industry analysts, Marico will be investing in domestic acquisitions after completing its formalities to divest stake in Sundari LLS. “Since the acquisition of ‘Manjal’ (herbal soap) in Kerala in 2006, Marico has been scouting for southern skin care brands for a while”, said an analyst based in Mumbai. In 2006, Marico had bought out Hindustan Lever Ltd's Nihar brand for a Rs 227 crore. In the same year, the company also acquired Fiancee (a hair care brand) from Egypt-based Ready Group.
When contacted, Chaitanya Deshpande, head of Mergers & Acquisitions (M&A), Marico declined to comment on Marico’s specific acquisition plans. “The company has identified inorganic growth as part of its corporate strategy and is open to considering acquisition opportunities. We can not comment on any specific opportunities,” he said. On the rationale behind Marico’s decision to divest in Sundari LLC, Deshpande said that a majority of Sundari’s revenue is generated from B2B sales to spas located within luxury resorts and hotels globally. “Sundari constituted only a small share of Marico’s revenue. Moreover, the US which is Sundari’s base, has not been a part of Marico’s focus geographies for growth, which has come increasingly from Asia and Africa. The divestment is thus a logical part of Marico’s global strategy,” he added. The Group posted a net profit of Rs 188.7 crore for the year ended March 31, 2009, 11.6 % higher than the Rs 169 crore net profit for the year ended March 31, 2008. The group’s total income rose by 25 % to Rs 2402.6 crore for the year, compared to Rs1914.5 crore for the previous year. Enthused by its performance in FY 09, Marico is planning an increase in its advertising and marketing spend in 2009-10

Source: Financial Express

Philip Morris, Modis settle Marlboro row

US tobacco giant Philip Morris and its Indian joint venture partner, the KK Modi group, have decided to settle their dispute over the sale of Marlboro cigarettes in India, in what is being seen as a tactical retreat by both companies keen on gaining market share. The board of Godfrey Phillips India (GPI), where the two firms own a 36% stake each, decided on Saturday to start negotiations with Philip Morris to market Marlboro through the GPI distribution network in India. The two companies had clashed in 2003 after Philip Morris bypassed its Indian partner and struck an arrangement with a local distributor to sell Marlboro in India. The US company had said at that time Marlboro, its iconic brand immortalised by the picture of a cigarette-toting cowboy, was too precious to be given to a company not controlled by it. The subsequent thaw and Saturday’s decision to bury the hatchet is being attributed to a serious deterioration in GPI’s competitive position and the ever increasing dominance of ITC, part owned by British American Tobacco, Philip Morris’ big global rival. India’s 96 billion sticks-a-year cigarette market is dominated by ITC with about 65% share. GPI’s Four Square, Jaisalmer are small players in the premium segment, which itself comprises 60% of the total market. KK Modi, chairman of the company, declined to comment on Saturday’s board decision, but a person close to the devlopment said the move is largely to combat ITC’s hegemony. “The standoff has not helped either GPI or Philip Morris’ plans in India. Marlboro will add to GPI’s portfolio a high-end brand with strong consumer pull which it always lacked. The board has been formally informed about discussions with Philip Morris, but this does not imply that a deal has been finalised,” said the person, requesting anonymity. GPI shares jumped 20% or Rs 166.25, to close at Rs 997.60 on BSE. In January last year, ET had first reported about early talks between GPI and Philip Morris to cut a marketing and distribution deal for Marlboro. Although an executive close to the development said that Marlboro will be imported and marketed in India, another person familiar with the matter said that Philip Morris International has already done due diligence on two GPI plants in Mumbai and Ghaziabad, suggesting that the deal may involve local manufacturing of Marlboro. While the government will not allow any expansion in production, the person said that GPI had idle capacity as cigarette production declined during FY09, with firms stopping production of non-filter cigarettes due to the high excise duty. Philip Morris is likely to invest in marketing, while GPI will be involved in manufacturing and distribution. In fact, GPI has been bolstering its distribution strength in the southern and eastern states, areas considered weak for the company. Philip Morris is likely to keep its 100% India arm, set up to import and distribute Marlboro, as a shell company that will hold the brand rights, people familiar with the situation said. Philip Morris was interested in acquiring its partner's stake in GPI, but Mr Modi has steadfastly refused its overtures for years. Besides, the government's refusal to countenance any increase in foreign holding in the tobacco industry also meant share buyout was not a straight-forward affair. The Union health ministry’s curbs on cigarettes (it banned smoking in public places last year) and Philip Morris’ realisation that it can’t do much on its own could also have contributed to the climbdown by the foreign firm. Cigarette advertsing is banned in India and the government doesn’t allow companies to increase capacities for manufacturing cigarettes. Japan tobacco has been trying to increase its stake in its Indian JV, but the government has still not cleared it. “Keeping in mind the numerous restrictions, it is best to utilise the current JV to push its brand in India. Afterall it is distribution that can lead to increased sales,” one industry official said. In 2003, Philip Morris Services India bypassed GPI and entered into an agreement with Barakat Foods & Tobacco (BFT) for the distribution of Marlboro cigarettes in India. The company directly imported the product, which was then distributed by BFT under a non-exclusive agreement. Also, smuggled cigarettes, especially the Marlboro brand, have been selling very well in India. According to industry estimates, of the 250 million cigarettes that come to India every year, Marlboro alone accounts for 100 million. Philip Morris has an India office, which is the subsidiary of Switzerland-based tobacco company Philip Morris International. Its global brand portfolio includes L&M, Parliament, Chesterfield, Bond Street, Philip Morris, Lark, Virginia Slims and Marlboro, none of which are marketed by GPI in India. Philip Morris Inc joined hands with the KK Modi Group in 1979.

Source: Economic Times