Month: November 2008

There are rumors that the RBI may announce steep rate cuts in a week or so and reports that the government has decided to inject a whopping Rs50,000cr for funding infrastructure projects in a bid to pump-prime the economy.

The RBI is also likely to create a special repo window to allow banks to borrow up to 100 basis points of the statutory liquidity ratio (SLR) – the percentage of deposits invested in government securities – to make available Rs40,000cr for infrastructure
like national highway projects.

It is unlikely that the market situation will improve in India in the near future as American markets touched a new 5 year low and other markets follow Dow Jones and then lead in going down further.

Cement despatch growth rate deteriorated in October-08 due to lack of demand from the construction sector, really especially the Real Estate.

All the Major Cement Companies except Ultratech and Shree Cement reported a drop in Cement Dispatch in Oct-08 compared to their sales figures in Oct-07.

• ACC -3.5% YoY
• Ambuja Cement -3.9% YoY
• Grasim Industries -6.4%
• Ultratech +5.5% YoY
• India Cements -12.3%
• JaiPrakash -1.2%
• Shree Cement +12.6%

Cement company lobby is maintaining the prices at Rs 240, [Rise from Rs 150 levels in 2006]. Demand is unlikely to improve in the near future.

Data for the month of October 2008 shows that the combined two wheeler and three wheeler industry volumes declined significantly by 10% Y-o-Y for the first time in FY09. Despite the festival period falling in the month of October 2008, sales at the companies’ end plunged sharply due to a huge pile up of inventory of the previous month at the dealer network, though retail sales recorded an increase.

Hero Honda (HH) – Decline in domestic volumes of entry-level Motorcycle segment (75-125cc) pull down overall volumes. Motorcycle sales were down 4.9% Y-o-Y and 10% sequentially to 335,754 units. Scooter sales witnessed a growth of 38% Y-o-Y to 16,695 units.

Bajaj Auto’s overall volumes declined sharply by 31% Y-o-Y and 21.8% sequentially to 191,840 units, due to a significant decline of 47.6% Y-o-Y in domestic sales to 116,748 units in October 2008. The company’s overall Motorcycles volumes plunged 34% Y-o-Y to 163,850 units, aided by the export growth of 42.3% Y-o-Y to 61,608 units.

TVS’s total volumes for October 2008 declined 9.7% Y-o-Y and 14.7% sequentially to 117,101 units. The company’s Motorcycle sales fell 11% Yo-Y to 60,273 units.