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Auto, manufacturing firms shed one-third share value in a year

Latest data shows that automobile sales for the month of August hit the lowest since 1997-98.

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Auto sector slowdown

Mumbai, Sep 10 : The ongoing economic slowdown in the country has claimed the livelihood of lakhs of people. New projects and investments have been put on hold, while a revival could take longer as investor confidence in companies cut a sorry picture at the exchanges.

Data from the bourses suggest that in just the past one year, the automobile and manufacturing companies, have seen over one-third of their share value getting eroded, on average, indicating a sharp decline in these companies’ abilities to raise capital in the market.

During the period in consideration, the Nifty metal index has lost the most among the 11 sectors constituting the benchmark index.

Manufacturing companies like SAIL and Jindal Steel, which constitute the metal index, declined by 35 per cent, on an average

Not a distant second was the auto index, which fell over 33 per cent.

Among the 15 constituent stocks of the auto index, Tata Motors, Motherson Sumi Systems and Ashok Leyland have been worse hit, losing 55 per cent , 66 per cent and 51 per cent, respectively. Bajaj Auto seems to have bucked the trend, coming down merely 2 per cent amid companies severely hurt owing to the slowdown.

Latest data shows that automobile sales for the month of August hit the lowest since 1997-98.

Steel companies are witnessing a similar trend. The state-owned Steel Authority of India (SAIL) has lost over 57 per cent, while Jindal Steel has also shed over half of its share value in the last one year.

Six of the 15 companies constituting the index have lost over 40 per cent of their share value.

The state-run bank index – Nifty PSU Bank index – despite a slew of measures that have been announced for the sector, has yet to regain investor interest. The PSU (public sector undertaking) bank index has declined by 21 per cent during the same period.

The Nifty pharma index – investment in which firms are considered to be relatively safe during downturns, and, therefore, called defensive investments — fell 22 per cent.

The Nifty media index also also shed over 30 per cent.

(Ravi Dutta Mishra can be contacted at [email protected])

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Hero MotoCorp, Maruti top gainers on ‘historic’ Friday

Stocks of two-wheeler major Hero MotoCorp settled 13.19 per cent or Rs 334.05 higher at Rs 2,866.50 per share.

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Mumbai, Sep 20 (IANS) As Indian stock markets surged to decade-high gains on Friday following Finance Minister Nirmala Sitharaman’s announcement of corporate tax rate cut among other measures, Hero MotoCorp and Maruti Suzuki India were the best performing stocks on the Sensex.

Stocks of two-wheeler major Hero MotoCorp settled 13.19 per cent or Rs 334.05 higher at Rs 2,866.50 per share.

Earlier in the day it surged 19 per cent to touch an intra-day high of Rs 3,015.60 per share.

Shares of Maruti Suzuki India which surged by 18.6 per cent during the intra-day trade, settled at Rs 6,585.25 per share, higher by Rs 646.95 or 10.89 per cent from the previous close.

Among the the other major gainers on the Sensex were IndusInd Bank, which closed 10.74 per cent higher at Rs 1,419.60, Bajaj Finance (10.19 per cent higher at Rs 3,705.60), State Bank of India (10.09 per cent up at Rs 301.70).

Following the major announcements earlier in the day, Indian benchmark indices logged the biggest-ever gains in over 10 years as the government slashed the effective corporate tax rate to about 25 per cent from 30 per cent.

Sensex advanced by a massive 1921.15 points to 38,014.62 and the broader Nifty jumped to 11,275.45 after gaining 570.65 points or 5.33 per cent.

The only stocks which lost on the Sensex were PowerGrid, Infosys, Tata Consultancy Services, NTPC and Tech Mahindra

Sitharaman announced lowering of corporate tax rate on domestic companies to 22 per cent subject to such entity not availing any exemptions and incentives. Also, these companies will not be required to pay any Minimum Alternate Tax (MAT). Effective tax rate in this case would be 25.17 per cent, including cess and surcharge.

Further, the ‘super-rich’ tax will not apply on capital gains arising from the sale of any security, including derivatives in the hands of Foreign Portfolio Investors (FPI).

To provide relief to the listed companies which have already made a public announcement of buyback before July 5, 2019, the government announced that tax on buyback of shares in case of such companies shall not be charged.

These measures also boosted the investor sentiments in the market.

Commenting on the measures, Mustafa Nadeem, CEO, Epic Research said: “This is huge for the market. There were few announcements that were keeping sentiments in check as the Finance Minister was trying to boost market sentiments and improve the state of the economy by boosting exports, banks consolidation, recapitalisation and so on but reducing the corporate tax rate to 22 per cent or domestic players and 15 per cent for new entrants setting up manufacturing units is a big boost. It has two important effects.

“One the domestic environment which was sluggish due to slowdown is going to fade with lowered corporate taxes,” Nadeem said.

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Tata Motors Group August global wholesales down 32%

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Mumbai, Sep 12 (IANS) Tata Motors Group on Wednesday reported a decline of 32 per cent in August’s global wholesales, including that of Jaguar Land Rover, over the corresponding period of last year.

According to the company, the global wholesales during the month under review declined to 72,464 units.

“Global wholesales of all Tata Motors’ commercial vehicles and Tata Daewoo range in August 2019 were at 25,366 nos, lower by 45 per cent, over August 2018,” the company said in a statement.

“Global wholesales of all passenger vehicles in August 2019 were at 47,098 nos, lower by 22 per cent, compared to August 2018.”

As per the statement, global wholesales for Jaguar Land Rover were 39,615 vehicles.

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Slowdown plunges August auto sales to lowest since 1997-98

Overall, passenger vehicle sales declined by 31.57 per cent in August to 196,524 units against 287,198 units in the corresponding month a year ago.

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Car Sale Down

New Delhi, Sep 9 (IANS) The ongoing consumption slowdown that has gripped the Indian economy dragged down the automobile industry’s August sales to the lowest level since 1997-98, leading to the sector seeking even a “bigger stimulus package” to revive growth.

The demand for another stimulus arose after August’s sales data showed that overall sectoral offtake in the domestic market has plunged 23.55 per cent. This level of downturn was witnessed only once earlier, in December 2000, when the de-growth was registered at 21.81 per cent. The available data series commences from 1997-98.

At present, the industry’s sales have been on a downslide since the last 10 months due to a high GST rate and lack of adequate liquidity. It had recorded a slump of 18.71 per cent in July, the highest monthly sales de-growth in the last 19 years.

A million contractual manufacturing jobs are at risk due to the consumption slowdown which has forced value-chain operators across the automobile industry to reduce production levels.

“The data in the month of August only highlights the urgent need for government to come out with some kind of a bigger stimulus package and to stregthen the stimulus that has already been given by giving the industry a reduced GST rate from 28 to 18 per cent,” Society of Indian Automobile Manufacturers (SIAM) Director General Vishnu Mathur said in a video message.

“We do not have much time, in case we miss on this opportunity, the festival season will also probably not be good, so we have to look at the festival season before we take decision now to reduce GST and to announce a scrappage policy which will help the industry in reviving its fortunes.”

Finance Minister Nirmala Sitharaman had earlier announced several measures to rescue the auto sector including lifting ban on purchase of vehicles by government departments, and allowing additional 15 per cent depreciation on vehicles acquired from now till March 2020.

On Monday, data furnished by the SIAM showed that total sales of the Indian automobile sector declined by 23.55 per cent in August to 1,821,490 units, from 2,382,436 units sold during the corresponding month of the previous year.

Passenger car sales in the month under consideration plunged by 41.09 per cent to 115,957 units, against 196,847 units sold in August 2018.

Utility vehicle sales declined by 2.2 per cent to 71,478, whereas vans’ offtake went down by 47.36 per cent to 9,089 units against that in the same month a year ago.

Overall, passenger vehicle sales declined by 31.57 per cent in August to 196,524 units against 287,198 units in the corresponding month a year ago.

In the commercial vehicle segment, sales were down by 38.71 per cent to 51,897 units.

The sale of three-wheelers in August declined by 6.93 per cent to 58,818 units.

In the case of two-wheelers, which include scooters, motorcycles and mopeds, the sale edged lower by 22.24 per cent to 1,514,196 units.

However, exports across categories were higher by 2.37 per cent at 421,107 units.

The sales decline has also dented production levels, causing job losses. The domestic passenger car production has fallen by 28.63 per cent to 182,495 units from 255,717 units.

Similarly, commercial vehicle production has come down by 42.05 per cent to 54,873 units, and two-wheeler production has edged lower by 17.08 per cent to 1,858,305 units.

“Despite a strong negative growth overall for passenger vehicles, utility vehicles have done reasonably well with minimum negative impact because of new introductions,”
Grant Thornton India LLP Partner Sridhar V. told IANS.

“Impact of measures undertaken to increase liquidity by the government is yet to be felt.”

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