Big companies queuing up to invest in Uttarakhand

By Vipin Agnihotri

Big companies such as Tata Motors, Bajaj Auto, Hero Honda, Ashok Leyland and Nestle are queuing up to invest in the state of Uttarakhand. In terms of statistics these companies have invested around Rs 30,000 crore in the state since 2003.

The irony is that state doesn’t have any more land in industrial estates. There is a long waiting list of companies, but state can’t accommodate everyone. If experts are to be believed, the industrial estates of Haridwar, Udham Singh Nagar and Dehradun have emerged as the main industrial centres.

In the last few years, Uttarakhand has clocked a state domestic product growth rate of 10 percent, placing it among the high growth states in the country. In my recent visit to Uttarakhand I notice that State Infrastructure and Industrial Development Corporation (SIDCUL) has most utilized unused government land for the purpose. The supply of such parcels of land has now run out.

Because of this, government can either turn away investors, or it can start doling out agricultural land. Initial signs are that government will divide land into three categories. First and foremost is the extremely fertile land, which they will not touch. Second one is the ordinary land. Last one being the government land. On the basis of what kind of Industries state needs, government will decide whether to give it to companies or not.

On other fronts, too, there are challenges that need to be addressed. In my opinion, basic infrastructure needs an urgent overhaul. No one will argue with the fact that the supply of power has not kept pace with demand in Uttarakhand. At this moment of time, the state generates 950 MW of power, against a peak demand of 1,200-1,300 MW. An investment of Rs 11,000 crore is expected to be made in the sector over the next few years to ramp this up to 3,500 MW.

In addition, there is an Rs 2,200 crore ADB funded project to overhaul and build roads in the state. The states urban centres also need large doses of investment. The lack of trained manpower is another issue. The government is working overtime to address this by inviting companies to adopt Industrial Training Institutes.

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Luxury Trains, Planes, Automobiles... and Buses

Well why not discuss luxury transportation here for those that enjoy the finer things in life. Borrowing in part from a movie with a similar title, I wanted to explore how Indian’s can travel in style now and in the future. Therefore, below we have highlighted a few of the best options.

Automobiles

Gallardo	Gallardo Spyder	Murcielago

India witnessed the entry of the Lamborgini earlier last year. Three of its latest international models that rolled out in India were the luxury Sports sedan Gallardo, the convertible 'Gallardo Spyder', and the 2-door coupe Murcielago.

While Lamborghini has sold only 7 cars thus far, the company expects greater sales as India’s infrastructure (read highways) improves. Who wants to drive a car that can go 322 kph (200 mph) on roads that don’t support much faster than 1/3 that speed. Also, due to the dusty roads and the potential for vandalism, most Lamborghini owners will be too jittery to leave the car for any length of time unless it’s in one’s garage.

Luxury Buses

Ashok Leyland plans a luxury upgrading of its fleet
Before	After

Ashok Leyland is planning to roll out super luxury passenger buses to rival Volvo and other high-technology buses. When asked about the company’s plan, Ashok Leyland chief operating officer Vinod K. Dasari said; “The chassis will be made by Ashok Leyland, TVS and a leading automobile firm of Spain would manufacture the body jointly; he said that “they had not yet decided the name to be given to the vehicle.”

Well that’s a relief, up till now Ashok Leyland buses have looked like they were designed right after India’s independence. See what a little competition can do for the population?

Dasari said; “that through extensive market research based on feedback from customers, they were changing the specifications of the vehicles and rolling out new models to suit Indian road conditions. So far, the response from the clients was overwhelming.”

Really? I thought it may because the old Ashok Leyland design was so bad that competitors would soon trounce the company. I have always said Monopolies breed apathy and this holds true here.

Volvo, on the other hand, is well known its luxurious fleet which is boosted by safety and luxurious features.

Volvo has been newsworthy recently due to the increased Multi-National Corporation (MNC) competition in the bus business and partly because of the consolidation in the market.

We found an interview at The Economic Times (ET) in which ET spoke with Eric LeBlanc, CEO, Volvo India.

ET Question: What are the company's plans in the luxury bus segment? What is the potential of the market in India and what is the targeted market share that you hope to achieve by 2010?

Volvo answer: In the bus segment Volvo's focus is the air-conditioned inter-city coaches and city buses. The overall bus market has remained quite steady over the years. While we expect the overall market to remain steady in the near future too, we do expect a steady (but not significant) growth in the segments we address.

However, once we see a certain threshold of infrastructure development and conducive environment for bus transport there is no reason not to expect significant growth at a later stage.

What we expect now, is the emergence of new kind of buses such as 3-axle buses, articulated buses, rear engine buses etc and enhancement in the quality, specification and features of the current lot of buses.

Again, the entry of these types of buses and the growth of the segment would depend upon how well our infrastructure develops in cities and outside and how well we create a conducive environment for buses to become a key mode of public transport.

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Luxury Planes

I was surprised to find that there are luxury jet services in India catering to the private HNW individual or corporations. While there is a huge need, the country only recently opened up air travel to companies and private individuals. India’s Air Charter Services is one of the few I found that address this market.

Cessna Citation XL
Cessna Citation II
HS-125 700B

About: AIR CHARTER SERVICES PVT. LTD. (AVIATION INDIA)—(air charter india / air charter operator) based at IGI Airport New Delhi India, with a fleet ranging from low-cost piston engine aircraft to luxurious turboprops and jets—is playing the same role in Indian Aviation - air charters india.

We cater to the requirements of VIPs, Corporate houses, Travel Agents, Tour Operators, affluent tourists/pilgrims and air medical evacuation experts.

In the future, there will be a decent market for personal jets in India. Unless the infrastructure improves significantly in India, the market will be much larger than in Western societies. The latest personal jet being introduced in the US starts at $3 million and is a luxury business jet. Those who can afford the luxury are sure to buy this sleek plane that cruises at 480 miles per hour.

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Luxury Trains

The luxury train market in India is well underrepresented. With the second largest rail network in the world, connecting every nook and corner of the country, there should be more luxury options. One of the better options is the renowned Palace on Wheels. Some other famous luxury trains of India include the Deccan Odyssey, Royal Orient and Fairy Queen. These luxury trains take you to some of the most fascinating historic cities, monuments, wildlife parks and sanctuaries and much more of India.

Luxury Train Charges
Travel charges keep on fluctuating with the time of the year. Below are representative rates for the year 2006 -2007.

Oct 2006 to Mar 2007

Single Occupancy (per person per night) 300 US$

Double Occupancy (per person per night) 200 US$

Triple Occupancy (per person per night) 150 US$

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Hot or Not? Automobile Sector on a slippery road!

By Sundaramurthy Vadivelu

Disclosure

It is a well known fact that automobiles form an integral part of every economy. Automobiles are very essential for the movement of men and material. In India, automobile industry has come up a long way. 25 years ago, only upper middle class people could afford to have a motor cycle and rich people could possibly have a car (only a few models existed however). Today, the scenario has changed and even middle class families own a car. Let us now analyze the automobile sector from the stock market point of view. We will discuss the BSE Auto Index as well as some popular stocks.

The BSE Auto Index:

The BSE Auto Index has a free float market capitalization of Rs.81,458 crores and 17 constituent stocks. Bajaj Auto (weightage: 17.91%), Tata Motors (17.57%), Mahindra & Mahindra (also known as M&M, 15.19%), Maruti (12.24%), Hero Honda (7.67) are the top 5 in terms of weightage. It may be noted here that these stocks are also constituents of Nifty.

In the weekly chart displayed below, a “double top” formation can be observed. During May 2006 the auto index reached a high of 5844. Within about one month, it fell to a low of 3960. In February 2007 it once again made a high of 5882 but could not close above its previous high. Between May and July this year, a similar double top pattern was formed and the index has broken its support as can be seen from the chart. These indicate that the Auto Index is bearish. The next supports are at 4073 and 3960.

Chart Courtesy : BSE Web site, www.bseindia.com

Top Auto stocks:

See Recent Performance of India Automobile Stocks

These can be classified into 4 categories viz.

• 2 and 3 wheelers (Bajaj Auto, Hero Honda, TVS Motor etc.)

• Light Commercial Vehicles (LCV) and Heavy Commercial Vehicles (HCV - Ashok Leyland, Tata Motors etc.)

• Passenger cars (Hindustan Motors, Maruti Udyog)

• Tractors (Escorts, Punjab Tractors etc.)

Two and Three wheelers:

Scrip	5 year return %	Recent Loss %
Bajaj Auto	402.36	(33.16)
Hero Honda	122.87	(31.66)
LML	(63.90)	(79.94)
Maha. Scooter	269.97	(41.23)
TVS Motor	23.89	(68.35)

LCV’s / HCV’s:

Scrip	5 year return %	Recent Loss %
Ashok Leyland	244.97	(33.65)
Eicher Motors	359.27	(17.90)
Swaraj Mazda	334.38	(28.37)
Tata Motors	371.84	(35.70)

Passenger Cars:

Scrip	5 year return %	Recent Loss %
Hindustan Motors	208.64	(57.45)
Maruti Udyog	236.70	(21.88)

Tractors:

Scrip	5 year return %	Recent Loss %
ESCORTS	51.29	(46.39)
HMT	127.38	(44.11)
M&M	1,268.71	(37.69)
PUNJABTRAC	56.31	(32.07)

For more detailed information on prices and returns please See Recent Performance of India Automobile Stocks

Possible causes of the weakness in automobile sector:

• Increased interest rates

• Excess inventories

• Increasing competition

Mahindra & Mahindra, TVS Motors, Punjab Tractors, Hero Honda and Bajaj Auto showed decline in their earnings during fourth quarter for financial year 2006 – 07 whereas Ashok Leyland and Maruti Udyog had more earnings than the previous quarter.

Let us now discuss the long term outlook for some important stocks.

Ashok Leyland:

The monthly chart of the stock is displayed above. Using Elliott wave theory, we can come to the conclusion that waves 1 through 5 are already over; corrective wave ‘a’ and pullback wave ‘b’ are also complete. Now the last leg of correction is in progress. The stock is on the verge of testing its 38.2% retracement levels. A bearish “three outside down” candlestick pattern has been formed. If 34.50 is breached on a monthly basis, we can expect a bearish target of 22.90 in the long term.

Eicher Motors:

As can be seen in the chart above, the stock is locked between 202 and 415 for almost 2 years now. Only a decisive monthly close above 415 with good volumes will move the stock further upwards. But a close below 202 will make the stock bearish.

Tata Motors:

Like Ashok Leyland, this stock is also in wave ‘c’. If it closes below 637 in monthly charts, it may have a bearish target of 415 in the long term. Note that the volumes were maximum during wave 3 in 2003.

Hot or Not Conclusion:

Long term investors can exit the automobile sector at every higher level. Medium term and short term trends are weak; so it is better to avoid these stocks. Day traders/future traders however, may go either way depending on intraday charts.

• Long Term Investors – Hot

• Medium Term – Not

• Short Term – Not

Sundaramurthy Vadivelu