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Export markets leading sales revival, says Bajaj Auto CFO Soumen Ray



New Delhi: Bajaj Auto is witnessing a strong revival in various export markets, including Africa and Latin America, as they were not hit as hard by the COVID-19 pandemic and subsequent lockdowns as the domestic market, a senior company official said. The company, which exports to around 79 countries globally, reported its best ever dispatches to international markets last month.

“In terms of recovery, international business is doing better than domestic because most of the countries where we export have not been impacted that much by the pandemic and lockdowns as India,” Bajaj Auto CFO Soumen Ray told in an interview.

The demand is very robust and various markets like Africa, Latin America Middle East and South Asia are doing very well, he added.

“We have only two areas of concern, one is ASEAN region where major markets like the Philippines and Cambodia are witnessing lockdowns and restrictions. Other is Sri Lanka, where the government has banned import of vehicles,” Ray said.

Barring these two, the company is witnessing very strong revival, he added.

“It (revival in export markets) is borne out of two factors — severity of pandemic has been less in these regions and thus, the economy is also less impacted,” Ray said.

The company’s export order book is very strong for the next few months, he said.

Bajaj Auto shipped 2.12 lakh units in September to various international markets.

In July-September period, however, two-wheeler dispatches fell 11 per cent to 4,14,271 units as compared with 4,62,890 units in the same period of previous fiscal.

Commenting on the outlook for domestic market, Ray said the company is witnessing increase in footfalls and inquiries at the dealerships.

“Jury is still out regarding the festive season this year. Looking at the response in the first few days of the festive season, our sense is that it is going to be similar or marginally better than last year,” he noted.

On three-wheeler sales, Ray said the revival in the segment depends on pick up in economic activity involving small commercial vehicles.

“Certain economic activity is required for demand to come back. Economic activity here pertains to movement of people from one place to another, relatively short distances, in both urban and rural landscapes,” he noted.

“Till that doesn’t happen, like opening of schools, entertainment areas, why would anybody like to buy a commercial two-wheeler or a three-wheeler,” he added.

He, however, said that situation is improving in the three-wheeler segment and September quarter was much better than first quarter of the current fiscal. MSS RVK

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Regulatory hurdles, valuation issues delays M&M’s exit from Ssangyong




Mumbai: Regulatory hurdles and valuation issues are hobbling a change of control in SsangYong Motors while Indian vehicle maker Mahindra & Mahindra is battling against time to revive the ailing Korean venture.

Informed sources said Mahindra wants to completely exit, while Haah wants to come in as a strategic investor. This has led to valuation issues with Haah Automotive and that has come in the way of concluding the stake sale as yet.

“We have not been able to agree to certain financial terms with Haah as yet,” said one person in the know.

The Mahindra Ssangyong combine may have to resort to a one-time write-off of foreign investment, which could run into regulatory hurdles, people in the know said.

“If the divestment of an overseas investment by an Indian company results in a write-off, Reserve Bank of India (RBI) permits such divestment only in limited circumstances,” says Sudip Mahapatra, partner at S&R Associates.

“Depending on the circumstances, RBI can grant exemption on a case-by-case basis. However, RBI might be concerned that such an exemption could set a precedent for other similar cases, Mahapatra added.

Mahindra currently owns 74.65% of cash trapped in Ssangyong. Samsung Securities and its global partner Rothschild have been brought on board to help find a suitor for SsangYong.

While negotiations are still going on, it is getting tougher with each passing day as bankruptcy is looming large on Ssangyong, said the person quoted above.

Currently, this is the only investor that Ssangyong is in discussions with and if this falls through, Ssangyong will have to go back to the drawing board and start to look for a new investor.

To sustain the operation, SsangYong Motor has managed to sell one of its service centres located in the Guro district in Seoul to an asset management company, PIA Investment Management.

Through this sale it raised close to $147 million for the Korean auto major that faces severe liquidity issues, according to reports in a section of Korean media.

Since July of 2020, SsangYong has witnessed month-on-month improvement in its sales, both in the domestic market as well as exports. In the first 10 months of 2020, the company had cumulative sales of about 85000 units with volumes down by about 24%.

The company was able to record sales increase for three consecutive quarters and delivered highest performance in Q3 thanks to diversified sales channel and non-face-to-face marketing and it is forecasting for a better Q4 both in terms of sales and profits on back of new models like Tivoli Air and All new Rexton.

SYMC was able to reduce its operating losses in Q3 with sales of 25,350 vehicles. The revenue for Q3 stood at 705.7 bn won, and operating loss at 93.2 bn won.

An email sent to Mahindra & Mahindra did not elicit any response.

Haah Automotive responded to an email query saying “We do not comment on rumours and speculation.”

With sales seeing some pick-up lately , Ssangyong is managing it’s working capital requirements in the interim. It’s in desperate need of funds to stay afloat after parent company Mahindra decided to let go of its control.

In September Haah Automotive made an “initial” offer of $258 million for a substantial stake in SsangYong Motors.

Mahindra paid Rs 2,100 crore ($463 million) for the purchase of the Korean car maker a decade ago and invested over $110 million.

Haah had also sought an extension of the loan repayments and their terms might not be acceptable to lenders.

Banks like JPMorgan, BNP Paribas, Bank of America, among others, have a 260 mn dollar (306 billion won) exposure.

Banking sources told ET that while the initial amount will be used to seek extension of SsangYong’s debt repayment, the lenders have made it clear that the incoming investor in the company will have to clear the dues upfront if Mahindra cedes control.

Haah Automotive Holdings, purchases various vehicle assemblies from Chery which, along with parts sourced in North America, are assembled in an American factory where the final vehicles are produced. These products are sold under the brand name VANTAS in North America. Informed sources say the aim is to close the deal as soon as possible so that vehicle exports to North America can start , allowing SsangYong Motor to make an inroad into the US market.

Mahindra’s board moved a special resolution at its AGM to reduce its shareholding in SsangYong to less than 50%, an indication of a new investor coming in rather than a complete sell out.

The board last April rejected a Rs 3300 crore turnaround plan for SsangYong, pushing the Korean car maker into deep financial distress.

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Omega Seiki plans to launch electric tractor, cargo pick-up truck as part of expansion plan




Omega Seiki Mobility aims to bring in multiple electric products including two-wheelers, a four-wheeler cargo vehicle and a tractor over the next two years, as per a top company official.

The company, which is a part of the Delhi-based Anglian Omega Group, also aims to set up manufacturing facilities across various parts of the country.

Omega Seiki already has multiple manufacturing sites in Delhi/NCR.

The company also plans to have around 200 dealerships across the country by the end of next year.

It has earmarked an initial investment of Rs 200 crore for the projects and going ahead aims to raise another Rs 1,000 crore in order to fund the expansion plans.

“We are going to have factories and we are going to line up the products, we are going to be non-stop from here till next few years,” Anglian Omega Group Chairman Uday Narang told PTI in an interview.

The company would consider taking various routes to raise required capital to fund various projects, he added.

“We will try a combination of various things which may include going public, private equity, green bonds etc,” Narang noted.

Elaborating on the product pipeline, Omega Seiki Mobility Managing Director Deb Mukherji said the electric two-wheelers for both passenger and cargo segments would be introduced around April next year, while the four-wheeler for cargo and tractor would make way around next 2021-end or early 2022.

Commenting on electric two-wheeler range, he said the vehicles would be powered by lithium ion batteries and would cater to last mile deliveries.

“These scooters are already in advanced stages of testing and trial stages,” Mukherji said.

The electric pick-up truck would come with two tonne payload and would cater to last mile cargo delivery, he added.

“The market is moving towards higher payload. With the development of highways like the Delhi-Mumbai corridor and other similar kinds of  projects, we see this is going to be a big driver of electrification in India particularly in logistics space as all along the highway there will be logistics hubs and warehouses,” Mukherji said.

The vehicle would be a great option to deliver cargo from such warehouses to city centres with its range of 200 kms in a single charge, he added.

Commenting on the electric tractor he said, the model would come with 30-40 HP power range and could be priced around Rs 10-12 lakh.

“We want to be the first mover in the electric tractor space  and solve the problems of farmers with smaller land holdings. Data shows 80 per cent of the farmers in the country hold less than an acre, so this is a huge market. The cost of preparing the land with diesel powered tractors costs Rs 150 to Rs 200 for an hour whereas our product would cost Rs 20-Rs 30 an hour,” Mukherji said.

He said the company is currently witnessing a significant demand coming up for electric three-wheelers in South India, primarily from e-commerce firms.

“We see around 40 per cent of the demand is being generated from there. So we are in an advanced stage of discussion with a possible partner for a facility there,” Mukherji said.

The company, which has recently set up dealerships in Hyderabad and Bengaluru, now plans to open 20 more outlets in Tamil Nadu, Karnataka and Kerala by this year end.

“We aim to have around 200 dealerships across the country by the end of next year,” Narang said.

The company, which currently sells electric three-wheeler Rage, has also recently unveiled  three new products Sun Ri (three-wheeler cargo), Ride (E-rickshaw), and Stream (passenger auto-rickshaw) which it plans to commercially launch in March next year.

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COVID-19 has put the focus back on personal vehicles, pushed out shared mobility, says Motherson Sumi chairman




NEW DELHI: The coronavirus pandemic has clearly established the role of private vehicles, pushing out shared mobility in the process while also dampening the ‘whole excitement’ over electric vehicles, according to auto components major Motherson Sumi Systems Ltd Chairman Vivek Chaand Sehgal. Citing global experience of countries like China, Japan and South Korea, where there has been a spike in demand of personal vehicles when the countries re-opened after the COVID-19 induced restrictions, he exuded confidence that the conventional automotive industry has a bright future.

“One thing is certain that COVID-19 has clearly established the role of a private vehicle for daily usage. All those particular thoughts about shared vehicle and that’s going to be the future is all out of the window,” Sehgal told .

Stating that the demand for personal vehicles has has been “very very strong” after the reopening of the economies, he said, “We saw that in China (where) demand came back very strong. I think the same happened in Japan, the same happened Korea and as countries opened up, we could see there was a beeline for buying a vehicle because the space is very very important for you.”

Commenting on the impact that the pandemic has had on the automotive industry, Sehgal said, “I believe that a lot of clarity has been brought in, at least for the next two years.”

Also, he added, “I think the whole excitement about that the future is going to be the electric cars and things like that is also a bit toned down for the simple fact that to replace 1.4 billion cars in the world at one time it is a mammoth task.”

Observing that “a lot of the feeling of reality has set in and people have understood that”, Sehgal said going forward more focus is going to be given towards trying to expand fuel economy of vehicles, “and that I think will be more reasonable and doable in the next 10-15 years”.

On the road ahead for the automotive industry, he said, “I think there is a huge future. It is going to go very strong and (we are) looking forward to exciting times.”

Sehgal also said once the COVID-19 vaccine is found, it “will make people little bit more wanting to go out and that’s very important”.

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