Stimulus effect: Auto makers slash prices

With government announcing a 4% cut in CENVAT across the board, the Auto industry today announced price cuts across various models and segments. The cut has been in the range of Rs.2000 to Rs.50,000. Rate cut comes as a blessing for the auto industry which has been hit hard by the global recession and a slowdown in the India economy.

Pune-based Bajaj Auto today announced cut in prices of its vehicles by up to Rs 4,400 on account of four per cent reduction in CENVAT.The prices of two-wheelers have been reduced by up to Rs 2,100, while that of three-wheelers have been cut by up to Rs 4,400, Bajaj Auto Ltd (BAL).

Maruti Suzuki said in a statement that the price of its top-end SX4 sedan will go down by Rs.23,000 to Rs.760,542, while the small car Maruti-800 will be cheaper by Rs.6,500 at Rs.193,561. Hyundai Motor, the second largest car maker in the country, has cut the prices of its flagship model Santro (GL) by Rs.8,834 (non AC), while the top-end luxury car Sonata will see a drop of Rs.44,792.The company's new sensation i10 will be cheaper by Rs.11,247 and Rs.18,381 depending on its models.

Toyota Kirloskar said the price of its popular multi-purpose vehicle would be reduced by up to Rs.32,780, while high-end models like Corolla would be cheaper by Rs.40,750.

Bajaj Auto listed on BSE; Bajaj FinServ on NSE

Bajaj Group on Monday listed two of its companies on the stock exchanges after it was demerged from Bajaj Holdings and Investments.Group Chairman Rahul Bajaj listed two-wheeler maker Bajaj Auto on the Bombay Stock Exchange, while Group Vice- Chairman Madhur Bajaj listed Bajaj FinServ on the National Stock Exchange.

Bajaj Holdings and Investments has 30 per cent stake each in Bajaj Auto and Bajaj FinServ.

Bajaj Auto would continue to launch new models in association with Kawasaki and KTM. It plans to raise its stake in KTM to 30 per cent from 25 per cent in due course of time, he said.

Bajaj said if the government allows higher FDI in insurance then its German partner Allianz has the call option to raise it from the present 26 per cent to 49 per cent in the insurance joint venture.

However, Bajaj said he doesn't see the FDI hike in insurance cap happening now. It would be taken up by the next government in the Centre, the Rajya Sabha MP said.

Nissan, Leyland in small truck alliance

The Chennai-based commercial vehicles maker and Japan’s Nissan Motor, in which France’s Renault is the single-largest shareholder, today agreed to form three joint ventures to develop, manufacture and market light commercial vehicles (LCVs). The joint venture will produce 100,000 vehicles annually in the medium term.

Renault already has a joint venture with utility vehicles maker Mahindra & Mahindra, which is rolling out the Logan sedan, and has announced another one with two-wheeler maker Bajaj Auto for a low-cost car.

The first of the three ventures will make Nissan commercial vehicles in India for the domestic market and overseas sales. Ashok Leyland will control a majority stake in the company.A venture for assembling engines and related parts is also on the cards. It will be controlled by Nissan.

The third company, equally owned by the two partners, will develop LCVs and engines, and market them in India and overseas. The products developed will be sold under both the Ashok Leyland and Nissan brands.

The two companies are also thinking of collaborating in sales and distribution. This may include giving Nissan an access to Ashok Leyland’s vast dealer network. Ashok Leyland may use Nissan’s dealer network in identifying export markets.Ashok Leyland expects to sign a final agreement with Nissan in October after completing a feasibility study.

Bajaj Auto skids for second straight day

Shares of India's largest two-wheeler maker Bajaj Auto fell for a second day, reacting negatively to the demerger of the non-auto business from the group's flagship company, whose new structure analysts termed as "convoluted".

The scrip plunged over 15 per cent soon after trading began this morning and closed 8.54 per cent down at Rs 2,286.80. It had fallen by seven per cent at Rs 2500.30 on Thursday.

Making things even worse, a number of brokerage houses downgraded their investment rating and target price for the stock, saying that the scrip could take a further hit if investors decide to sell-off in large numbers.

The stock fell by nearly 15 per cent to Rs 2,179 in intra-day trading on the Bombay Stock Exchange and 17 per cent on the National Stock Exchange as the scrip witnessed across the board selling.

As per the proposal, Bajaj group's auto business will be demerged into a new subsidiary Bajaj Holdings and Investment Ltd (BHIL) and other strategic businesses such as wind energy, insurance and financial services would be hived off into another new entity Bajaj Finserv Ltd (BFL).

Read more in DNA Money article.

Bulls reign to push Nifty above 4200

Heavy buying interest in frontline stocks propelled key indices to close in the positive. Banking stocks continued to lead the advances followed by cement stocks. Bajaj Auto plunged 9% on the demerger news and disappointing Q4 results. Tata Steel's impressive performance in the March quarter pushed the stock up 1.5%.

The BSE Sensex closed 172 points or 1.22% up at 14,299. The NSE Nifty was up 39 points or 0.92% at 4219. BSE Midcap Index was up 0.65% at 6,080 while the Smallcap Index slipped 0.01% to close at 7205.

Of a total of 2,676 shares traded on the BSE today, 1,241advanced, 1,355 declined and 80 were unchanged.

State Bank of India, up 3.47% at Rs 1,329, Reliance Industries, up 3.15% at Rs 1,685, Dr Reddy's Laboratories, up 2.21% at Rs 678 and Tata Motors, up 2.05% at Rs 750, were the major gainers on the Sensex.

Banking stocks continued to rally upward with SBI and ICICI Bank in the lead. HDFC (up 0.71%) and HDFC Bank (up 0.23%) gained on account of expectations of the merger of the two entities.

Bajaj Auto redesigned to ride on two new wheels

The board of Bajaj Auto Ltd (BAL) has approved the scheme for demerger of the businesses of the company. The Board of Directors, at its meeting held on May 17, 2007, approved the demerger plan.

It includes demerger of the two and three wheeler manufacturing undertaking, its strategic businesses comprising the generation of wind-energy using wind-farms, the insurance business conducted through its joint ventures Bajaj Allianz Life Insurance Company Ltd and Bajaj Allianz General Insurance Company Ltd, financial products distribution business conducted through Bajaj Allianz Financial Distributors Ltd and interests in retail-consumer finance business conducted by Bajaj Auto Finance Ltd. to two newly incorporated subsidiaries, Bajaj Holdings and Investment Ltd ("BHIL") and Bajaj Finserv Ltd ("BFL").

The board has unanimously approved the proposed demerger of the undertakings of the Company as above, with effect from the closing hours of March 31, 2007, the appointed date.

Read more in The Economic Times article.

Bajaj Auto to mull demerger plans on May 17

Bajaj Auto Ltd, the country's second-biggest two-wheeler maker, is likely to take a decision on May 17 for carving out the company's auto and financial business into separate entities.

The company today informed the Bombay Stock Exchange its Board of Directors would meet on May 17 to consider a proposal for demerger, besides taking up the audited financial results and dividend for 2006-07.

Bajaj Auto chairman Rahul Bajaj had in the past said the company intended to unlock shareholders value by splitting the manufacturing and financial assets into two separate entities.At present, the company has cash reserves of around Rs 8,000 crore and a market capitalisation of about Rs 25,950 crore. The shares of the company closed at Rs 2,609, up 1.74 per cent on BSE today.

Read more in The Economic Times article.