Fundamentals January 16, 2013

Nik’s Diary

The Indian market opened flat to negative mirroring the negative opening of most of the Asian markets.  US markets ended slightly higher Tuesday after mixed economic data and before major earnings releases, while further losses for Apple Inc. weighed on the technology sector. The early weakness on Wall Street was partly due to worries about continued gridlock in Washington regarding the debt ceiling. While President Barack Obama has indicated that he will not debate raising the debt limit, Republicans have called for any increase in the debt ceiling to be tied to additional spending cuts. Meanwhile, a report showed that retail sales rose by 0.5% (Estimate – 0.2%) in December following a revised 0.4% increase in November. A separate report from the Labor department showed a slightly bigger than expected drop in producer prices in December. Indian shares rose for a second straight session yesterday led by gains in rate sensitive realty and banking stocks on increasing bets that the RBI is going to have a rate cut later this month.

Bharti Airtel replaces India CEO Sanjay Kapoor; Gopal Vittal to take over

BhartiAirtel's Chief Executive for India and South Asia, Sanjay Kapoor, will quit in March amid speculation that the proposed reorganisation of India's largest telecom company forced his hand. He will be replaced by GopalVittal, group director (special projects), who will take over as the India CEO from March 1, the company announced on Tuesday. While this is Vittal's second stint with Airtel, he has spent a large part of his career at Hindustan Unilever and will be the first MNC manager to occupy the corner room in the homegrown telecom company. He is expected to aggressively lead Bharti's data and value-added services initiatives. Vittal was heading the home and personal care business of Hindustan Unilever before he rejoined Bharti AirtelBSE -0.32 % last year. His former boss and HUL CEO Nitin Paranjpe welcomed his elevation. "I am delighted for Gopal. Having worked with him for several years, I have no doubt that he will bring to bear his clarity of thought and strategic understanding of issues in this challenging role as CEO," Paranjpe told ET. As this newspaper had reported in October last year, BhartiBSE -0.32 % AirtelBSE -0.32 % is planning to combine its Indian and African operations under a global CEO. Manoj Kohli, the joint MD of Bharti and chief executive of its African operations, is learnt to be the front-runner to head the combined entity. It is believed that Sunil Mittal, the company's founder, was keen to appoint Vittal as the CEO of the Indian operations and transfer Kapoor to Kenya to replace Kohli. A person familiar with Kapoor's thinking said he was not willing to move to Africa as he considered the transfer a clear demotion. In addition, Kapoor did not want to report to Kohli, as both are currently at the same rank. The Indian operations account for 75 per cent of revenue with the rest coming from Africa. The Bharti spokesperson and Kapoor did not reply to ET's specific queries on these issues. While industry executives say Kapoor is parting with the company he worked for a decadeand-a-half on a less-than-cordial note, Mittal was generous in his praise for his one-time protege. "Sanjay has had an enviable performance track record, strategic disposition, business acumen and is an inspirational leader. I wish Sanjay all the very best in his future endeavours," said the Bharti Airtel chairman. Bharti shares rose 5 per cent on Tuesday to close at Rs 345, the highest since March 5, 2012. But executives close to the company said the shares surged on expectations of a new round of cellphone tariff hikes, and not because of the management changes. Kapoor was elevated to head Bharti's India and South Asia operations in March 2010. The telecom industry has had a rough ride in the past three years with a bruising price war and rising borrowings, because of astronomical 3G bids, impacting the profitability of all telcos. The near $10-billion debt taken by Bharti to fund the Zain Africa acquisition has added to its interest costs. Bharti's delayed response to the aggressive pricing tactics of its competitors had resulted in the company's revenue market share, which was as high as 34 per cent in June 2009, sliding to 29 per cent in March 2012, before recovering to about 31 per cent at present. Source:Economic Times

TTMT’s global sales down sharply in December 2012

Tata Motors today said its global sales decreased 13.88 per cent in December 2012 to 8,968 units over the same period in the previous year. The company had sold 1,14,920 units during the corresponding month in 2011. Sales of luxury brands from Jaguar Land Rover were at 2,282 units in December last year, Tata Motors said in a statement. While sales of luxury sedans of Jaguar brand stood at 5,444 units, Land Rover sales were at 26,838 units, it added. The company said total passenger vehicles sales stood at 46,925 units in December, 2012, a fall of 23.16 per cent from 61,066 units in the same month previous year. Commercial vehicle sales were down by 3.36 per cent to 52,043 units from 53,854 units in the the same month 2011. Tata Motors group's global sales comprise Tata, Tata Daewoo and Hispano Carrocera range of commercial vehicles, Tata passenger vehicles, along with the distributed brands in India, Jaguar and Land Rover. Source: NDTV

Maruti Suzuki to hike car prices by up to `20,000

Maruti Suzuki India Ltd said it would increase the prices of all its cars by up to Rs. 20,000. It said the announcement would come on Wednesday and the hikes would take effect from Thursday. The company had said in December that it would be compelled to increase the prices in the new year as adverse currency fluctuations had made imported components dearer. India’s largest car company, Maruti, sells a variety of cars, starting from M800 to imported Kizashi. Maruti is likely to be followed by other car manufacturers which had announced similar intentions last month.Though it is a common practice at the start of every year, the hike comes at a time when the car industry is staring at a decline in sales for the first time in almost a decade."The price hike across all models will be upto Rs. 20,000," said Mayank Pareek, chief operating officer (marketing and sales), MSIL. "On average, the increase will be around 2.5%."The current round of hikes will not, however, include the Wagon R.Source: Hindustan Times

Petrol price hiked by 35 paise with effect from tonight

 Petrol price was tonight hiked by about 35 paise per litre in line with firming raw material cost.Petrol will cost Rs 67.56 per litre in Delhi with effect from midnight tonight, industry sources said. Prices vary from city to city due to differential local sales tax or VAT rates. This is the first revision in rates of petrol, which was deregulated by the government, since November. Petrol price was cut twice in October and November - first by 56 paise and then by 95 paise per litre.Source: Economic Times