The Indian market opened in the red today, mirroring negative opening trades in the SGX Nifty and mixed opening in the Asian markets. After moving notably higher over the course of Tuesday’s session, US stocks turned in a relatively lackluster performance during trading on Wednesday, amid uncertainty about the near-term outlook for the markets, following recent strength. The majority of the European markets ended Wednesday's trading session in negative territory. The markets were up in early trade, adding to the strong rally of the previous session. The better-than-expected private sector employment data released in the afternoon also provided support. However, those early gains began to erode in late trading. Investors will watch out for Thursday's announcement from the ECB, as well as the US jobs report on Friday. Meanwhile, Indian shares rose on Wednesday, mirroring strong global cues, with upbeat economic data from the United States and continued hopes for easy monetary policy in Japan and elsewhere underpinning sentiment.
Tool down protest at MM’s Nashik plant impacts production
Workers at Mahindra & Mahindra's Nashik factory went on a tool-down strike today in reaction to the suspension of their union’s general secretary, thus paralysing production at the facility. The management suspended general secretary Pravin Shinde, who has been on a hunger strike since Monday to press for a renewal of the wage agreement which ended last month. Union vice-president Amol Sonawane is also on hunger strike. The Nashik plant of Mumbai-based M&M, India's largest utility vehicle manufacturer, makes the Scorpio, Bolero, Verito (sedan) and Xylo models. M&M's stock on the Bombay Stock Exchange dipped today by 2.2 per cent, to close at Rs 878.35. Yesterday, too, the company lost production of around 90 vehicles due to a three-hour stoppage of work. Output resumed during the second shift. M&M normally produces around 550 vehicles from the Nashik plant daily. There are around 3,000 employees. Wage negotiations between union and management have been on for six months. However, despite several rounds of talks, the wage agreement was not renewed, say the workers. They’d earlier threatened an indefinite strike from March 11 if the wage negotiations are not finalised by March 9. Now, they’d asked for reinstatement of the suspended office bearers of the union before a dialogue. A statement from the company says the tool-down began at 6 pm yesterday and was continuing. The Nashik factory has a history of unpleasant management-labour relations. It has seen a tool-down strike thrice in four years. In 2009, a 10-day strike here caused a production loss of Rs 225 crore. Estimates suggest the loss for today was close to Rs 50 crore. The strike comes when M&M is the only company among the volume players to report robust growth, in a falling market. Its diesel-powered utility vehicles have driven demand for the company. The company says the strike will not have any immediate impact on sales, as it has three weeks stock in the pipeline. The company said it was striving to end the strike and restart production. "Mahindra and Mahindra believes in fair treatment and will keep its dialogue ongoing with the union representatives for stoppage of the current strike so as to reach a mutual agreement", it said. Source: BusinessStandard
Air Asia - Tata JV gets FIPB green signal
The Foreign Investment Promotion Board (FIPB) today cleared Malaysian low-cost carrier (LCC) AirAsia’s proposal to launch a domestic airline in India, in alliance with Tata Sons. The approval has come close to six months after the government last year liberalised the country’s foreign direct investment (FDI) policy, after a long debate, allowing foreign airline companies to hold up to 49 per cent stake in Indian ones. Some news reports had yesterday suggested the proposal could face hurdles from the civil aviation ministry after minister Ajit Singh had said: “The commerce ministry should change the FDI guidelines to bring more clarity on whether a new airline JV comes under its rules.” The doubt was on whether these norms applied only on foreign airlines investing in existing Indian ones or also on those setting up JVs for greenfield operations. However, Singh said he supported the proposal in principle. A senior government official who attended the meeting today said: “The proposal has been cleared. It’s in line with the policy, which allows up to 49 per cent FDI.” AirAsia promoter Tony Fernandes tweeted: “Exciting. Thank you all... The good always wins. People and companies with good intentions to create jobs and make life of an average man better will always win.” AirAsia is to hold 49 per cent stake in the proposed JV, while Tata Sons will hold 30 per cent and Delhi-based Telestra Tradeplace’s Arun Bhatia 21 per cent. However, operational control of the airline would be with AirAsia; Tata has made it clear it will only be an investor. The next big challenge for the JV would be getting a no-objection certificate from the civil aviation ministry and an air operator’s permit from the Directorate General of Civil Aviation (DGCA). These could take up to six months. A senior ministry official today said: “AirAsia has not applied for a permit. However, we have concerns on issuing a national permit to a new airline. We would prefer it taking a regional permit. If such airlines start flying on trunk routes, there will be overcapacity on those routes.” The application of G R Gopinath for a national permit is still pending with the ministry. Singh’s contention is that Gopinath’s airline should first fly regional (for which it has a licence) before it could be given permission to operate across the country and its licence could then be upgraded. Fernandes has already made clear his intention of treading slow — starting operations in South and West India, rather than nationally from day one. He plans to begin with four-five aircraft, with Chennai as base and concentrate on Tier-II and III cities, instead of the metros where airport costs are too high. Unlike in Malaysia, where it had the first-mover advantage, AirAsia will face a tough challenge from domestic LCCs, such as IndiGo, which controls nearly half the LCC market and is growing rapidly with new capacity. Also, it will not have the advantage of low ATF rates and airport charges, which account for 50 per cent of costs. Besides, the foreign carrier has not been able to make a mark through its international operations in India. Experts, however, say its entry could lead to a fare war in the Indian market, as Fernandes has publicly said the fares of domestic LCCs are too high. Source: BusinessStandard
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