4 Corporates w w w. f i n a n c i a l e x p re s s .

c o m NEW DELHI l SATURDAY l JUNE 2 l 2012

Quick view
Wipro Infotech bags a 10-yr
contract from MHEPL
Car sales skid on interest rates, petrol cost
Wipro Infotech, the India and West Asia IT ■ Absence of diesel variants in mini-car segment costs Maruti dear even as Hyundai reports modest growth
business unit of Wipro, has bagged a 10-year
contract from Manipal Health Enterprises
(MHEPL). Though the value of the deal was fe Bureau May last year. Commenting on the
not disclosed, under the agreement, Wipro New Delhi, June 1 sales Arvind Saxena, director, market-
will implement its latest Hospital ing and sales, said: “The recent hike in

Information System (HIS) & data migration
services across Manipal Group Hospitals.
According to a press release, Wipro's
engagement with Manipal Hospitals spans
across a gamut of services encompassing
integration of HIS with third party software,
interfacing with lab equipment and providing
infrastructure support services on HIS
Platform.
Future Group ties up
with LT Group
Diversified conglomerate Future Group on
Friday said rice processor and exporter LT
Group will use integrated food parks being
developed by Future Ventures India (FVIL), a
Future Group firm, as part of a pact. The two
business groups will also work towards
jointly developing and marketing a range of
snacks to be manufactured at Daawat Foods
facilities, a subsidiary of LT Foods under a
private label brand.
UltraTech Cement output
for April-May up 4.7%
Aditya Birla Group Company UltraTech
Cement’s production for April-May 2012
moved up by 4.7% at 679.47 lakh mt against
648.95 lakh mt during April-May 2011.
Dispatches also moved up by 3.5% at
678.37 lakh mt in April-May 2012 vis-à-vis
H
IGH interest rates and hike
in petrol prices dampened the
sales of passenger vehicles of
auto majors, such as Maruti, General
Motors and Ford, in May, further tem-
pering down the growth of the auto
sector for the second month in a row.
The car sales had registered a spurt of
20% in March.
Absenceof anydieselvariantsinits
bread-and-butter segment of mini
cars cost the country's largest car-
maker Maruti Suzuki India (MSIL) a
4.32% decline in its overall domestic
sales, which stood at 89,478 units, com-
pared to 93,519 units a year ago. Ford
and General Motors also posted a 14%
and 27 % dip in sales at 6,036 units and
6,079 units, respectively, over the same
period last year.
For Maruti, even a 14.66% rise to
24,290 units (from 21,185 units) in its
compact segment, comprising the Es-
tilo, Swift and Ritz models, wasn't suf-
SpiceJet scouts for
foreign stake buyer as
petrol prices has depressed market
sentiment, with the macro-economic
indicators providing no cause for
cheer,thedemandoutlookdoesn’tlook
very bright.” The company's exports,
however, grew at an impressive 42.2% ,
recording sales of 23, 660 vehicles com-
pared to 16,639 last year.
Tata Motors, the country's third
largest car-maker saw a 6% growth in
its sales figures (20,503 units against
19,401 units). Nano sold 8,507 units, a
jump of 31%, compared to 6,515 units.
But the Indica range of cars sales de-
clined 1% (5,467 units compared to
5,497 units in May 2011).
For Maruti, even a 14.66% rise in its compact segment, comprising the Estilo, Swift and Ritz models, wasn't sufficient to reverse the fall Ridingonthedemandwavefordiesel
caused by decline in sales across all other segments, including export. However, Tata Motors, the country's third largest car-maker, vehicles,sportsutilitymajorMahindra
saw a 6% growth in its sales figures. Nano sold 8,507 units, a jump of 31%, compared to 6,515 units last year & Mahindra witnessed a 24% jump in
salesforMay(itsold39,938unitsagainst
ficient to reverse the fall caused by de- cludes Alto, A-Star, Wagon R and Hyundai Motors India saw sluggish 32,159 units in May 2011). Toyota Kir-
cline in sales across all other seg- Maruti 800, tumbled 29.03% to 29,895 growth as it posted a modest growth of loskar also saw sales doubling on the
ments, including export. Sales in unitsfrom42,125unitsinMaylastyear. 2.8% in May. Hyundai sold 32,010 units back of strong fleet/taxi sales of the In-
Maruti's mini car segment, which in- Even the Korean car-maker in the month against 31,123 units in novaandEtiosrange.
Airlines’ ECB back-up BEML reports
R14-cr loss in
plans go haywire on R Q4 as industrial

losses mount in Q4 growth slows

644.08 lakh mt in the corresponding
period last year. Cement production for
May 2012 was higher by 7.7% at 35.02 lakh mt
and dispatches at 35.87 lakh mt by
10.6% over May 2011.
ACC May sales up 3%
to 2.05 million tonne
Cement manufacturer ACC on Friday
reported a just 3% increase in sales for May
at 2.05 million tonne against 1.99 million
tonne in the same month last year. The
production of the company also went up
marginally to 2.02 million tonne from 2.01
million tonne, it said in a release.
Toyota hikes prices of
select models by 1%
Car major Toyota Kirloskar Motor on Friday
announced raising prices of select models by
up to 1% with immediate effect to partly
offset losses due to rupee depreciation.
“With the rupee weakening, we are unable to
retain the current prices. We are forced to
pass a part of it to our customers,” Toyota
Kirloskar Motor (TKM) deputy managing
director (marketing) Sandeep Singh said in a
statement.
IT sector slows down
hiring to cut costs
The information technology sector in
the country witnessed a steep decline in
hiring activities as most companies
embraced cost-cutting measures to tide
over uncertain economic conditions, say
experts. “Hiring activities have seen a dip of
29% in IT and ITeS sectors in May 2012 from
the preceding month,” said
MyHiringClub.com CEO Rajesh Kumar.
Ricoh India hikes prices
by 5% on R depreciation
Hurt by the falling rupee, printing and
document management solutions provider
Ricoh India on Friday said it has increased the
prices of its office products by 5% with
immediate effect. “In spite of the huge
depreciation of the rupee vis-a-vis US dollar,
we have been trying to hold on to our pricing
to our customers till now, hoping that the
situation would improve soon," Ricoh
India MD and CEO Tetsuya Takano said
in a statement.
Parul Chhaparia
New Delhi, June 1: The Sun
Group-promoted SpiceJet is
keen on offloading a part of its
stake to an overseas investor
as soon as the government
gives green signal to the FDI
policy, allowing foreign air-
lines to pick up to 49% stake in
domestic airlines.
The SpiceJet board has al-
ready evolved a consensus on
selling a part of the company
to foreign investors. “The air-
line is open to selling its stake
— it could be to financial in-
vestors or foreign airlines,”
Neil Mills, CEO of SpiceJet,
told FE on Thursday.
FE had earlier reported
that the airline was in talks
with Dubai-based Emirates
for a majority stake sale. The
carrier had officially refused
to comment on the news then.
Even now, Mills did not di-
vulge the name of the airline
or the foreign investors that
SpiceJet was in talks with.
“Many airlines have ex-
pressed interest. We do not
now how much we would sell.
It will all depend on the deal
that they offer. As far as for-
eign airlines are concerned,
for European airlines, it
wouldnotmakemuchsenseto
buy into SpiceJet. It can be ei-
ther a Gulf or a Southeast
Asian airline,” he said.
The aviation ministry has
already moved a Cabinet note
on allowing foreign airlines to
buy up to 49% in Indian carri-
ers.Theproposal,if cleared,is
seen as a major relief to do-
mestic carriers struggling to
stay afloat.
Meanwhile, SpiceJet's Q4
losses mounted to R249 crore
during 2011-12 against R59
crore a year ago despite a 46%
increase in sales to over R1,100
The aviation ministry has
already moved a Cabinet note on
allowing foreign airlines to buy
up to 49% in Indian carriers
crore. Mills attributed the
lossto high fuel cost. SpiceJet
fuel bills shot up 55% in Q4.
With oil prices coming
down from $115 per barrel to
$103 in the last couple of
weeks, the airline expects the
losses to narrow.
“The fuel cost will come
down further, once we start
importing it directly. Also,
our yields per seat have been
going up significantly. So, the
next quarter, things are defi-
nitely going to improve,”
said Mills. The company has
tied up with a third party —
transportation companies —
for importing fuel from vari-
ous countries. It was initially
in talks with Indian oil mar-
keting companies for the
same. However, Mills said,
“Indian oil firms were not in-
terested. So, we had to look
for other options.”
For 2011-12, the Chennai-
based company's net loss
stood at R605 crore against a
net profit of R101 crore a year
before. Its income rose to
R3,998 crore from R2,938 crore.
The carrier outperformed
the industry passenger traf-
fic growth of 16%. Its passen-
ger traffic grew 24% and seat
load factor crossed 80% from
74.4% during the same period
a year before.
Vishakha Talreja Guha
& Parul Chhaparia
NewDelhi,June1: Adepreci-
ating rupee may worsen the
health of domestic airlines. It
may not only make external
commercial borrowings
(ECBs) costlier, but also in-
creasethecostof dollar-linked
operational expenses, such as
fuel, lease rentals, mainte-
nanceandexpatsalaries.
According to industry ex-
perts, low-cost airlines, such
as IndiGo, SpiceJet and
GoAir, which have one-third
of their quarterly cash outgo
in foreign currency, with lim-
ited forex earnings, will have
to shell out more for the same
expenses.
For full-service carriers,
such as Jet Airways and Air
India, who have significant
earnings in foreign ex-
change,theexposuretorupee
fluctuations is less. However,
that may not help these air-
linesde-riskthemselvescom-
pletelyfromthefallingrupee.
“The weakening rupee is re-
sponsible for shrinking Jet
Airways margins by 3-4% as
it has earnings of more than
40% from international
routes,” explains Rashesh
Shah,researchanalyst,ICICI
Securities.
Jet Airways more than
doubled its losses at R298
crore in the fourth quarter of
thefiscalcomparedtothecor-
responding period a year ago.
Despite a 24% growth in rev-
enues, rising fuel costs and a
weak rupee have pushed the
company deeper into red. Jet
Airways CEO Nikos Kardas-
sis said even though the
crude price is getting stable,
the rupee depreciation con-
tinues to be a cause of con-
cern. SpiceJet's net loss for
the January-March quarter,
too, has widened more than
four-fold, but it expects lower
costs once it imports jet fuel
directly. SpiceJet reported a
lossof R249croreforthequar-
ter ended March 2012.
KingfisherAirlinesposted
itsbiggest-everquarterlyloss
at R1,151 crore as huge cuts in
the number of flights and
high fuel prices eroded earn-
ACCORDING TO INDUSTRY EXPERTS,
LOW-COST AIRLINES, SUCH AS INDIGO,
SPICEJET AND GOAIR, WHICH HAVE ONE-
THIRD OF THEIR QUARTERLY CASH OUTGO
IN FOREIGN CURRENCY, WITH LIMITED
FOREX EARNINGS, WILL HAVE TO SHELL
OUT MORE FOR THE SAME EXPENSES
ings. The weakening rupee
has impacted margins of
these airlines, reflected in
bigger quarterly losses.
The rupee factor may also
spoil the government's plans
to provide relief to the ailing
airlinesthroughECBs.Carri-
ers, such as Air India and Jet
Airways, which were looking
at the ECB option, may have
to rethink the idea.
The government had al-
lowedairlinestoraiseupto$1
billion through ECBs for
their working capital loan re-
quirement. According to the
Reserve Bank of India's
guidelines, an individual air-
line can raise up to $300 mil-
lionwithin12monthsandthe
minimum maturity period
would be three years.
Most domestic carriers
were looking at raising mon-
ey through ECBs to repay
their high-cost rupee debt. In-
dustry officials said the
falling rupee would make all
theairlinesrethinktheirECB
plans. NationalcarrierAIhas
already floated its 'invitation
for offers' plan to raise funds
through ECBs to repay a part
of its over R22,000-crore work-
ing capital debt.
An AI official said the im-
pact of rupee depreciation
would not be that much as
about 50% of the airline's
earnings are in foreign cur-
rency, which will take care of
nearlyhalf of itsdollar-linked
expenses. “Airlines which get
significant revenues from in-
ternational operations would
not be impacted much as they
earn in dollars,” said Amber
Dubey, partner and head (avi-
ation), at global consultancy
firm KPMG.
fe Bureau
Bangalore, June 1: Defence
equipment-maker BEML on
Fridaypostedalossof R14crore
for the quarter ended March
against a profit of R70.25 crore
in the year-ago period, which it
attributed to orders not materi-
alising into sales as some com-
ponent supplies were delayed
andbecauseof slowerindustri-
al growth.
The company's net sales de-
clined 17% to R774.38 crore dur-
ing the quarter against sales of
R933.47croreinthecorrespond-
ing period last year.
THE COMPANY’S NET
SALES DECLINED 17%
TO R774.38 CR DURING
THE QUARTER
AGAINST R933.47 CR
IN THE YEAR-AGO
PERIOD
BEML makes mining and
construction equipment,
dredgers and rail cars, besides
defence equipment.
BEML's chairman and man-
aging director VRS Natarajan
said defence equipment worth
at least R180 crore could not be
supplied because of a delay in
receiving parts from various
suppliers, while its other busi-
ness segments took took a hit.
“We had to take out almost
aboutR300croreof businessan-
ticipated. We were confident of
clocking R4000 crore, but it did
not happen,” he said.
Fortheyearendedmarch,the
companyposteda61.37%decline
in profit at R56.74 crore against
R147 crore in the previous year.
Net sales were flat at R2,695 crore
against revenue of R2,626 crore a
yearago.BEML'ssharesclosedat
R416.85, down 2.97% at the end of
Friday'stradingonBSE.

Higher ad revenues draw print media to Hindi heartland

SohiniMitter
Mumbai, June 1: Print media firms are
aggressively tapping into the Hindi
heartland by either launching green-
field operations or acquiring strong in-
dependent brands, since the advertising
revenues in these markets are growing
at 13%, higher than the overall industry
growth rate of 8-9% .
In the last two years, DB Corp, which
publishes the country's second largest
daily Dainik Bhaskar, launched 12 new
editions in Madhya Pradesh, Gujarat,
Haryana, Punjab and Chhattisgarh. Ja-
gran Prakashan, which publishes the
country's largest selling daily Dainik
Jagran, acquired Nai Dunia in April
this year, to strengthen its position and
take on Dainik Bhaskar and Rajasthan
Patrika in MP.
Sources say that Living Media or the
India Today Group, which recently sold
27.5% stake to the Aditya Birla Group,
plans to start a Hindi newspaper under
the Aaj Tak brand name. Living Media
ownsIndia'ssecond-mostwatchedHindi
news channel Aaj Tak and plans to lever-
age the brand's values in print as well.
This news couldn't be confirmed from
the company as mails and messages sent
to the CEO and CFO of Living Media did-
n't yield any response.
Lokmat Media, which publishes
Marathi daily Lokmat, said it will launch
more editions of its Hindi paper Lokmat
Samachar. Sources further say that HT
Media, which publishes Hindi daily Hin-
dustan, is also planning to start more edi-
tions in the core markets, while Dainik
Bhaskar and Dainik Jagran look to con-
solidateinkeycities.TheHindibelt'soth-
er widely read dailies Amar Ujala and
Prabhat Khabar, may also look to align
with bigger names.
Experts indicate that in the next two
years, the country will see the emergence
of 2-3 very strong brands in the core mar-
kets. “Bigger players will either acquire
smaller portfolio brands or launch green-
field operations as they realise that ad
growthliesinthesemarketsastheliterate
senior executive of DB Corp. “Certain On the contrary, the English print ad
GROWTH STORY markets like Rajasthan are growing at 18- markethassloweddownandisgrowingat
20%, while MP is the strongest at 20-22%.” about 8%. It is estimated to touch R8,400
Hindi
4,500 cr 12.9% 7,400 cr Hecan'tbenamedashe'snotauthorisedto crore by 2016 from R6,100 crore now, ac-
print speak to the media. Hindi markets have cording to KPMG estimates. However,
turned out to be an essential cog in the English still occupies the highest share
English
6,100 cr 8% 8,400 cr wheelforprintmediafirmswiththeadpie (40%) in the ad revenue pie, while Hindi
print
estimated to grow to R7,400 crore by 2016 gets30%.“WhilevolumesgotoHindimar-
) ) from R4,500 crore now, according to a KP- kets, value comes to English as they com-
2012 th ra
te 2016
ize ( ize (
arket s
ual grow arket s MG report released in March. Media buy- mandpremiumadrates,”saysSathiraju.
Ad m Ann Ad m ers say Rajasthan, MP, UP and Punjab are But,thisischangingaswell.According
key markets and newspapers are follow- tomediabuyers'estimates,during2007-09,
ingadvertisersintotheselocations. the ad rate commanded by English news-
“The skew of advertising is towards papers was roughly 10x that of non-Eng-
traditionalHindimarketsanditturnsout lish dailies. This rate has contracted to
** Newspapers:Magazines = 94:06 in 2012. Estimated to grow to 96:04 in 2016 Source: FICCI-KPMG Report 2012 to be more effective for companies as the about 8x and is further expected to come
reach is vast,” says Anil Sathiraju, media downto5xor4xinthenextthreeyears.
buyer at Mudra Max, which just complet- AccordingtothePitchMadisonAdOut-
populationcontinuestoincrease,”saysJe- Corp, which publishes India's second ed a spot buying activity in UP for a four- look 2012, advertising volumes in print
hil Thakkar, head —media & entertain- largest daily Dainik Bhaskar, gets 67% of wheelercompany. haveincreased13%between2007-2011and
ment—KPMGIndia. itsadrevenuesfromlocaladvertisers. As advertisers are going to the Hindi number of advertisers have gone up by
Thisgrowthisbeingdrivenbylocalad- “In 2011, the core markets have re- heartland,mediacompaniesarefollowing 22%,asTVadratescontinuetobeprohibi-
vertiserswhoarethriving,whilenational mained largely unaffected by advertising suit."Noadvertiserorpublishercanafford tive. “The growth of English news is mut-
advertisersarecuttingdownonadspends, slowdown and saw a growth of 17-18% toignorethecoremarkets.Advolumesare ed, both in print and TV, because rates are
reflectiveof globalsentiments.Oneof the across states, while the overall market increasing and about 65% go to them,” unaffordable for most advertisers,” says
strongest players in the Hindi belt, DB managed to grow in single digits,” says a saysMudraMax'sSathiraju. anindependentmediabuyer.