Volvo to make India hub for engines

NEW DELHI: Swedish commercial vehicle giant Volvo on Friday said it will make India a hub for medium-duty engines for which the company will make new investments in its local joint venture with Eicher. VE Commercial Vehicles (VECV), the joint venture between Eicher and Volvo, will see investments of Rs 288 crore to boost engine capacity at its Pithampur plant in Madhya Pradesh by 85000 engines a year. The current capacity at the plant is 40000 engines.

"This investment by VECV in its Pithampur plant gives the Volvo group a complete facility in India for manufacturing and assembling the new medium-duty engine which will be introduced in the Volvo groups trucks and buses worldwide over the next few years. Additionally, these engines will also be used for Eicher's range of heavy-duty commercial vehicles," Par Ostberg, president (trucks Asia) for Volvo group and chairman of VECV, said.

VECV MD & CEO Siddhartha Lal said the decision will catapult the company into one of the largest commercial vehicle engine manufacturers in India and will give it the capability well beyond any of its competitors.

"The new capacity will come onstream in the second half of 2012, initially to serve Volvo group's and Eicher's local requirements and later for exports," Lal said.

Lal said the fresh investments would be over and above the Rs 500 crore investment that VECV had announced in January to expand production capacity and develop new engine technology over the next three years.

The plant will do the final assembly of 55000 Euro 3 and Euro 4 engines from 2012 and will start shipping a year later 30000 base engines to Volvo's plant in France for final assembly of Euro 5 and Euro 6 engines. "Indian market is extremely important and in a few years will become one of the most important countries in terms of turnover and profitablity for us," Ostberg added.

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Industry grows 17.6% in April

NEW DELHI: India's factory output bettered expectations to expand at 17.6% in April, marking a near 20-year high achieved on the back of copious domestic consumer demand, a revival in exports and higher infrastructure spending but also got boosted by a low base effect. While the best show by the manufacturing sector since December 2009 raised hopes of an 8.5% GDP growth rate in the ongoing fiscal, it also reinforced expectations of a further rate hike by the RBI next month.

The April figure is almost equal to the 20-year-high of 17.7% posted in December 2009. Manufacturing, which accounts for around 80% of the IIP (index of industrial production), expanded by 19.4% in April. Capital goods showed a growth of 72.8% and consumer durables by 37%. The expansion follows an annual 8.6% expansion in the economy in the quarter through March. But finance minister Pranab Mukherjee said he had expected the industry to do even better in April. "Of course, my appetite is infinite. I would have been happier if it was 20%," he told reporters.

Analysts said the strong industrial showing in April coupled with a normal monsoon would put the economy on an 8.5% growth trajectory in 2010-11. "The industrial growth can be equal to the growth rate last year and, therefore, taking that into account and if agriculture performs reasonably well during the year, one should hope to get a growth rate close to 8.5%," prime minister's Economic Advisory Council chairman C Rangarajan said.

The double-digit growth strengthened the case for stimulus rollback but Planning Commission deputy chairman Montek Singh Ahluwalia said the pace of monetary policy normalisation need not be quickened. This essentially reflects worries over Eurozone debt crisis and the health of the global economic recovery as well as concerns expressed by most other central banks in Asia.

India Inc too cautioned that the growth trend may moderate from June onwards since part of the industrial expansion could be attributed to a low base in April last year. Ficci secretary-general Amit Mitra said, "This trend of very high growth might moderate from June onwards because of the base effect." The low base is evident from the fact that capital goods had contracted by 5.9% in April 2009, even as consumer durables had risen by 17.6%.

Besides manufacturing, mining expanded by 11.4% in April against 3.4% a year ago. On the broad sectoral storyboard, electricity was a weak link as generation rose by 6% in April, lower than 6.7% a year ago. The robust economic growth is, however, also raising the prospects of capacity constraints that are seen aggravating price pressures.

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Food Inflation rises to 16.74%

NEW DELHI: Food Inflation rose marginally to 16.74 per cent for the week ended May 29 on high prices of pulses, milk and fruits.

Inflation increased by 0.19 percentage point from 16.55 per cent in the previous week, food inflation data released on Thursday showed.

Prices of pulses shot up by 31 per cent, milk by 21.1 per cent and fruits by 18.7 per cent.

However, potatoes and onions became cheaper by 30.87 and 12.27 per cent respectively.

For the month ended April, the overall inflation, which includes manufactured goods, stood at 9.59 per cent.

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Sensex rises 95 pts on funds buying

MUMBAI: The Bombay Stock Exchange benchmark Sensex on Thursday rose by over 95 points in early trade on buying by funds and retail investors.

The 30-share index, which gained 40.79 points in the previous session, gathered another 95.51 points, or 0.57 per cent, to 16,753.40 points.

Stocks of auto, oil & gas and metal sectors were leading the rally.

The wide-based National Stock Exchange index Nifty gained 28.40 points, or 0.52 per cent, to 5,028.70 points.

Brokers said increased buying by foreign funds and retail investors helped the Sensex remain in the positive for the second straight session, but overnight losses in the US market and mixed cues from Asian markets capped gains.

Among auto stocks, Tata Motors gained 0.95 per cent to Rs 735, Mahindra and Mahindra was up 0.99 per cent to Rs 582.90 and Maruti Suzuki rose by 0.46 per cent to Rs 1,308.30.

Stocks of most-weighted Reliance Industries was up by 0.60 per cent to Rs 1.012.90 supported by reports that the company was looking to enter the telecom sector.

Rcom was up 0.32 per cent to Rs 170.50, Bharti Telecom by 0.79 per cent to Rs 274.30, Sterlite Industries by 0.78 per cent to Rs 634.45, Hindalco by 1.54 per cent to Rs 135.05 and State Bank of India by 0.97 per cent to Rs 2,295.

TOI