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Monday,10-August-2020

Business

No economic logic now for diesel cars: Maruti Suzuki

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Maruti-Suzuki

With parity between the prices of petrol and diesel, there is no economic logic for buying diesel cars as with the same running cost, the acquisition cost differential is very high.

In an interview with IANS, Shashank Srivastava, Executive Director (Marketing & Sales), Maruti Suzuki India Limited said that under BS VI, the differential between diesel and petrol cars is to the tune of Rs 1.25 to Rs 2 lakh. Srivastava said that at the same running cost, with petrol and diesel at the same price, or even diesel higher in some states, there is no economic logic for buying diesel cars.

He said that till 7-8 years back, diesel was cheaper by Rs 32 compared to petrol and diesel cars were 60 per cent of total sales.

Thereafter, the government allowed free float of fuel prices and last year the differential fell to Rs 7 and diesel car share fell to 28 per cent.

Srivastava said in the last quarter, it was only 17 per cent, the share has been falling due to the convergence between the petrol and diesel prices. In the smaller cars segment, it was only 5 per cent.

Currently, there is almost parity in diesel and petrol prices and in some states, diesel is even higher.

Srivastava said there is no economic logic now for diesel cars to be bought. In BS VI vehicles, the differential is Rs 1.25-2 lakh, meaning that diesel cars are more expensive.

Srivastava said that with a similar running cost why would consumers want to pay extra. In higher segment for SUVs, some consumers still prefer diesel vehicles but in small cars and sedans there is no no economic logic, he said.

Srivastava said the new fuel option that is gaining traction is CNG as the running cost is low compared to petrol and diesel at only Rs 1.5 per km. Even last year, CNG gained 6-7 market share and in some of the models, the CNG penetration is as high as 70 per cent.

The government policy to boost the network is also a positive as the outlets at 2100 in the country are expected to go up to 3000-3500 this year.

On the demand dynamics, Srivastava said June was a good representative month after a long gap. The enquiries, bookings are at 80-85 per cent of pre-Covid levels. “It’s a good comeback”, he said but added that part of this is also large pent up demand from the previous months.

Maruti has opened 2800 of its showrooms. On the supply side, industry is at 50 per cent of pre-Covid levels.

On the emerging consumer trends, Srivastava said consumers are shifting the choice downwards due to income loss and uncertainty in jobs and business loss. This is being reflected in bookings with a higher percentage of bookings towards smaller cars. This share was 55 per cent earlier but now it is higher at about 65 per cent.

He added that during times of stress, people tend to shift towards the established brands and are less experimental.

Also, the demand for pre-owned cars is increasing, the only issue there is that supply is less as people are holding on to their vehicles for longer time and they are not being sold in used cars.

Srivastava said another trend is that consumers are apprehensive of public transport and want to have their own vehicles.

On financing of cars, Srivastava said 80 per cent of retail sale is through financing. The post Covid liquidity of banks is good thanks to government measures. However, some of the banks are little more cautious in lending and are reviewing credit worthy of business and individuals as income levels will be impacted.

Maruti has rolled out financing arrangements with more flexibility on tenure, EMIs and cash down requirements to help consumers.

On the future triggers for demand, Srivastava said the current spike in demand has an element of pent up demand and the long term demand will be linked to fundamentals of economy and how the Covid situation evolves.

There could be an upside if the vaccine comes earlier and a downside, if the number of cases goes up. Srivastava said there is uncertainty and demand situation is difficult to predict.

He said there is revival of rural demand with a good crop and encouraging monsoons. In addition, the Covid effect on rural areas is much less while it is more in the larger cities.

Business

SpiceJet operates first long-haul wide-body charter flight to Canada

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SpiceJet

Airline major SpiceJet on Saturday became the first Indian budget carrier to operate a long-haul wide-body charter flight to North America.

The airline repatriated 352 Canadian nationals and permanent residency holders from New Delhi to Toronto on Saturday. The airline chartered a wide-body Airbus A330-900 Neo aircraft for the purpose.

The twin-aisle A330 Neo aircraft has a configuration of 353 economy and 18 business class seats.

“Our first-ever long-haul charter flight to Canada is yet another example of our commitment to helping as many people as we can to get back home to their families in these troubled times. Being the first Indian budget airline to operate a non-stop long-haul flight to North America is a proud moment for the SpiceJet family,” Ajay Singh, Chairman and Managing Director, SpiceJet, said in a statement.

“We have operated flights across the globe repatriating close to 85,000 people and transporting over 28,000 tonnes of medical and essential supplies, and we intend to keep on with our efforts,” the statement said.

On August 1, SpiceJet had repatriated 269 Indians from Amsterdam to Bengaluru and Hyderabad.

The airline has operated over 515 charter and Vande Bharat flights to help repatriate close to 85,000 stranded Indian citizens from countries such as the Philippines, Kyrgyzstan, Russia, the Netherlands, the UAE, Saudi Arabia, Oman, Qatar, Lebanon, Bangladesh, Maldives and Sri Lanka.

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PM Narendra Modi to launch Rs 1 lakh crore financing facility on Sunday

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Prime Minister Narendra Modi will launch the financing facility of Rs 1 lakh crore under the Agriculture Infrastructure Fund on Sunday and also release the sixth instalment of funds of Rs 17,000 crore to 8.5 crore farmers under the PM-KISAN scheme.

Modi will take part in the event around 11 a.m. via video conferencing and the occasion will be witnessed by lakhs of farmers, cooperatives, and citizens across the country. Union Minister of Agriculture and Farmers Welfare, Narendra Singh Tomar, will also be present on the occasion.

The Union Cabinet has approved the Central Sector Scheme of financing facility under “Agriculture Infrastructure Fund” of Rs 1 lakh crore. The fund will catalyse the creation of post-harvest management infrastructure and community farming assets such as cold storage, collection centres, processing units.

These assets will enable farmers to get greater value for their produce, as they will be able to store and sell at higher prices, reduce wastage, and increase processing and value addition.

Prime Minister’s Office (PMO) in a statement said Rs 1 lakh crore will be sanctioned under the financing facility in partnership with multiple lending institutions.

Eleven of the 12 Public Sector Banks have already signed MOUs with the Department of Agriculture Cooperation and Farmers Welfare (DAC&FW). A three per cent interest subvention and credit guarantee of up to Rs 2 crore will be provided to the beneficiaries to increase the viability of these projects.

The beneficiaries of the scheme will include farmers, Picture Archiving and Communication System (PACS), Marketing Cooperative Societies, Farmer Producer Organization Scheme (FPOs), Self Help Groups (SHGs), Joint Liability Groups (JLG), Multipurpose Cooperative Societies, Agri-entrepreneurs, startups, and Central or state agency or local body sponsored Public-Private Partnership Projects.

The Pradhan Mantri Kisan Samman Nidhi Yojna (PM-KISAN) scheme, launched on December 1, 2018 has provided a direct cash benefit of over Rs 75,000 crore to more than 9.9 crore farmers. This has enabled them to fulfil their agricultural requirements and support their families.

The rollout and implementation of the PM-KISAN scheme has happened at an unparalleled pace, with funds being directly transferred into the Aadhaar authenticated beneficiaries’ bank account to prevent leakage and increase convenience for farmers.

The scheme has also been instrumental in supporting farmers during the Covid-19 pandemic, through the release of nearly Rs 22,000 crore to aid the farmers during the lockdown period.

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Business

Petrol and diesel prices may rise again from next week

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Petrol

Consumers might see fuel prices going up again as oil companies are bracing up to pass the rise in global crude and product prices on retail sales.

Accordingly, petrol and diesel prices may begin their rising trend all over again much to the discomfort of fuel consumers that have faced constant increasing prices since June 7.

The pump price of petrol and diesel had remained unchanged for last one week as oil prices were steady and crude was hovering around $42 per barrel mark for past several days. But with crude price now rising and inching towards $45 per barrel mark, oil companies said that they will be left with no option but to raise retail prices of petrol and diesel.

“We will observe the price movement for next couple of days and if oil prices remains firm, a decision may be taken to revise retail product prices again under the daily price revision mechanism,” said an executive of a public sector oil company on condition of anonymity.

Diesel continues to be priced at Rs 73.56 per litre in Delhi while petrol price remains static at Rs 80.43 per litre. This price level has been maintained since last Friday when diesel were cut by a sharp Rs 8.38 per litre following Delhi government’s decision to reduce VAT on the product from 30 per cent to 16.75 per cent.

This price cut has again made diesel cheaper than petrol in the city after more than month. In fact, diesel is cheaper than petrol in Delhi by the widest margin among all metros now.

Delhi was the only major city in the country where diesel prices were higher than petrol. Diesel prices first rose above petrol in Delhi last month, much to the discomfort of the transport sector and the fuel dealers.

The Rs 1.5 per litre differential had led substantial loss of business to pump operators in Delhi as vehicles were getting diesel filled in neighbouring Haryana and Uttar Pradesh.

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