You can finally heave a sigh of relief. The Reserve Bank of India (RBI) has said it is done with the rate hike cycle.The RBI did hike the repo rate by 25 basis points (bps) to 8.50 per cent and reverse repo rate to 7.50 per cent -- maintaining the 100 bps corridor between the two key rates. But that's in the headlines. It also said: "The likelihood of a rate action in the December mid-quarter review is relatively low. Beyond that, if the inflation trajectory conforms to projections, further rate hikes may not be warranted".Says Tushar Poddar of Goldman Sachs: "We think the data on inflation would have to surprise significantly to the upside for the RBI to change its stance. It (RBI) could have chosen the option to not be so explicit about a stop to rate hikes, but by so doing, we think it has enhanced its credibility, and dispelled uncertainty about rates and anchored future expectations. We continue to think that with inflation and growth likely to surprise on the downside, the RBI will likely cut interest rates in April 2012, and we have built in 100 bps in rate cuts in the next fiscal year".The year-on-year headline inflation has remained stubbornly high during the financial year so far, averaging 9.6 per cent. It was driven by all the three major groups: primary articles; fuel and power; and manufactured products. Both the level and persistence of inflation remain a cause of concern. "However, there is some comfort coming from de-seasonalised sequential quarterly WPI data which suggest that inflation momentum has turned down", said the RBI.Headline inflation has stayed above 9 per cent for the past 19 months, while CPI-based inflation has been higher than 8 per cent for the past 38 months. Inflation pressures have become persistent in the last few years. In the past 66 months (since April 2006), it stood above 5 per cent in 48 months; above 6 per cent in 44 months; above 7 per cent in 34 months; and above 8 per cent in 28 months. The last rate hike cycle (in 2008) saw the repo rate peak at 9 per cent, as inflation stayed above 7 per cent for about 9 months. In the current cycle, however, inflation has been much more stubborn, inviting today's rate hike.The central bank began exiting from the crisis driven expansionary policy in October 2009. Since then, it raised the cash reserve ratio (CRR) by 100 basis points, and raised the policy rate (the repo rate) 12 times by 350 basis points. The effective tightening has been of 500 basis points as liquidity in the system transited from surplus to deficit. This is shown by the by the daily borrowings under the liquidity adjustment facility (LAF) repos – it averaged around Rs 47,000 crore till October 21, 2011. But this deficit remained within one per cent of banks' net demand and time liabilities (or deposits) the comfort zone assessed by the central bank.
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For big conglomerates and corporates hoping to get into the banking business, the wait just got longer. Corporates like Tatas, Birlas, the Anil Ambani group, Religare, Bajaj and Muthoot group among others, will have to wait longer for a banking licence after the RBI governor D. Subbarao raised a reg flag over handing out the much-anticipated licences. This came just days ahead of the scheduled release by RBI of the draft proposal on the entry of a new set of private banks into India's Rs 64-trillion banking industry. A discussion paper was floated last August and the RBI has received a lot of feedback.The Governor further said the RBI had already sent the draft amendment to the government, which was working on it. While the guidelines will be issued shortly, the amendment to the Banking Regulation Act is uncertain.Subbarao said though admittedly the strongest reason to allow corporates to get into banking was their easy access to large capital, the issue of 'self-dealing'— the fear that corporates will use the bank as a private pool of readily available funds — made him raise the red flag.For example, the Banking Regulation Act expressly prohibits banks from lending to directors on the board and to entities in which they are interested. Regulations also prohibit lending to relatives of directors without the prior approval or knowledge of the board. Directors, who are directly or indirectly interested in any loan proposal, are required to disclose such interest and to refrain from participating in the discussion on the proposal."There are still gaps," the governor said while addressing the Ficci-IBA summit in Mumbai earlier this week. This could be the first time the RBI has openly expressed its apprehensions about handing out new licences.Another apprehension that was raised during the public debate on the Discussion Paper was that it is not easy for supervisors to prevent or detect self-dealing because banks can hide related party lending behind complex company structures or through lending to suppliers of the promoters and their group companies, Subbarao said.There is a need for changes in statutes and regulations to address these concerns, he said.Although most bankers maintain that bringing in new banks will provide more competition to the PSU banks to up their ante when it comes to servicing, it remains to be seen how the corporates themselves react to this admission from the country's top most banker himself.
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What is the right way to make a motorsports championship work? That too, in a scenario when seven out of ten motor sporting ventures fail; in a business context where in the need to make their business look eco-friendly, several auto manufacturers have deserted motor sports. And in a country where cricket soaks up most of the marketing investment coming into sports.That would have been the top-most question amongst the management of Machdar Motorsports when they plotted the strategy for the i1 Super Series, an Indian motor sport racing event that will flag-off in mid-December. Robin Webb, a veteran who's familiar with the nuts and bolts of the motor sports championships and who will be involved as the series co-ordinator with the i1, says that there are a lot of lessons to be picked up from failures all over the world. According to him, that's probably where the management of Machdar has started on the right note. "In motor sports, it is natural to make the car your starting point. But here they have made the business the starting point," he says. His argument: the car can always be changed at any future point, if it does not meet the requirements, as long as the business fundamentals are rock solid.And the choice of the car, the Radical SR3 in this case, helps in getting the right amount of savings. A SR3 roughly costs $1,00,000 (around Rs 45 lakh), while a car that's geared upto F1 levels could cost a minimum of $ 4,00,000 (approximately Rs 1.8 crore). So if twenty such cars are required for a season of the i1 super series (18 drivers plus two back-up cars), using Radical SR3 cars will cost the teams a total of Rs 9 crore, while they could have paid four times the money if they chose race cars fit for the F1 circuit. Another focus is on lesser manpower - a Radical SR3 can do with 1 attendant per car as opposed to anywhere between 4-12 people per car that are used in other championships. That's also because, the i1 series will have a shorter race of 45 minutes, compared to an F1 race that could go on for two hours and beyond. That means saving on fuel costs and tyres, as no tyre replacements or refuelling will be permitted in the middle of the race. But on the flip side, a shorter race also means there will be lesser time for airing commercials during the live telecast.The series has been designed as a single make racing series format - all the cars used by all the teams will be of one make, one configuration and one technical specification (Radical SR3). This will ensure that driver skill would be at maximum display. Another benefit is that teams do not have to bust the bank for investing in R&D and over-engineer their team car for superior performance. Also as Anjana Reddy, promoter of the series, points out, Machdar plans to plug-and-play into the existing infrastructure for its racing season. That means no additional costs incurred on building infrastructure. Among the seven venues that will play host to the inaugural season, two will be in India - Delhi and Chennai, with the remaining five venues across Asia. Machdar even plans to get the players under a central contract, so that team owners do not end up paying through their nose. Each team owner will have to put up an initial investment of Rs 22.5 crore ($ 5 million) with an additional investment of $ two million (Rs 9 crore) in the first year and Rs 4.5 crore in the subsequent years. Teams who do not overshoot this budget are expected to break even in the fourth year. That means the nine team owners put together will be investing a total of Rs 365 crore in the first three years put together. If revenues are split in the ratio 60:40 amongst the team owners and Machdar respectively, the i1 super-series will need an average of Rs 200 crore every year in revenues to recover its investments after three years. On paper, the roadmap seems well planned. But when the race begins, it could be a different match altogether.
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Not too long ago, fund managers didn't talk about macroeconomic issues; most focus on stock market liquidity, net asset values and the Sensex (or the Nifty Fifty), not interest rates, the fiscal deficit or global economic crises. But increasingly, fund mangers have started looking at interest rates, credit market conditions and levels of public debt, in an attempt to better understand what drives capital flows into different asset classes. Take food inflation, for instance. Though it moved above 10 per cent for the week ended 6 October, Suyash Choudhary, Head-Fixed Income at IDFC Mutual Fund, feels 25th October would be the last time Reserve Bank of India would hike rates by quarter per cent and eventually pause following the slowdown in the economic activity. Talking to Businessworld's Mahesh Nayak he personally favours investing his moolahs in equities as he sees these are good levels to enter equities for the long term. While he sees short-end rates having peaked, his funds are investing in corporate bond with maturity of 1-3 years. Excerpts from the conversation: What are you expecting from Reserve Bank of India's (RBI) monetary policy on the 25 October 2011? And why?We are assigning an even possibility of a pause or a 25 bps hike. The RBI has been concerned with inflation remaining sticky at elevated levels. While momentum on inflation seems to be weakening, the print is still expected to be above 9 per cent for the months of October and November. Managing expectation in light of this may prompt another rate hike. Though on the other hand, there are compulsive reasons to pause. Global uncertainties have picked up further over the last couple of months. Domestic data continues to show that economic activity is slowing down. Finally, the lagged effect of previous rate hikes is yet to fully take hold. Importantly from RBI's stand-point, pausing now may not necessarily mean a reversal of stance. The central bank can make it clear via its communication that it is pausing to assess the effect of previous hikes in context of an uncertain global environment and may resume hiking down the road if inflation dynamics so warrant. Are we at the fag-end of rate hikes and why?Yes, in our view we are approaching the end of the tightening cycle. GDP growth this year and next will very likely print below the assessed current trend rate of 8 per cent. This should ensure that demand pressures continue to weaken. As the full effect of previous rate hikes gets felt in economic activity, this phenomenon will become more visible. Additionally, global growth is also facing a period of exceptional uncertainty which is likely to continue into the next year as well. This would tell on domestic growth as well. Market is expecting the 10-year government securities yield to touch 9 per cent. What is your take on the 10-year G-Sec yields and why?There have been two triggers for government securities (G-Sec) yields this year. The first was the expected additional bond supply much, if not all, of which has already fructified. This has caused the sharp rise in yields over the past few days. The other trigger is the anticipation of RBI's bond purchase which is very likely to happen before the end of calendar 2011. On its own, banking system liquidity will head towards negative Rs one lakh crore by mid-November or so on account of rise in currency with public. In order to bring it back towards its stated comfort zone of 1 per cent of net demand and time liabilities (NDTL) of banks, the RBI will have to infuse liquidity via purchase of bonds from the market (similar to what happened last year). This should provide some support to bond yields. Hence, even if 10 year G-sec yield were to touch 9 per cent, we do not anticipate that it will remain there for a long period of time. Near term direction for G-sec yields would depend upon RBI's rate decision on 25th October and the timing of its open market purchase of G-Sec's. However, over the medium term (6 months) we expect yields to be lower than current levels as market starts anticipating change in monetary policy stance towards early next financial year. Despite the system flooded with liquidity, why are bankers craving for more returns on their money—at least this comes to be seen from the latest RBI auctions. What is your view and why?With the additional borrowing amount, the net supply (excluding bond maturities) for second half of the year stands at Rs 2.05 lakh crore which is higher than the first half net supply of Rs 1.9 lakh crore. Given that second half is busy season on credit, demand for credit is expected to be higher than first half (though not as much as second half last year, as off take itself is slowing). Hence, banks may not be as keen buyers of government bonds as in the first half of the year, especially also as they have already built up significant excess SLR positions (over and above the mandated 24 per cent of deposits). The same is getting reflected in latest RBI auctions. In times of uncertainty where will you advice investors to invest? Currently where are you investing your money? And why?Asset allocation as a principle should serve investors, especially in times of uncertainty. So depending upon the risk profile of the investor, a mix of asset classes should be looked at. Fixed income and equities are two different asset classes with different risk versus reward profiles. While it is true that often fixed income gets looked at as a ‘defensive' option when one is not investing in equities, we believe that the right approach is to look at each asset class proactively in order to arrive at a desired composite risk versus reward profile on investments. In line with an endeavour to practice what I preach (!), I am asset allocated across fixed income and equities. At this juncture I am somewhat favouring equities for incremental allocations given that my personal judgement is that these are good levels to enter equities for the long term. This is also in line with the composite risk versus return profile that I am seeking on my investments. Is the fund house seeing a flow of money in to the fund house? How much of it is coming into fixed income and in which schemes? Institutional flows into money market funds have stagnated somewhat. This is a function of available investable surpluses with institutional clients. However, flows into other products like the short term fund have picked up significantly as the case for taking some duration risk has become quite compulsive. As a fund manager how are you managing the money in your portfolio and where are you investing in this market?We have had a view since March that short end rates have peaked and that the yield curve would incrementally steepen. The basis for the view was that, apart from expected rate hikes and system liquidity deficit, a major trigger for short end rates to rise was a sharp rise in credit to deposit ratio of banks in the last quarter of calendar year 2010. Owing to higher deposit rates since January – March quarter, we found that credit to deposit ratios had stabilised in that quarter and expected them to fall subsequently. We believed this would protect short end rates from rising much further despite incremental rate hikes from the RBI. Hence we have favoured the ‘front end' of the corporate bond curve (1 – 3 years). In line with our expectation, the yield curve has incrementally steepened. Thus, while the curve was inverted in March, it is almost flat now. We believe that this process will continue in the future as RBI pauses soon on rates and credit demand continues to slow relative to deposit growth. Hence, we remain of the view that the most compulsive trade is that of curve steepening and accordingly continue to favour investments in the 1 – 3 year segment of the corporate bond curve. We see the yield curve will continue to steepen over next year or so.
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Suresh Vaswani earned his chops, by joining a then unknown company called Wipro straight out of IIM A campus, in 1985, to sell PC hardware. In the next 25 years, Vaswani grew meteorically within Wipro first as an executive assistant to its billionaire chairman Azim Premji, to eventually become the co-CEO of the company. Unlike several of its Indian IT peers, if Wipro today gets close to a quarter of its IT revenue from the domestic market, it owes it in no small measure to Vaswani. He is credited for building Wipro Infotech, the system integration arm of Wipro Ltd, which mainly caters to India, Middle East and other developing markets. Vaswani also built several global lines of business for Wipro like testing and validation as well as Infrastructure Management Services. In January after a surprising exit as the co-CEO of the company, Vaswani was wooed by Michael Dell personally to come onboard. Dell will be hoping that Vaswani will help him in ramping up the applications and BPO business of the company as he seeks to strengthen the services arm. A keen golfer, Vaswani sat down with Businessworld's Venkatesha Babu to talk about the mandate from Dell and how he intends to execute it. Excerpts:Why Dell? What do you intend to achieve over the next few years?It is true that immediately after January I had multiple opportunities including one to head the Indian operations of another large multinational. However I was excited by Dell's vision to transform the company to become an end-to-end player offering everything under a single roof. My brief is simple: to growth the applications and BPO business of the company. I have global profit and loss responsibility for it. I am also the Chairman of Dell India. I have an 80: 20 split for this. I spend about 80 per cent of my time in my global role and the rest for the Indian market. I think the team here has done a good job of helping us become the market leaders in the PC segment in the domestic market. We have a strong play in servers too. Yes, we can do better in services. You will start seeing some of those results in the near future.Indian IT vendors including the likes of TCS, Infosys and Wipro took on large multinational players and managed to carve out a niche for themselves. Dell, while it is known as a hardware seller, isn't late to the services game? How do you intend to differentiate yourself and grow the business?I don't agree with the contention that Dell is late in the services game. We already have close to $8 billion in revenues coming from services, which is more than several India based players. Yes, some of it might be around support services around the products we sell. However I think we have a different story in the services game. We will address the mid market segment (Small and Medium Business), make our solutions open, affordable and scalable. By emphasising on IP and platforms we will ensure that revenue is not directly linked to head count growth. Dell already has C-suite relationships which are the envy of the industry and not easy for a lot of standalone services companies to replicate. From PC's, servers, software, storage to services, Dell's integrated offerings mean that customers need not worry about making different technologies talk and work with each other. We will ensure all that happens seamlessly. Because of our Perot acquisition, Dell is already the leader in certain segments of the market like healthcare and public sector/government business. We have tremendous strengths which we will leverage. We will also strengthen certain other segments such as banking, financial services, insurance, energy and utilities, telecom, IMS etc. Are you following in the footsteps of IBM and HP in stressing more on services as the business here is more predictable and profitable?I think Dell usually leads rather than merely follow somebody else's strategy. We think we have a differentiated play and a compelling value proposition for our customers.
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Mohan Shenoi, President – Group Treasury & Global Markets, Kotak Mahindra Bank and Phani Shankar, Head Financial Markets, ING Vysya Bank talk to BW's Tanushree Pillai about the trend in the debt and money market and a give their forecast for bond yields and the rupee.Indian bond yields touched the psychological 9 per cent level and bounced back thereafter. What are the concerns in the bond market? Shenoi: The biggest concern of the government securities market is excess supply which far outstrips demand. There's a steady input of Rs 13000 crore of dated securities every week plus Rs 7000 to 8000 crore of State Development Loan every fortnight, weekly treasury bills' auctions plus intermittent issuance of Cash Management Bills.The market and primary dealer system do not have the appetite to underwrite and absorb such avalanche of supply of Government paper.Shankar: The heavy supply has brought in growing concerns the government will overshoot its fiscal deficit target of 4.6 per cent of GDP. Persistently elevated inflation also continues to keep bonds under pressure. Shenoi: Secondly, the banking system as a whole is maintaining statutory liquidity ratio at 29 to 30 per cent of their Net Demand and Time Liabilities (total deposits) as against the required level of 24 per cent. This has also dampened demand. Some banks have also announced that they will move away from Government securities to ‘AAA'-rated corporate paper in order to improve their Net Interest Margins. This is putting pressure from the demand side.What is the current trend in the overnight money market of collateralized lending and borrowing obligation (CBLO) and interbank call money market? Shenoi: Liquidity in money markets continues to be in the negative territory. Average deficit at the system level is around Rs 50000 crore. Hence, money market will operate at the upper end of the interest rate corridor. In other words, repo rate will continue to be the operative rate. CBLO and call money rates therefore will hover around the repo rate. How has trading been this past month in the overnight money market? Shankar: Liquidity has been in deficit mode, but largely within RBI's comfort zone. Trading has been fairly stable with CBLO rates trading near repo rate while interbank call rate trading about 5-10 basis points above repo rate.Shenoi: With liquidity in negative territory, trading in money markets has been negligible. What's your near-term and medium-term prediction for bond yields?Shankar: In the near term, bond yields are expected to peak around 9%, but the bond market should pare losses in the medium term to trend towards 8.5 per cent as supply concerns ease, with likely Open Market Operations purchases by the RBI and inflation trajectory starting to ebb slowly.Shenoi: The 10 year benchmark 7.80 per cent -2021 bond yield is expected to be around 8.75% to 8.85% in the next one month, while it may rise to 8.90 per cent - 8.95 per cent levels in the next three months. All eyes are on RBIs October 25th policy. With 12 rate hikes in about 18 months, and more expected, what are your expectations? Shenoi: We expect another increase of 25 basis points in Repo rate and a concomitant increase in reverse repo rate. Inflation is yet to moderate forcing the RBI to continue its anti inflationary stance.Shankar: We expect RBI to raise the repo rate by 25bps on 25th Oct as managing inflation remains the central bank's key concern. Inflation for the month of September (at 9.72 per cent) remained much above the central bank's comfort zone and its efforts to rein it in have not had much impact. Where do you think is inflation headed in the medium-term and by March-end?Shankar: Inflation trajectory is expected to start showing a downward trend in a months time. We expect inflation to be close to 7 per cent by March end. Shenoi: Headline wholesale price index is expected to be at around 7 to 7.5 per cent by March 2012. How is the demand for bonds and Treasury-bills currently and why? Shenoi: As the SLR holding of the banking system remains significantly higher than what is mandated by RBI, the appetite for bonds and Treasury-bills has been very limited.This limited appetite is manifesting itself into higher yields in successive auctions and devolvement in dated government securities auction.Shankar: The last two bond auctions clearly witnessed poor interest, with 2 out of 3 securities worth Rs 4038 crore on offer devolving last week, while in the previous week, securities worth Rs 899 crore devolved. Even Treasury-bill auctions have been witnessing higher yields than before. Along with over supply and high inflation, there are growing concerns that after an extra borrowing worth Rs 52800 crore already being announced for the second half of this fiscal, government might need to increase its supply further towards the end of the year to meet its shortfall. Where do you see the rupee headed in the next a) 1 month b) 3 months c) 6 months and why? Shankar: Rupee is expected to trade between 48.50-51 per dollar in the next three months. With risk sentiments easing and markets being less vulnerable, we expect rupee to trend towards 47.50 per dollar in the next six months.The movement in the domestic currency in the last few months has largely been driven by global factors as concerns of contagion risks in Eurozone threaten to destabilize the world economy. The rising risk aversion has led to drying up of foreign institutional inflows in India, with the net inflow being to the tune of USD 2.5 billion between April-October 2011 compared to USD 25 billion in the corresponding period last year. Not surprising, the Indian Rupee has weakened over 10% in the last six months.Shenoi: I am expecting a weak Euro which means risk aversion in global markets. On account of that I am expecting INR depreciation 49.80 per dollar in the next one month, at 50.80 to 51 per dollar in the next three months and at 50.30-.50 in six months' time.
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This week, stock markets will gyrate, perhaps more than they have in the last two. Here are three things: one, how the markets read the October 23 meeting of the European Union. So far the news looks bad. Two, what the Reserve Bank Of India will do about interest rate hikes: pause or continue. Opinion is divided about which way the central bank will go. But more importantly, look for what it says about the economic outlook for the financial year. Lastly, the tenor of corporate quarterly results. Here, pay more attention to the half year, not just the quarter. That will tell you how much catching up companies will have to do.Last week, as expected, the market reacted to the disappointing corporate results reported by blue-chip companies. The Indian markets lost 2 per cent with players offloading their stocks ahead of the crucial European Union (EU) nations meeting on 23 October 2011 that will meet to discuss the bailout of Greece and other heavily indebted European nations. "We will have to wait to see if the bailout package is for short-term or the long-term. It doesn't make sense if it's a 3-4 month stop gap arrangement," says Ambareesh Baliga, COO at Way2Wealth, a financial services firm.These are uncertain times and across the globe players are waiting to see what measures the European government takes to recapitalize the banking systems. The underlying fears of banking sector contagion still continuous to pose threats and the market aren't prepared for anymore failing of banks. There are doubts over the financial soundness of the banks because they lack confidence in the valuation of banking assets such as sovereign debt.While Monday morning Indian markets will follow its Asian counter parts, the coming week players will also key an eye on the Reserve Bank of India (RBI) monetary policy on 25 October 2011. Though the market has discounted a quarter per cent hike in rates, players are waiting to see RBI governor's future stance on inflation and rate hikes. Last week Brazil has cut its rates by a half per cent to spark growth and many feel India and other nations like China will soon follow. In India, expectations are if not a cut at least RBI would indicate of no more hikes following the slowdown in economic activity.Meanwhile, in the week ended 21 October 2011, the Bombay Stock Exchange (BSE) Sensitive Index (Sensex) ended with a loss of 297 points at 16,785.64. The disappointing results from index heavyweights — RIL, TCS and L&T were responsible for pulling the index lower which remained on a flip-flop mode for most of the week. "There is hardly any activity in the market. Players are holding on to their position and aren't committing any fresh money into the market," says Baliga. He adds: "Though the Sensex is moving in a narrow band of 1000 points. There is a lot of volatility and therefore players aren't willing to enter the market." This has also impacted volumes in the market. This month, on the BSE, the daily average turnover has dipped by 7 per cent to Rs 2,400 crore, compared to Rs 2,588 crore in September. The turnover is sharply down since January that used to record a daily average turnover of Rs 3,500 crore.On the other hand, despite uncertainty prevailing in the market on account of global as well as domestic concerns, Ramit Bhasin, managing director & head-markets, India at RBS is bullish on the Indian equity market. "The Indian market has held on very nicely despite the volatility and from a 2 to 4 years stand point I am bullish on equities and we are buying at current levels on expectation that it could give a return of 20 per cent in the next 18 months," says Bhasin. One of the reasons why he is positive on the market is because he feels all the bad news is factored in the price and secondly he sees core inflation stabilizing. Core inflation measures using exclusion method that excludes volatile items like food and fuel. But core inflation is said to be stickier as it includes prices of manufactured products which do not change very often.Meanwhile Baliga is also positive on the market. "Today 30 per cent of my money is parked in equities. And if market tanks, and there is all the possibility that market can tank by 10-15 per cent, I will remove money from debt and invest in equities in the ratio of 40 per cent equities and 60 per cent debt." He adds, "In terms of valuation markets are attractive. One can't time the market and therefore one should start accumulating quality stocks."Though experts feel that bad news is all discounted in the price and the clouds of uncertainty are getting lifted, a clearer picture would emerge only after Sunday's Euro-zone meeting that could make or break the Indian market in the next week. Post Script: A Silver Lining? On Monday, the sensex rose as much as 1.6 per cent early on Monday, with index heavyweight Reliance Industries and ICICI Bank leading the gains, as investors cheered renewed efforts to limit the euro zone debt crisis.At 9:16 a.m. (0346 GMT), the 30-share BSE index was up 1.55 per cent at 17,045.03 points, with all its components rising.The broader 50-share NSE index was up 1.54 per cent at 5,127.90.
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The luxury carmaker, BMW is contemplating bringing the Mini brand in India. It will also have independent dealer network to sell the brand across the country."India definitely has a market for the Mini brand but we are waiting for the market to grow further to launch the brand. The decision will be taken only next year and in 2-3 year's time-frame, we will start selling the products," says Andreas Schaaf, president, BMW India.The Mini brand will be sold under a different dealer network across the country. However, the numbers has not been divulged.Apart from this, the luxury automaker also plans to bring the BMW 1 series hatchback in India. The time line again is not decided yet. "Considering the market condition at present, we haven't decided the timeline to launch the 1 series in India," added Schaaf.Last year around 15,000 units were sold in the luxury segment in India. This year the number is expected to grow by 70 per cent.BMW India today launched the new BMW X3. The car will be available in two variants - the xDrive 20d priced at Rs 42.2 lakh and the xDrive30d at Rs 47.9 lakh (all India ex showroom).The car will be produced as a CKD (Completely Built Unit) in the company's Chennai plant. BMW has recently increased the plant's capacity from 10,000 units to 11,000 units in March this year. The deliveries of the xDrive20d will start in September and xDrive30d in October, a month later.So far the company has invested Rs 1.1 billion in the country. The number is expected to go up to Rs1.8 billion by end of 2012. BMW also plans to expand its dealer network to 40 from the current 24 by end of next year.
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