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Editorial
The Magaz ine for Pakistan Au tomotive Sector
September 2010 Vol 3, Issue 9 Editor : M. Hanif Memon Sub Editor : Dr. Raja Irfan Sabir Contribution Writers : Mohammad Owais Khan Samiullah Khan Shahzad Tabish
Advisor : J. Pereira Abdul Majeed Sheikh Circulation Manager : Abdul Khaliq Designed By : Mustafa Hanif
Government - IMF talks Trade, industry circles oppose further borrowing Trade and industry circles have expressed dismay over the outcome of Pakistan's negotiations with International Monetary Fund (IMF) and World Bank and termed it extremely hopeless. Industrialists, Business groups and associations of different Trade and Industries saying said that this is not the time to further burden the nation with another loan as Pakistan is not in a position to pay off huge loans, already piled up by history's biggest natural catastrophe which has not only displaced over 25 million people, but also incurred monetary losses to the tune of billion of dollars. "Pakistan needs grants an d morat orium on precious loans as the exchequer is not in position to pay off huge loans amounting to about $54 billion ov er the years". Deman ded of the government to categorically express its inability to pay the debts an d demand all loans to be written off.
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The industry leader said that government should simply convey its decision to the world that Pakistan is in dire strait, and rehabilitation of the IDPs and covering losses of destroyed crops will take months if not years and the national exchequer can not afford huge debt servicing. "The loans acquired or given to the previous governments were not spent on development or in national interest but mostly usurped by corrupt rulers. This happened due to absence of a monitoring system by donors and thus, nation is not liable to pay these loans. The country co uld no t be able to bear any additional burden of taxes and the simplest and easiest way to come out of this mammoth crisis is to seek writing-off of loans from the donors....
CONTENTS
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The Monthly Magazine for Pakistan Automotive Sector
Your trust is our success Chinese bike makers expect level playing field from new EDB CEOI Exclusive Article on Motorcycle sector
9-10
SME of Pakistan Confers Membership on Imtiaz Rastgar 11 Mir Hazar Khan Bijarani visits Hinopak Corporate event at Hinopak
12
Car sales in August as compared to July Exclusive Article in Car sector
13-14
Auto vendors seek enforcement of development plan
15
ABS (Anti-lock Braking System) Exclusive Article by by Omar Rashdi
25
An Exclusive Report on Lubricants by Automark team (from previous issue)
27-28
Thar Coal Gasification Project shelved
35
Hero Honda - News
42
Corporate Event at Thal Engineering
45
Pakistan needs low-priced cars Exclusive Article by Automark
46-47
Local assembled car price list
43
Used car prices
44
The common man’s 70cc of recent times An Exclusive Article by Shahzad Tabish from NED
48-49
Motorcycle price list
50-51
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Corporate Events - Update
Society of Mechanical Engineers of Pakistan Confers Membership on Imtiaz Rastgar In recognition of his services to the cause of the engineering profession as well advancements in the manufacture of engineered products in Pakistan, the Societ y of Mechan ical Engineers conferred Honorary Membership of the Society on Imtiaz Rastgar, ex CEO of the Engineering Development Board. Mechanical Engineering plays a vital role in almost every field of life ranging from power generation to health care. One finds mechanical engin eering playing vital role in running of fields as divers e as s oftw are firms , heavy electrical goods manufacturing, financial institutions, defense installations, oil and gas development an d so on. This is because of wide applicability of knowledge, which is intrinsic to the field of mechanical engineering. For the same very reason, Mechanical Engineering has been called the “Mother of all Engineering Science’s. The Society of Mechanical Engineers of Pakistan is formed with the aim of providing a platform to the Mechanical Engineers in Pakistan. Acco rding to some estimates there are more than 17000 mechanical engineers actively involved in various fields ranging from manufacturing to services. A need to unite the mechanical engineers
serving in Pakistan was long felt this was needed to increase professional’s competence, introduce standardizations, improve quality of education, provide bett er gr ow th op portu ni ties f or mechanical engineering professional and above all provide the mechanical engineers serving in all of their diverse areas of interests a platform so their voice can be heard. With these expressed
and declared ai ms. The Society of Mechanical Engineers of Pakistan (SMEP) was formed. Imtiaz Rastgar has served on the Governing Bodies of several technical universities in Pakistan as well as a Director on eminent engineering sector enterprises. - PR
J. Pereira elected by CILT The Chartered Institute of Logistics and Transport (CILT) Pakistan, whose head quarter is based at London, UK held its 19th Annual J. Pereira, Deputy General Manager, Customer Services and Training of the Product Support Division of Hinopak Motors Limited was elected unopposed Member of the Counci l Executive Committee of the Chartered Institute of Logistics and Transport, Pakistan (Road Transport Sector) for the year 20102011. Brig. (Retd) S.S.A. Qasim, Honorary Secretary General of the Chartered Institute of Logistics and Transport, Pakistan whilst presenting his Annual Report to the Members of the CILT, thanked Hinopak Motors Limited and
other private sector organizations for supporting the CILT. Brig. (Retd) S.S.A. Qasim appreciated the contribution of Pereira in various activities of the CILT. On June 11, 2010 a special meeting of the Council Executive Committee held at the PIA Training Centre during which Pereira was also elected Member of the Education and Training Sub Committee. J. Pereira is a Life, Chartered Member of the CILT and is also a member of the CILT faculty, where he gives lectures on Trans por tation Man agemen t. He delivers lectures at the Diploma Course in Logistics and Transport and the Di ploma Course in Supply Chain Management (SCM) and covers all the four modes of transportation namely Air, Rail, Road and Sea. These courses AUTOMARK | September-2010 11
are held at the PIA Training Centre near the Star Gate, Old Ka r a ch i Air p or t Terminal. Pereira is also the Member of the Stan din g Co mm i tt ee o n Science, Technology an d Te ch ni ca l Edu ca tion of t he Federation of Pakistan Chambers of Commerce and Indus try (FP CCI). He is a Member of the Cath olic Bu si n es sme n an d Profe ss iona ls Association (CBPA) and Head of the Technical Education Committee (TEC) of the CBPA, which recently organized a programme on Career Counseling for the youth of Karachi....
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Corporate Event - Update
Mir Hazar Khan Bijarani, Honorable Minister for Industries & Production visits Hinopak
Recently Mir Hazar Khan Bijarani, Federal Minister for Industries & Production visits Hinopak Moto rs Limited. The agenda of his visit was to discuss the automobile industry of Pakistan in general. During the meeting Value Added Tax (VAT), Government policies & fut ure pla ns for t he betterment of industry and production sector, issues on import of used vehicles and other related issues were discussed. Speaking on the occasion, the Federal Minister briefed that the Government of Pakistan recognizes the role of the automobile industry of Pakistan as a major growth driver and its contribution for the economy of Pakistan and will support this industry to enable it to develop and play an important role globally. He told that today he observed the modern manufacturing facilities of Hinopak and was highly impressed to see the state of the art processes and inh ou se ma nuf ac tur in g pr oces ses . Mr. Kunwar Idris, Chairman, Hinopak
thanked the federal Minister for his visit to Hinopak. He expressed his views that Hinopak strongly believes that this visit will provide new opportunities that will help to meet the challenges being faced by the local industries. On this occasion Mr. Hideya Iijima, Managing Director & CEO, Hinopak said that however the industry had declined in sales due to unfavorable economic conditions till the end of last year. He added that it is heartening that due to aggressive government policies, sales of automobil e sta rted grow ing sin ce January this year. He also informed that Hinopak has made huge investments and technology transfer for the industry development. Mr. Muhammad Irfan Shaikh, Director Sales & Marketing, Hinopak said that Pak ist an Automobil e Indus try is facilitating the common people of the country by providing jobs. He added that increase in duties & taxes directly impacting the pockets of common AUTOMARK | September-2010
12
people and disturbing daily routine life. He also briefed the federal minister about the export activities, and said that by successfully meeting international standards in export quality, Hinopak in collaboration with its principals is continuously striving to tap other prospective markets such as Saudi Arabia, Qatar, Oman, Kuwait, Egypt, Bahrain, UAE, Jordan as well as many inquiries are in pipeline from Panama, Mozambique, Cost Rica and Sub Sahara countries. He mentioned that Hinopak has invested huge amount of money to renovate its body operation plant by keeping in view the expected orders of export from different parts of the world. In the end he again congratulated Hinopak Management and workers for the continuous success by setting up milestones and benchmarks in Pakistan automotive industry, and hope that Hin opak wi ll continue its journey t owa rds it s p rosp erit y an d for betterment of Pakistan as a whole...
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Automotive Sector - Update
Auto vendors seek enforcement of development plan Due to unknown reasons, none of the steps of implementation of AIDP that were envisaged to be enforced from July 2010 were incorporated in the Federal Budget 2010-11. the Engineering Development Board (EDB).
Local aut o vendors ha ve s ou ght intervention of Ministry of Industries for practical implementation of Auto Industry Development Plan (AIDP). Pakistan Association of Automotive Parts and Ac cess ories (PAA PAM) Chairman Tariq Nazir in a letter to Secretary Ministry of Industries and Production Dr. Abdul Ghaffar Soomro said t he E cono mic Coordina tion Committee (ECC) in one of its meetings al so en dorsed t he in tent of th e government to follow consistent policy for the local industry and this highlights the importance to ensure complete implementation of the five-year AIDP. He said unfortunately, due to unknown rea s ons , no n e of t he st ep s o f implementation of AIDP that were envisaged to be enforced from July 2010 were incorporated in the Federal Budget 2010-11. “This has left the auto industry directionless and unsure of the fate of AIDP,” he added. He urged the industries secretary to refresh this issue with Ministry of Finance and Federal Board of Revenue (FBR) so that the implementation of the AIDP can be done in letter and spirit. He also asked the ministry to ensure tr a ns p ar en cy in u tilis a t ion o f concessionary SROs by the industry. The ministry should draft the ‘rules of manufacturing’ and notify them as a guiding document for approval of any permission of concessionary imports by
A car part vendor said that presently less than 40 per cent parts were manufactured locally by auto vending industry, the balance and the most technological and high-tech parts like engine, transmission parts, fuel filters etc., were imported through concessionary regime of SROs supported by the five-year plan approved by the ECC in 2006. In case of cars, all the technological parts in major engine were imported from the parent companies of local car assemblers. He said auto venders who favour the continuation of AIDP were confronting with the resistance from car assemblers to further indigenise the technological and high-tech parts. The car assemblers allege the venders
AUTOMARK | September-2010 15
of having no capacity to develop the technological parts as such for the practical purpose n o engine and no transmission parts and o thers hightech parts ha ve been in digen ised. AID P through assoc iated SRO 693 levies a 15 per cent regulatory duty on the locally developed parts according to the list o f parts mentioned in the whole programme.The engine and transmission parts were supposed to be locally manufactured during budget 2009-10. The car assemblers having influence in the power corridor managed to get the loc alis ation of 10 most important technological parts including engine and tra ns mis si on p art s def erred for localisation. As such the additional duty of 15 per cent could not be levied yet on the imports to force the imp ort substitution. The car assemblers gave undertaking to the Engineering Development Board to indigenise these parts during 2010-11 along with the deferred parts during the year 2009-10. The automotive parts manufacturers raised various issues with the ministry of industries including localisation of parts of cars may also be done as was done in motorcycles, rickshaws and tractors where deletion level ranges between 80-90 per cent while in car it was still 50 per cent....
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Automotive Sector - Update
Auto sector localisation Industrial policy stresses strict adherence to TBS Auto analysts believe that the government has failed to force carmakers to bring down prices. As the major engine and high-tech parts are still in the import lists for assembly which due to yen and rupee disturbing parity gives a reason to car assemblers to increase prices.
The draft of the National Industrial Policy 2010 “Rebuilding Pakistan’s Manufacturing Base” has said that deletion programme in the car industry could not be as successful as one would have hoped.With a few exceptions major car assemblers have achieved less than 40 per cent local contents. The draft on the auto sector said that until 2006, a deletion programme was followed in the auto industry. Due to some structural reasons as well as poor governance leading to smuggling and un d e r- in v oicin g , t h e de le t ion programme remained unsuccessful. Moreover transfer pricing, where it occurs, acts as a disincentive to produce locally. Where the auto industry has localized, it has produced thousands of jobs and an extensive vendor industry. Several parts are being produced locally but a few barriers continue to prevent this in dustry from go in g further. The draft recommended for strictly enforcing Tariff Based System (TBS) which is officially in use but effectively in abeyance. This is absolutely crucial. In the absence of effective monitoring the progress of local auto industry will be severely impeded. There is a need for revising the indices that are still quoted for parts deletion. These are not based on international prices and are misleading. New indices need to be based on international prices of respective components and the TBS
needs to be brought in line with these. Transfer pricing severely impedes the development of local market and benefits only parent companies (original equipment manufacturers) OEMs. The draft said that granting of Pakistan specific licences for assembly restricts export potential of car makers in parts of the industry where high levels of deletion have been ach ieved. The government needs to take remedial steps to eliminate this constraint. In this regard priority will be given to three sectors: twowheeler, three-wheelers and tractor industry where most deletion or indigeni sation has been achi eved. The draft said that any firms completing full deletion and operating under local brands should get a subsidy on markup. In order to facilitate deletion and develop local parts based on global standards, the draft said that an Auto Des ign Institute will be set up in
AUTOMARK | September-2010 16
con junct ion with a Ka rachi-bas ed Universi ty. The government should sponsor foreign consultants for staying at the institute for next two years. The industrial policy draft covering all the sectors has been circulated to all the mi n is t ri es , t r a de b od ie s a n d stakeholders for seeking further input before presenting to the cabinet for approval. Au to a na ly s ts b elieve t h at t he go ver nme nt has fa iled to f or ce carmakers to bring down prices. As the major engine and high-tech parts are still in the import lists for assembly which due to yen and rupee disturbing parity gives a reason to car assemblers to increase prices. They said the answer is localisation which for many reasons given by car assemblers is held in abeyance. The reasons of car assemblers do not limit to any extent but they allege that there is no local tech no logy ba s e t o manufacture the high-tech parts locally and moreover the vending industry is unpredictable as to the delivery and supply commitments. They also justify the deferment of hightech parts localisation by giving reasons that economy of scale is not sufficient, forgetting that same brand of car in Thailand is manufactured less than number of cars in Pakistan but the localisa tion level is fa r a head of Pakistan....
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Automotive Sector - Update
Press Release
Indus Motor announces financial results for FY 09-10 The domestic auto industry that had witnessed a 67% drop in volume over last couple of years bounced back in 2009-10, the industry demand for the locally manufactured Passenger Cars (PC) and Light Commercial Vehicles (LCV) grew by 43% to 141,654 units as compared to 99,310 units in 2008-09. The Board of Directors of Indus Motor Compan y Ltd., met to review the Company’s financial and operating performance for the year ended June 30, 2010. The combined sales of Indus Motor’s Toyota and Daihatsu brands of both CKD and CBU for the year ended June 30, 2010 registered an impressive growth of 48% to 52,063 units compared to 35,276 units sold for the same period last year. Continuous improvement in a ll a reas of man ufa cturin g a nd production planning enabled the plant t o operate efficiently and at full maximum capacity to meet the market demand. The production of Indus Motor’s Passenger Cars (PC) and Light Commercial Vehicles (LCV) for the year increased by 47% to 50,557 units as against 34,298 units produced in the same period in 2009. Both the sales and production numbers are an all time new record for the Company. The Company outperformed the industry and the m a rke t a t la rg e u nd er s e ve re
circumstances and was able to increase its market share from 32% to 34.5%. The Company’s sales revenue increased to Rs 60.1 billion, up 59% over Rs. 37.9 billion; with pre tax profit of Rs 5.2 billion, as compared to Rs 2.0 billion achieved during the year ended June 30, 2009. Earnings per share increased to Rs 43.81, as compared to Rs 17.62 in the previous year. The domestic auto industry that had witnessed a 67% drop in volume over last couple of years bounced back in 2009-10, the industry demand for the locally manufactured Passenger Cars (PC) and Light Commercial Vehicles (LCV) grew by 43% to 141,654 units as compared to 99,310 units in 2008-09.
The overall production increased by 37% to 138,587 units versus 101,400 units produced in the corresponding period of 2008-09. The sharp rebound in demand is mainly attributable to the combined effect of healthy agricultural income in the farming communi ty and margi nal increase in auto financing coming on top of the low volume base in the comparable period of 2008-09, which suffered from the dampened demand due to the extraordin ary difficult economic conditions in the country and the absence of Corolla which was only partially present on account of run out of the old model last year. The Board of Directors appreciated the Company’s performance and declared a final cash dividend of Rs 10 per share, making for a total of Rs 15 per share during the year. The total dividend paid for the same period last year was Rs 10 per share....
PAAPAM to take part in 3 international auto expositions Pakistan Association of Automotive Parts & Accessories Manufactures (PAAPAM) will tak e part in three international automobile exhibitions in Germany, United States and Italy this year to get export orders for their p rod uct s , de velop a nd e xp an d engineering base in Pakistan as well as integrate it with the world markets. Former PAAPAM Chairman, Malik Moha mmad As la m told tha t 22 PAAPAM members will take part in Auto Mechanika show in Frankfurt from 14 to 19 September 2010. 10 Pakistani
engineering companies will exhibit their auto parts an d other engineeri ng products in AAPEX, Los Vegas, USA from 2 to 4 November. Pakista ni manufacturers of auto parts, casting, forging parts and metal sheets will also participate in Eima Auto Sho w in Bolgna, Italy from 10 to 14 November this year. Aslam said the automobile industry has suffered great financial losses due to unprecedented floods in the country. “Transport infrastructure has been destroyed and the manufactures had to AUTOMARK | September-2010 21
pay exorbitant inland freight charges for transportation of their raw material and manufactured engineering goods”, he said. He regretted that government has not implemented its decision to pay rebate to the manufacturers on inland freight charges of manufactured goods for export purposes. He added that PAAPAM members are assessing their losses during July-August due to super floods, which are still wreaking havoc in lower Sindh.—Agencies
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Economic Update
Pakistan likely to enter new IMF programme: report A foreign bank has said Pakistan would request the IMF for further assistance after the conclusion of the current loan program. “Pakistan is expected to enter into a new IMF loan at the end of the current standby arrang emen t (SBA) facilit y in December, giving balance of payment support in the medium term,” said Standard Chartered Bank in its half yearly 2010 report. Pakistan had requested the IMF for emergency assistance in November 2008 on worst economic conditions following political instability, energy crisis, deteriorating security situation and global recession. IMF approved $7.6 billion for 23-month SBA as si stan ce, which wa s later enhanced to $11.3 billion in August 2009. The report said reconstruction and rehabilitation of flood affected areas and
communities will be the key challenge ahead for policy makers. “Significant fiscal reforms are expected to be carried out, including tax reforms and power sector reforms, to limit the build-up in public debt and create fiscal space for reconstruction spending,” the
AUTOMARK | September-2010 22
report added. The bank said large external support from the IMF and other international financial institutions will be critical to cushion the impact of floods. The IMF recently announced a $450 million emergency loan program for Pakistan to hel p flood victims and rehabilitate economic life in flood-hit areas. The report pointed out that large foreign aid commitments from the World Bank and Asian Development Bank would provide further support to the national economy. “Pakistan is a key partner of the US and NATO forces in Afghanistan and will continue to benefit from large aid flows, including the $7.5 billion aid plan a n n o u n ce d b y t h e O b a m a administration for Pakistan over the n ext five years, ” the report said. Pakistan’s economy has gone through a phase of difficult political and economic reforms over the last two years. Aimed at bringing greater stability to the economy, significant progress has been made under the $11.3 billion IMF loan and successful implementation of key reforms has helped to tackle inflation, build up forex reserves and restore investor confidence. The economy is showing signs of recovery, growing at 4.1 percent in FY10, the fastest pace in the last three years, the report said. “However, recent floods have caused mas sive damage t o the econ omy, t hreateni ng to derai l t he growth momentum,” Stan dard Chartered Bank’s report said. The scale of devastation is large, with 20 million people displaced. The immense damage sustained by roads, power infrastructure and houses is expected to be clo se to $15 billion. The report said inflation is anticipated to rise sharply due to the loss of sugar and rice crops, and also because of a breakdown in transport infrastructure disrupting the supply of essential food commodities.
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Oil & Gas Sector - Update
Ogra sees no gas price hike till June 2011 Oil and Gas Regulatory Authority (Ogra) anticipates that the government would not increase the prices of gas for commercial as w ell a s domestic consumers till June 2011. Ogra Chairman Tariq Sadiq informed the National Assembly's Standing Committee that the authority sees no change in gas prices in the country till the end of 2010-2011. "According to our calculations there will be no gas price rise unless there is surge in crude oil prices up to $145 per barrel," he said. He briefed the committee that during current year, consumers will have to face acute gas loadshedding especially in winter. During this period the demand will in crea se by 6266 mmcfd w hi le indigenous supplies would remain 4984 mmcfd. This shows a shortfall of around 1300 mmcfd in coming winter. "The deficit may be reduced to 1182 mmcfd if LNG and gas is imported from the Iran," he added. It has also been learnt that major portion of gas is consumed by energy sector (31.8 percent), general industry second on list (25.1 percent) and domestic consumer stand third (16.9 percent). It has been further stated that the cost of gas has increased by 136 percent as compared to fiscal year 2001-02, since
it is an uncontrollable factor. It has been linked with international prices of crude oil and HSFO, determined as per GPAs executed between gas producers and the federal government. The committee criticised Ogra for giving dual charge of office to Member Finance. Wi t h so r tin g ou t th e fin an cial im plica tion s, h e h as a lso been authorised to determine CNG prices in the market. Committee member Pervaiz Khan alleged that it violation of the Ogra Ordinance as it did not allow a Member Finance to determine CNG prices. He further criticised Ogra for violating the natural justice. Oil and Gas Authority has assigned the task of listening to complaints and appellant authority to same person. The committee was also informed that in the prices of high speed diesel (HSD) 56 percent surge has been observed since January 1, 2007. Similarly, motor gasoline (MS) prices have gone up by 60 per cen t in t he sam e pe riod. The prices of high octane blended component (HOBC) rose by 59 percent. Fuel for poor (kerosene oil) also shows a surge of 60 percent in the same period. Light Diesel Oil (LDO) prices have also witnessed 59 percent rise.
OGRA reluctant to take action against marketing companies Despite setting new Liquefied Petroleum Gas (LPG) consumer price, Oil and Gas Regulatory Authority seems reluctant t o t ak e a ny a ct ion a gains t LPG marketing compani es, which have allegedly stopped LPG supply and forced the consumers to buy it on sky-scraping rates. Market sources have informed that OGRA seems helpless in front of LPG m a rk et in g c omp a n ie s fo r th e implemen tat ion of its n ew LPG consumer price, as LPG marketing companies have refused to provide LPG on OGRA consumer price from last three days so consumers are forced to buy LPG on previous high-ceilinged rates during the holy month of Ramazan. In a press release , LPG Zonal Standing Committee’s Chairman Muhammad Irfan Khok ar s aid that people are
d e s p er a t e ly w a i t in g fo r t h e implementation of OGRA’s new LPG consumer price. He blamed the LPG marketing companies that have illegally earned more than four hundred rupees extra from one cylinder of LPG and have successfully grabbed Rs 76.5 million in a day so Rs 22.95 billion during one month through improper profiteering. He was of the opinion that ‘gas mafia’ has successfully snatched three hundred billion rupees during last four years which needs suo moto action from the Chief Justice of Pakistan. He further appealed to the President Asif Al i Zardari, Prime Minister Syed Yousuf Raza Gilani and Chief Justice of Pakistan Iftikhar Muhammad Chaudhry to get back this improper profiteering of Rs 4 billion and use this weighty amount on flood affected areas. AUTOMARK | September-2010 23
Producing E-10 gasoline Punjab denies excise duty exemption to PSO
The Punjab government has declined to grant exemption of excise duty and allow procurement of denatured fuel ethanol on zero duty to Pakistan State Oil (PSO) for producing E-10 gasoline, . "We had requested Punjab government on behalf of ethanol producers to grant exemption in duties for producing E-10 gasoline," PSO Managing Director Irfan Qureshi said while talking to press media. The government of Sindh has given exemption of excise duty and allowed procurement of denatured fuel ethanol on zero duty to produce E-10 gasoline to make it economically affordable for consumers. PSO said that the blending of E-10 gasoline in Sindh and selling it in Punjab would increase the Inland Freight Equalization Margin (IFEM), resulting in higher price differential claims (PDC). Director General Excise and Taxation, Punjab had considered and examined request of waiver of excise licence and other legal/procedural formalities for procurement of denatured spirit of blending int o motor gaso li ne but rejected it. "Provincial excise laws neither allows issuance of denatured spirit without prescribed permit nor do provides for exemption from payment of duty except for education, research and defence purposes only," DG Excise said, adding that the department had no objection to the issuance of permits according to the provincial excise laws on payment of prescribed fee and duties.
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Automotive Sector - Update
Rising yen to impact car prices “The government is fully aware of the fact that the economic slowdown and high inflation have resulted in an increase in prices of every commodity and product, including the prices of the imported used cars. But the car prices have not been increased in line with their rising costs. In fact, the prices of some brands have declined,” he claimed.
Car makers may increase their prices to cover the rising costs of imported CKD kits on account of an appreciating yen against the rupee. “The car prices may be raised by up to Rs50,000 a unit to offset the impact of a rising yen and protect our margins,” a director of one of the country’s three Japanese car assemblers media last month. The yen has gained almost 10 per cent against the rupee to rise to Rs1.0037 in three months and 46 per cent in two years making imports fro m Japan dearer. “The imported CKD kits are almost 35 per cent of the total cost of a car. So you can imagine the impact of the 10 per cent increase in the import costs on our prices and margins,” the executive said. He further said the taxes on imports had also increased in line with the rise in the import costs of the kits. Another car assembler contended that the raw materials of the auto industry had also spiked steeply in the past few months putting immense pressure on auto makers worldwide. The price of steel sheet has gone up to $1,050 per ton from $701 at th e
beginning of 2010. Similarly, the price of alumini um primary ing ot has increased from $68 per pound to $108. On the other han d, ho wever, th e government is bringing pressure on the car assemblers to cut their prices to make them affordable for more people. In order to build more pressure on the car makers, the government is believed to be considering a proposal to relax restrictions on the import of used cars under the trans fer of residence (T/R) scheme. “We are in a fix because the government wants us to reduce our car prices at a time w hen imports are becoming costlier, prices of raw materials are going up and our capacity utilisation is down to 55 per cent,” the assembler lamented. The industry sources claim that the government has, in recent times, put pressure on the car makers by giving additional concessions to new entrants in violation of the Auto Indust ry Development Policy formulated with the consent of all the stakeholders. According to a proposal by the federal industries ministry, the government could double the rate of depreciation per month to two per cent on import of used cars. Apart from that, it is also considering to allow import of up to fiveyear old cars instead of three years. “The government is fully aware of the fact that the economic slowdown and high inflation have resulted in an increase in prices of every commodity and product, including the prices of the imported used cars. But the car prices have not been increased in line with their rising costs. AUTOMARK | September-2010 24
In fact, the prices of some brands have declined,” he claimed. It may be noted that Suzuki operated on less that 50 per cent of its installed capacity of 150,000 units during the last financi al year, while Honda with a capacity of 40,000 units could roll out only 13,500 units. Dewan worked at only 12.18 per cent of its 10,000 cars’ capacity. Only Indus Motor could utilise above 77 per cent of its installed capacity of 65,000 units.
Atlas Engineering posts Rs 36.144 million after tax profit Atlas Enginee-ring Limited posted Rs 36.144 million profit after tax in the year ended on June 30, 2010 (FY10) as compared to after tax loss of Rs 47.467 million recorded in FY09. The board of directors of the company in its meeting held her e on Tues day declare d company's earning per share of Rs 1.46 in the period under review against loss per share of Rs 3.33 a year back. According to the financial results sent to Karachi Stock Exchange (KSE), the company's sales increased to Rs 1.529 billion in FY10 against Rs 1.135 billion in FY09. The cost of go ods s old increased to Rs 1.341 billion against Rs 1.070 billion. The company posted Rs 58.062 million as profit before tax in FY10 against before tax loss of Rs 59.274 million in FY09.
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Exclusive Article
by Omar Rashdi
ABS (Anti-lock Braking System)
Because ABS has been popular since the mid-80s, I suppose most of you have already known its theory. Anyway, for the sake of those new joining car enthusiasts, I think it would be better to describe it briefly here. Behind every new technology, there are two main things. Safety & Power. When any company discussing about new features in vehicle, they keep these two things in their mind that they are going to make it safer and more powerful. All new t echnolog ies invented by BOSCH German, then they apply first in Mercedes then it will taken by others automotive companies. BOSCH is the world's largest supplier of automobile com pon en ts , an d h as bu s in es s rel ationshi ps w ith virtual ly every automotive company in the world. Basic theory You might think that optimal braking is implemented by completely locking all the wheels. No, law of physics tells us that the coefficient of friction between the ground surface and a static object is always greater than a moving object. If the tyres are sliding on the road surface, the friction between road and wheel will not be maximum. Therefore, the maximum braking occurs when the wheels are braked up to the level that the wheels just do not slide. To ensure the shortest stopping distance, ABS applies intermittent braking in very high frequency. This avoid complete lock up of wheels, thus gives the name "AntiLock Braking System".
Another advantage of ABS is letting the driver to keep controlling the car during braking. Before ABS appeared, cars lock up during braking, thus unable to be steered to avoid collision. With ABS, while slowing down the car, the driver can simultaneously try to steer away from the obstacle in front. To implement anti-lock braking, ABS system emplo ys speed sensors for individual wheels. If the wheel speed detected differs from the vehicle speed, that means the wheel is sliding, thus the computer will signal the corresponding brake to loose until sliding disappear. The computer will also compare the speed of all wheels, if one or more of them run considerably faster than others, that means the car is losing control, it will apply more brake to that wheel to correct the driving path.
A Brief History Let me share with you the little bit informat ion I gathered. ABS was origi nated in aeroplanes . It was developed in order to shorten the distance necessary for landing. It did not appeared in road cars until 1966, when Jensen FF (the first 4WD road car) installed a system developed by Dunlop. That system, called Maxaret, did not employ computer as well as wheel speed sensors. It just employed electronic sensors to avoid locking the disc brakes. Anyway, road testers immediately found its superiority over conventional brakes. What's next. Sorry, my information becomes incomplete since then. The following is the information bits I got : o BMW applied ABS to its road cars in 1979. Th en motorcycle in 1987. o Bo s ch la un che d t he mode rn computerised ABS in the early 80s. Mercedes and BMW included it as option of their top of the range. o In 1985, Ford Granada Scorpio took it as sta ndard equip ment, while Chevrolet Corvette made it a very common option. As production scale increased, ABS became cheaper and popular. o In the mid-80s, Lucas Girling and AP AUTOMARK | September-2010 25
also developed their low price ABS for cars like Ford Escort and Fiat Uno. Both served only the front wheels. mini cars offer ABS as standard. Significance of ABS Not only enhance braking, ABS sensors, computer and hydraulic pump also serve as the hardwares for Traction Control, Electronic Stability Control and Artificial LSD. If not ABS is so popular, these new technology might not have appeared. Technical Description These are some useful points of ABS. STOMP: Firmly depress the brake pedal. STAY: Stay on the brakes. Don’t pump the brakes! STEER: Steer where you want to go. It is designed to protect passenger in accident. It wouldn’t be nice to a boy that accident in a first place, ABS can help you do just back. It is 4wheel antilock brake system is accident avoidance happen in drive it to brake and steer where he wants to go in a hard braking situation. Its also called anti-skid brake system. In normal brake system when you apply brake, doesn’t allow to turn your vehicle quickly but ABS has this solution. It helps you in any type of weather condition. It applies all wheels to brake to eliminate wheel lockup and optimize control. Remember that just because your vehicle has ABS Doesn’t give a license to drive more aggressively, always keep a safe distance in front of you and maintain a speed consistence with world conditions and always
“Always Wear Your Safety Belt.” Please don’t forget…
Safety is a standard, not an option
About writer: Omar Rashdi D.A.E. (Cont.) St. Patrick’s Technical Institute
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Economic Update
WB sanctions $115m Karachi port project With approval of the Karachi Port Improvement Project, the World Bank hopes to achieve both short and long term goals to ensure a stronger transport system for Pakistan The Board of Directors of the World Bank has endorsed $115.8 million Karachi Port Improvement Project, the financing will help reconstruct the country’s largest port to relieve the capacity constraints and strengthen shipping revenues. Port improvement is a key component of t he Nat ion al Trad e Corridor Improvement Programme (NTCIP), which was initiated by the government in 2005. The financing is an IBRD flexible loan with fixedspread, commitment-linked repayment schedule, level repayments, and 28 years maturity including a grace period of 7.5 years. The World Bank has said that a number of operations have been initiated at the Karac hi p ort to improve overal l efficiency but several areas still requiring reform. “Improving the efficiency of Pakistan’s trade corridors is a key element of the bank’s support to trade facilitation in the country,” said Rachid Benmessaoud, Wo rld Bank Country Di rector for Pakistan. “Karachi Port, as the main international g atewa y, provides a key lin k to internati onal markets and through efficient and cost-effective operations can significantly reduce the cost of doing busi ness in Paki stan ,” he added. This operation will support both the provision of infrastructure capable of handling modern bulk cargo vessels and
the institutional support required to promote international best practice in the management of port facilities.” The Karachi Port Trust (KPT) currently has a substantial development programme, but needs additional financial assistance to improve utilisation of its available resources. Aspects of the development programme include, deepening the channel and harbour to accommodate mother ships, reconstructing old and shallow berths, and investing in cross harbour bridges and cargo villages.
Fina nc e f rom t he Ka ra ch i Port Improvement Project will be used for the reconstruction of old and shallow berths which will reduce ship waiting times and provide the necessary capacity at the Port for long term g rowth. Continued focus on the operational aspects of the port will ensure its long term sustainability and competitiveness both within Pakistan and regionally. The World Bank said that Karachi port has witnessed growth in cargo volumes, and in the fiscal year 2008-09, the limitation in KPT’s general and bulk cargo capacity delayed wheat imports which had serious economic and social r epe rcus s ions for th e cou nt ry . “The berths at the Karachi port are too shallow and illequipped to handle heavy cargo,” said Simon David Ellis, World Bank Task Team Leader and Senior Transport Economist. “Reconstruction of the failed berths is necessary to increase the effectiveness and efficiency of port operations, as well as to enha nc e its environmenta l sustainability.”The bank has been active in the port of Karachi since 1955. It has supported six projects to date with the la s t be in g t h e K a r a ch i P or t Modernisation project during 1991-1998. With approval of the Karachi Port Improvement Project, the World Bank hopes to achieve both short and long term goals to ensure a stronger transport system for Pakistan.
Bridgestone Group Supports Flood Relief Efforts in Pakistan –Approximately 5.1 million yen to be contributed to help victims– To ky o (S e pt e mb e r 1 , 20 1 0)— Bridgestone Corporation announced today that it will donate 2 million yen through the Japanese Red Cross Society to assist with relief efforts following the July flood in Pakistan. Additionally, Bridgestone Asia Pacific
Pte. Ltd., a subsidiary of the Bridgestone Corporation, wi ll donat e 50, 000 Singapore dollars, equivalent to 3.1 million yen, through the Singapore Red Cross Society. On behalf of the global Bridgestone Group, we would like to express our sincere condolences to those who have lost loved ones as a result of this tragedy, AUTOMARK | September-2010 26
and offer our wishes for a rapid recovery in the areas devastated by this disaster. * Bridgestone has conducted tire sales business for more than 50 years in Pakistan. Source: http://www.bridgestone.com/corpora te/news/2010090102.html - Press Release
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Exclusive Report
by Automark research team
Lubricant Industry hit by Iranian smuggled lubricant, illegal blending and glut of sub-standard lubricants Lube base oil (LBO), a main raw material used in the making of lubricating oils/greases, is solely produced by the NRL having maximum LBO production capacity of 190,000 tons per annum. This quantity of LBO is only sufficient for producing 200,000 tons to finished lubricating oils and greases
The local markets are now flooded with hug e presenc e of various foreign lubricants and even many varieties like loose and motorcycle oil are being sold on the footpaths by a number of people. A consumer is more interested in the prices rather than knowing the source of lubricants’ arrival either through legal or illegal channels. The prices of locally produced lubrican ts are definitely slightly higher than the imported or smuggled lubricants. Ho wever, the devaluation of the rupee against the dollar has made imports costlier in the last one year as one dollar is now equal to over Rs 84 as compared to Rs 63 last year. Besides rising crude oil prices have also made an impact of locally produced oil products. As far as quality of locally produced and foreign lubricants are concerned, there might be a slight or big difference but surging cost of living in view of high prices of food items and burgeoning inc rease in the tariff of gas and electricity, many people prefer low priced lubricants irrespective of their
quality and damage to their machineries. For example, a lubricant pack of 700ml of two-wheeler is priced between Rs 160-210 while imported or smuggled varieties can be purchased at with a cut of Rs 10-20 per pack. Caltex Havoline Formula petrol engine oil (four litre and three litre) are now priced at Rs 1,542 and Rs 1,156 as compared to Rs 1,480 and Rs 1,110 in December 2008. Havoline CNG oil four and three litre are now selling at Rs 1,254 and Rs 940 as compared to Rs 1,212 and Rs 909 in
December 2008 respectively. Delo diesel oil 10 litre pack now sells at Rs 3,420 as compared to Rs3,320 a year back. Prices of car and heavy vehicle lubricants have also surged sharply in the last one and a half years. Smu ggled, fa ke an d low qua li ty lubricants severely damage the engine life besides depriving the government’s from getting revenues. The prices of locally produced lubricants have gone up in the last two years which force many people to buy low priced and quality lubricants. The local lube industry is facing problems like huge inflow of Iranian smuggled lubricants, illegal blending and glut of sub-standard lubricants in the markets. The lubricating oil and g rease deman d in the count ry is estimated at 392,000 tons and 20,000 tons per annum. Th e local lubr ica nt ind us try is contributing an estimated sum of Rs six billion in the heads of federal excise duty and general sales tax. Other direct taxes by the individual units are additional
On the recommendation of the Association the FBR had increased the customs duty on the commercial import of carbon oil but the same is still being imported through mis-declaration which should be controlled by the FBR. Similarly, import of LBO as well as used lubricating oil should only be allowed to registered lubricant manufacturing industry and it should not be importable for commercial purpose. AUTOMARK | September-2010 27
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Exclusive Report
Ministry of Petroleum and Natural Resources which is the only authority to grant permission for production of lubricants under Pakistan Petroleum and Refining Rules 1971. However, there are number of illegal producers who had succeeded to obtain L-1 license from Central Excise and Sales Tax Department by taking advantage of lacunae in the law and do not have registration/permission from the Petroleum Ministry.
source of national exchequer besides providing jobs to 0.3 million people. Lube base oil (LBO), a main raw material used in the maki ng of lubricating oils/greases, is solely produced by the National Refinery Limited (NRL) having maximum LBO production capacity of 190,000 tons per annum. This quantity of LBO is only sufficient for producing 200,000 tons to finished lubricating oils and greases. Around 5,000-10,000 tons of reclaimed oil is also produced by registered reclamation plants. As such the deficit 182,000 tons has to be met through imports of LBO, finished lubricating oils, greases and reclamation of used lubricating oil up to optimum level. It is estimated that regular imports of LBO, finished lubricating oils and greases are around 30,000-40,000 tons per annum whereas the rest of some 1 40, 000 t on s is being from the smuggling via Iran, fake lubricants in the shape of carbon oil, synthetic rubber a nd lig ht dies el oil cont raption, substandard refined lubricating oil being made in Karachi and fake and sub standard grease. Chairman Al l Pakistan Lubricants Manufacturing Association (APLMA), Mian Zahid Hussain said that the above situation is a threat to lubricant makers and fake lubricants are damaging the precious automotive and industrial machineries. The above mentioned menac e has two reasons which are shortage of raw material i.e. LBO and used lubricating oil which is required for reclamation plants for reclamation and monetary benefit vested in illegal business. He said the menace could be tackled by eliminating the shortage of raw material i.e. LBO and used lubricant oil to the registered blending/reclamation plants and curtailing the monetary benefits vested in illegal business. To eradicate the shortage of raw material , the Association has suggested following steps like abolishing the customs duty on the import of LBO which at present is 25 per cent. Due to impact of customs duty the imported LBO costs expensive at Rs six to seven per litre as compared
to National Refinery’s price. As a result, the import of LBO is not practical. To eliminate 25 per cent customs duty and FED at Rs 7.15 per litre from the imp ort of u sed lubr ica tin g oil. In order to curb the nuisance of fake, and ill-refined lubricating oil/greases, Mian Zahid suggested monetary steps as in this way the national industry would be able to compete with cheaper smuggled and fake lubricating oil. The monetary steps are: FED of Rs 7.15 per litre on the import of LBO should be abolished. FED of Rs 7.15 pr litre on the NRL produced LBO should also be abolished. FED of Rs 2.00 per litre from reclaimed lubricating should be totally abolished. FED on finished product i.e. lubricating oil should be aboli shed instead of 10 per cent of retail price. Lube additives/chemicals are main raw material and not produced in Pakistan therefore five per cent customs duty on the import of these should be abolished. FED on locally manufactured greases as well as FED and customs duty on the import of grea se sh ould a lso be abolished. Withholding tax chargeable at 3.5 per cent under section 153 of the Income Tax Ordinance 2001 on the supplies may also be abolished as this is an element of increasing the cost of packing material etc which ultimately results into higher prices of lubricants. To control the menace of sub standard lubricating oils and greas es some administrative measures are required such as: Sales tax registration s to lubricant manufacturing units should be subjected to prior registration from the OGRA. This is also a mandatory requirement under Pakistan Petroleum Refinery Rules 1971, which is not being implemented. Sales tax registrations issued already to the lubricating units should be revoked immediately from those who do not posses valid registration under Pakistan Pet roleu m Refiner y Rules 1 971 . Another prime source of sub-standard lubricants is carbon oil which is mixed with synthetic rubber , LDO and other oils. Carbon oil is a basic raw material for producing carbon black and this is only one industry which is converting AUTOMARK | September-2010 28
carbon oil into carbon black i.e. National Petrocarbon Limited. Hence the import of carbon oil for commercial purpose should not be allowed rather it can only be importable by the relevant user for b on a -f id e in d us t r ia l p u rp os e . O n t he recommen dat ion of t he Association the FBR had increased the customs duty on the commercial import of carbon oil but the same is still being imported through mis-declaration which should be controlled by the FBR. Similarly, import of LBO as well as used lubricating oil should only be allowed to registered lubricant manufacturing industry and it should not be importable for commercial purpose. By doing so, illegal lubricant manufacturers will be discouraged and there are 50 factories duly sanctioned/regi stered by the Ministry of Petroleum and Natural Resources which is the only authority to grant permission for production of lubricants under Pakistan Petroleum and Refining Rules 1971. However, there are number of illegal producers who had succeeded to obtain L-1 license from C en t ra l E x cis e an d S al e s Ta x Department by taking advantage of lacunae in the law and do not have regi stra tion/permis sion from the Petroleum Ministry. Mian Zahid said that by adopting above mentioned fiscal and administrative measures the national industry could flourish and also be able to fill the gap of demand and supply by providing quality lubricant. The industry could be able to export the finished lubricants in the world markets just like UAE where lube industry is exporting fini shed products to around 60 countries. UAE has no lube refinery rather it imports base oil from international market. He said suggesting above proposals, the As soc iation h as kept in mind the revenue of the government which should n ot be r edu ced . Rev en ue los s apprehended due to elimination of custom duties and federal excise duty as suggested above will be recoverable through sales tax as the aforesaid out of 140,000 tons per annum would be sold through channel.....
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International Automotive Sector
Automotive sales in Saudi Arabia to hit over SAR 69 billion in 2010 Industry pundits expect Saudi Arabia to remain generally impervious to the effects of the global downturn as a range of demographic factors and the country's financial stability help cushion any negative impact on the automotive sector. Increasing lending facilities support growth as car loans account for up to 70 per cent of car sales Automotive sales in the Kingdom of Saudi Arabia (KSA) is expected to reach over SAR 69.4 billion in 2010, while there will be a 30 per cent growth in the number of vehicles sold from 676,000 to 880,000 within the next three years, according to a recent BMI report. A factor in the robust market growth is inc reas ed av ailabili ty of len din g facilities, with car loans expected to account for up to 70 per cent of car sales, up from 50 per cent. Taking advantage of the industry's robust growth forecast, Riyadh Motor Show 2010 - The 28th International Exhibition for Motor Vehicles, and Saudi Autoshop 2010 - The 14th International Exhibition for Auto Repair Equipment, Tools, Parts and Ac cessories, will showcase the latest models, accessories and specialised automotive services from leading international brands. Riyadh Motor Show and Saudi Autoshop will be concurrently held from December 5 to 9, 2010 (29 Dhu al Hijjah 1431 till 3 Muh arra m 14 32) at t he Riya dh International Convention & Exhibition Centre, expecting to attract over 85,000 visi tors fro m al l over t he world. Kamil Al Jawhari, Project Manager of Riya dh Mot or Sh ow at Riyad h Exh ibit ions Compa ny, said: "The favourable economic conditions have helped consolidate Saudi Arabia's reput ation a s a hi ghly att ract ive automotive market. Moreover, there w ere s ever al oth er fa ct ors tha t
contributed to the encouraging auto sales growth in 2010, including the imposed restrictions on the age of imported u sed veh icles an d the population growth in the country, which has helped spark the increase in demand for vehicles and auto parts and services. In addition, the local weather condition, which can be harsh on vehicles, has also been a factor in the steady demand for auto maintenance services." Industry pundits expect Saudi Arabia to remain generally impervious to the effects of the global downturn as a range of demographic factors and the country's financial stability help cushion any negative impact on the automotive sector. Factors such as strong population growth of up to 3 per cent annually, high disposable income, low tariffs on imported cars and low fuel cost are
boosting the automotive sector's growth prospects, even as up to 60 per cent of the country's population comprise the 16 to 64 age bracket, which is within the industry's market range. Riyadh Motor Show 2010 will showcase the latest models of passenger cars, station wagons, Sports Utility Vehicles (SUV), pick-up trucks, motorcycles, Special Purpose Vehicles, and 4x4 vehicles. It will also include automobile fin ancing and insurance services. Saudi Autoshop 2010, which is held concurrently, will feature the latest automobile accessories an d repair s erv ice equ ip men t; g as st at ion equipment; automobile parts; tires, exhausts and batteries; and automobile care products.....
Riyadh Motor Show 2010 will showcase the latest models of passenger cars, station wagons, Sports Utility Vehicles (SUV), pick-up trucks, motorcycles, Special Purpose Vehicles, and 4x4 vehicles. It will also include automobile financing and insurance services. AUTOMARK | September-2010 33
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Alternative Energy - Update
Thar Coal Gasification Project shelved
The federal government has shelved 'Thar Coal Gasification Project,' terming it technically unfeasible, which had also sparked controversy between federal an d S ind h g ov er n men t s . " The experiences of coal gasification in India as well as China have already failed and therefore it is not technically feasible," Saleem Mandviwalla, Chairman, Board of Investment (BoI), said while talking to press. He said that Pakistan is yet at mining stage where coal gasification is not po s s ib le t h is t im e. P la n n in g Commission, which is not an executing agency, had conceived a pilot project of 'Thar Coal Gasification', which created differences between federal and Sindh governments. Sources said that Sindh government had strongly resisted and warned Planning Commission not to table it again on the age nda of Cent ral Dev elop ment Working Party (CDWP) of Planning Commission for consideration. They said that after resistanc e by Sindh government, the Planning Commission had said that the scope of the project
had been broadened to include other coal deposit areas of the economy and there was a need to modify the title and scope of the project. Subsequently, the Planning Commission changed the title of the project and renamed it as 'Cr eation of New Processing Facilities (for handling and purification of Coal Ga s (HPCG) produ ced by u nd erg roun d C oal Gasifica tion in an y Coal field in Pakistan'. In the modified PC-1 of the project, it
Pakistan’s Thar Coal Reserves Are More Than Oil Reserves Of Saudia & Iran AUTOMARK | September-2010 35
was proposed that the sco pe of the project would not be limited to district Tharparkar and be broadened to cover coal deposits in other areas so that other coal depos its of Pun jab, NWF P, Balochistan, FATA, NA and AJK can be explored. Sindh had also questioned the role of the Planning Commission as execu tin g a genc y of th e project. The project, titled 'Creation of New Processing Facilities (for handling and purification of Coal Ga s (HPCG) prod uced b y un der gr ou n d coa l gasification' was approved in the CDWP meeting held on April 30, 2009. The aim of the project was to create new processing facility for handling and purification of coal gas produced by underground coal gasification located in Tharparkar Sindh. The proposed modif icat ions in t he tit le a nd location/scope of the project were approved and PC-1 would be modified accordingly. Total cost of the project is Rs 490.480 million including foreign exchange component of Rs 79.700 million…
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International Automotive - Update
Honda in talks to sell Hero stake to Munjals
A person close to the development said Honda and its Indian partner, the BM Munjal-owned Hero group, are discussing a formula that would enable the Japanese firm to sell its shares at a discount Japan’s Honda is believed to be in talks to sell its 26% stake in Hero Honda Motors, the enormously successful, 26year-old joint venture responsible for trans forming the loc al motorcycle in dustr y an d s purring an ent ire generation of Indians to take to biking. A person close to the development said Honda and its Indian partner, the BM Mu nj a l- own ed He ro g roup , are discussing a formula that would enable the Japanese firm to sell its shares at a discount. A Munjal family company will purchase most of the shares with some help from private equity firms, he added. The news, broken first by ET NOW, this newspaper’s business channel, drove down the shares of Hero Honda in the market on Tuesday as investors worried over the impact the separation will have on India’s largest motorcycle maker. The management of both the companies, though, strongly denied it. A Honda Motors spokesman told Bloomberg News that the company had no plans to sell. A statement issued by the Hero group said it has enjoyed very cordial and fruitful relations’ with Honda and there is no change in the relationship in any ma nner. A t op Hero Ho nda executive said ‘stake sale was not even on the table’, though he added that discussions between the two partners centred around securing the future of the joint venture. Hero Honda shares slumped 6.8% before the denials triggered a pull-back. The shares ended down just 0.11% at Rs 1,790. But the person with the direct knowledge of the situation said talks are on and the Munjal-owned company incorporated overseas will buy the shares from Honda and take the Hero group’s stake in the motorcycle firm to 52%. At current market price, the 26% stake is being valued at Rs 9,293 crore, or $2 billion, but this person said the Hero
group, which has the right of first refusal over Honda’s shares, is likely to pay at a disco unt as part of an amicable settlement. He added that the Hero group will raise money from private equity investors in the new company after the first leg of the transaction, giving them an indirect stake in Hero Honda. Discussions are on with three private equity firms and this new holding company will be valued on the basis of its 26% in Hero Honda, the person added. Other combinations, such as a direct sale by Honda to a private equity firm, are also being discussed, but no details were available. A senior auto industry veteran, however, said Honda and the Hero group have been sparring over some key issues such as royalty and spare parts purchases for some time now. Honda wants to increase its royalty from the sales of the joint venture but has been unable to do so because bulk of the sales, about 60%, are contributed by Splendor and Passion, two old bikes. Honda also wants the Hero group to route all spare part purchases through Honda Motorcycles and Scooters India, (HMSI), which the Hero group has been resisting for a long time. “This could be Honda’s way of getting the Hero group to the negotiating table,” he added. The Hero group and Honda came together in 1984 to buil d and sell motorbikes in the country and their AUTOMARK | September-2010 36
venture was an instant hit. A consumer boom trig gered by former prime minister Rajiv Gandhi ’s econo mic reforms and the success of another IndoJapanese joint venture, Maruti Suzuki, quickly propelled Hero Honda to the top of the sales charts. Its cleverly-worded, catchy slogan, Fill it, Shut it, Forget it’ focused on the Indian consumer’s concern for mileage and r eliabil ity , helpin g s hut out competition completely. Very soon, Honda was selling more bikes than Bajaj Auto’ s scooters, despite the latter’s decades-old headstart. A separation at India’s largest motorcycle maker, if true, wil l have large implications for the com pa ny a nd it s s ha reh older s. Hero Honda has spent the last few months trying to stare down the threat from a resurgent Bajaj Auto, and a shareholder squabble and split will divert attention at a very crucial time. The second issue relates to access to techno logy. Ho nda has shouldered much of the burden, though the Hero grou p’s ma rket in g a cu men a nd knowledge of the consumer has also played a big role in the company’s success. “For the next three years, Hero Honda will not have any problem as it will have technology commitment. But what will happen after that is yet to be seen,” Ramdeo Agarwal, managing director of brokerage firm Motilal Oswal Securities, said. The current technology agreement between the two companies is due to expire in 2014. “This development can have two major impacts. What will happen to Hero Honda’s new product line after three years when the current technology contract ends? Second, it will result in a far more aggressive HMSI,” said a seni or auto analyst wi th a foreign securities firm.....
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Automotive - Article
For sheer drive Career in automotives For automotive engineers, a special one-year course is also designed by foreign employers. If our engineers pass this course, they can be hired by employers in the West. But the place where auto industry really values Pakistani professionals is Middle East where one can see many Pakistanis working in auto manufacturing firms. To own a flashy brand-new car is the dream of millions in this developing country, but to opt for a career in automobile industry is a different thing altogether. Professionals who want to pursue a career in auto industry must have an aptitude towards this field since it takes an inborn understanding and interest towards vehicles to be an automotive engineer. Automotive and related industries are the biggest investors after chemical industries in the international trade. Pakistan also witnessed tremendous growth in automotive industry in recent y ea rs s inc e th e p riv at e s e ct or investments are facilitated by supportive policies of government. Unfortunately, t h e ed uca t ion a l se ctor in th is department is in its developing phase, and will take a while before it finds its feet. “NED University of Engineering and Techno logy is the only un iversity p roviding ba ch elor-lev el deg ree programme in automotive engineering,” said chairman, automotive and marine e ng in ee rin g dep a rt men t , NED. NED started this programme two years ago and their first batch will graduate in 2010, said Hamid, adding that the
National University of Science and Technology (NUST) is also planning to develop an automotive engineering department in the coming years. While discussing the admission criteria for the newly-established department, Hamid explained, “At present there are 50 seats in automotive engineering section. Students who have completed HSC in pre-engineering or those with foreign degrees are allowed to apply for the programme.” Regarding the career prospects for automotive engineers in Pakistan, H am id is n ot ver y op t im ist ic. “Automotive engineering is a sub-field of mechanical engineering and not fully developed at academic level in our country.” No surprise then, that reputed firms p refer to h ir e mecha ni ca l engineers. In fact, Hamid is not very confident if the very first batch of automotive engineers will be able to replace mechanical engineers in this industry. However, he added that the reputed auto-manufacturing companies like Suzuki, Toyota, Honda, Nissan as well as auto-parts manufacturing firms can offer a huge scope for auto-engineers in future, where at present mechanical engineers are working.
AUTOMARK | July-2010
37
Ho wever, if for some reason, auto professionals do not find a suitable career in automobile industry, they can always switch to other industries that include machinery-related tasks, such as textile industry, sugar mills, etc. While talking about career possibilities of auto-engineers abroad, He added that there is a huge scope for auto-related careers in Middle East for Pakistanis, but not in Europe and America since the employers there do not accept Pakistani degrees. But if a Pakistani graduate holding a BE degree in automotive engineering gets enrolled in a masters programme in any European or American university, he will find it easy to start a career there. For automotive engineers, a special oneyear course is also designed by foreign employers. If our engineers pass this course, they can be hired by employers in the West. But the place where auto ind ust ry rea ll y val ues Pa kis tan i professionals is Middle East where one can see many Pakistanis working in auto manufacturing firms. Auto industry provides a variety of career options from desig ning t o manufacturing and quality assurance to m ar ket in g an d m an a ge men t . .. .
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September-2010
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Alternative Energy update
Greenspace Leveraging NASA far a Greener Earth rese arc h an d de vel o pmen t, microsatellites with algae in space, algae from extreme environments, and algae communities research.
Clean Energy Res ear ch ers a t NASA Ames are conducting cutting-edge research in the de v elo pm e n t of c lea n en e rg y technologies for NASA mission needs in the Exploration Systems Mission Directorate and the Science Mission Directorate. Our renewable energy focus is on advancing biofuels, solar, and wind technologies that also help reduce our nation’s dependence on petroleumbased fuels. By advancing clean energy technologies, NASA Ames hopes to help our nation reduce its generation of gre enh ous e g as es a nd cre ate a sustainable future here on Earth.
Biofuels Biofuels may provide a means to generate and store energy for NASA’s long-term human ha bitation and exploration missions. NASA Ames is conducting research on biofuels from both algae and waste biomass. Algae can be grown as a crop that is very high in oil content; waste biomass is envisioned as a elegant means of extracting energy from waste materials. Biofuels also ben efit us h ere on Ea rt h as a transportation fuel that reduces our dependence on foreign oil and mitigates the generation of greenhous e gas emissions.
The Cellulosic Biofuels Team is focused on bioengineering techniques that can improve the efficiency of digestion enzymes, investigating lipid ex t r ac ti on a n d a n a ly s es , a n d rosettazymes research to improve the cellulose-to-glucose-to-fuels process. The team issued a press release on July 31, 2009 describing their current research. The Systems Engineering group develops and analyzes requirements for comp lex s ys t e ms wi th un iq ue capabilities to technically integrate component processes into a single s y s t em a n d a s s e s s p o t en t ia l sustainability and ecosystem impacts. Solar Energy Solar energy is the primary source of power for today’s NASA missions. New solar technologies can improve spacebased energy systems for human and robotic spacecraft missions. NASA solar technologies demand that deployed solar energy systems be as efficient and as lightweight as possible. Researchers at
NASA Ames are pushing the limits of solar energy efficiency and weight by creating new materials that enhance solar energy system performance. Our t ec h n olo g ie s fo r s pa c e -b as ed applications also provide Earth-based benefits, helping to drive down the cost of solar energy with more effici ent systems.
Wind Energy Aeronautics research, including the aerodynamics of air flow over turbines, is one of the signature areas of research for NASA Ames. NASA Ames maintains several different wind tunnels of varying sizes used to predict the performance of new prototype designs of rotocraft a n d o t h e r e q u ip m e n t w h e re aerodynamics is a critical component. With deep skills in modeling and design, our researchers can apply their expertise and facilities to wind power applications to create more efficient wind power systems.
• Wind Tunnels • R o t o r c r a f t Ac o u s t ic s / A er oa c ou s t ic s • C om p u t a t io n a l F lu id Dynamics • Fluid Mechanics
The Algal Biofuels Team is centered around expertise in algal strain selection, gr ow t h , ch a ra ct e riza t io n, an d monitoring, including photobioreactor AUTOMARK | September-2010 39
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Focus on Flood Tax
Economists, importers oppose flood tax The government’s plan to impose a five per cent flood relief surcharge has been strongly opposed by importers and economists, who say the tax will not only hurt all major sectors of the economy but will also increase prices of essential items. The government is considering levying a special surcharge, endorsed by the International Monetary Fund, on all dutiable items, including essential ones, at a rate of five per cent. According to a study carried out by the ministry of finance, if the surcharge on dutiable imports is levi ed from Oc tober 1 onwards, it would generate an additional Rs74.1 billion till June 30 next year. “The most worrisome aspect of the five per cent additional tax on dutiable imports is its significant inflationary impa ct ,” s ai d Dr H afeez Pa sha , Chairman Revenue Advisory Council a nd form er mini st er of f in ance. According to calculations conducted by the ministry of finance, inflation may shoot to 25 per cent in coming months due to disruptions in the supply chain of necessities and soaring demand for construction material. This study does not include the impact of five per cent surcharge. “The econo my does not have the strength to bear the burden of another surcharge. It would be very bad for the economy,” added Dr Pasha. “What the government should do is to exempt essential items like fertiliser, wheat, pulses, petroleum products, edible oil and medic ines from this s p ecia l su r cha r ge , ” h e a dd ed . Dr Pasha also said that the surcharge would adversely impact importers of raw material. However, it will provide protection to an industry that sells finished products as the surcharge will make imports expensive and provide an edge to the local industry. Presently, the average import duty rate is 11 per cent which would increase to 16 per cent after the surcharge and may severely affect inflation. The government would collect an additional $500 million
on only petroleum products as the annual import bill hovers around $10 billion. The flood surcharge would immediately increase petroleum product prices by at least 10 per cent as the price will be calculated by taking into account all payable duties. Dr Pasha criticised the government policy of collecting money by levying an additional surcharge. “The federal and provincial governments should cut their development budgets by 25 per cent as this move alone could save over Rs150 billion, which is much more than the expected revenue from the flood relief surcharge.” In addition to impo rting advanced mac hinery, Paki stan also imports various raw materials, reprocesses them in local industries and then exports finished products. The raw materials which Pakistan imports, utilises and then exports mainly include raw cotton, synthetic fibre, silk yarn, fertiliser, insecticide, plastic material, iron and steel, scrap and other chemical products. The range of raw ma ter ia ls sh ows h ow broa dly a surcharge would affect consumers across different sectors. “Any move to slap a special flood surcharge will negatively affect the textile and engineering industries the most,” says Sultan Burk, an individual who imports zinc as raw material. Burk said that if the government levies this surcharge, it would become very difficult for him to run his factory. He added that in such a case he would prefer to import the finished products from China, as those would be cheaper than producin g the go ods locally. The business community wants to help the flood victims but has shied away from g ivin g money th rough t he AUTOMARK | September-2010 40
go vernment. It is sc eptical of the transparent use of money and worried about any neg ative impact of the surcharge on the industry. Islamabad Chamber of Commerce and Industry Chairman Zahid Maqbool also opposed the idea of levying any form of flood surcharge on imports. “Any such move would fuel inflation and above all no one was sure about the fair use of money,” he said. Instead, he suggested the idea that the government could levy a fixed surcharge of up to Rs2,000 on services rendered by the state. “In order to ensure transparency the amount should be pooled in a flood relief fund so that it ca n be d uly a ud it ed, ” he sa id . All Pakistan Car Dealers Chairman HM Shahzad is currently operating a relief camp in a remote Sindh town but he is reluctant to donate money through the government. In addition to transparency issues, he was also apprehensive about the fallout of the surcharge on the import of used cars. “Since 2008, import duties on cars have increased dramatically by 265 per cent and the likely imposition of 5 per cent flood surcharge would actually result in a 25 per cent increase in prices of cars as the price would be charged after ca lcula tin g al l imp ort du tie s. ” Shahzad said that the surcharge would also result in shrinking car imports and would also strengthen the position of local car manufacturers who will find more avenues to exploit consumers. “The government is not working in areas where it can actually get more money,” he said, adding that instead of slapping the surcharge at the import stage the government should think of increasing road vehicle tax and registration fee for new cars. However, Planning Commission Deputy Chairman Dr Nadeem ul Haq remained a strong propon ent of the flood s urcharg e. He sa id th at people, irrespective of their affiliations, should come out to help their countrymen. He said that the surcharge would not affect the industry much.
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Automotive Technology - Update
Car start-ups talk technology The five vehicles that made an appearance at the showcase demonstrated technology ranging from the standard combustion engine to fully electric and solar-powered systems. Rep re se nt at ive s fr om s ix loca l automotive companies and development teams came together at the Center for Automot ive Research at Stan ford (CARS) last month to show off their prototype vehicles at the annual Vehicle Concept Showcase. In a question-andanswer session led by CARS director Sven Beiker, a lecturer in mechanical engineering, the teams discussed the innovative technology that makes their cars unique and said they hope to inspire major car manufacturers to take notice. The center invited four teams in its extended network, as well as two of its own student-run projects, to speak in the hope of giving visibility to alternative vehi cl es that mig ht ot herwise go unnoticed. The five vehicles that made a n ap pear an ce at t he s ho wc a se demonstrated technology ranging from the standard combustion engine to fully electric and solar-powered systems. Silicon Valley may not call to mind the same images of car manufacturing that Detroit does, but according to the teams that have made their home here, the valley has benefits that Motown does not offer. As the industry moves further away from gasoline-powered vehicles and toward electric cars, it is more useful f or th em t o be clos er t o th e manufacturers of the chips that gave the valley its name. “The Silicon Valley has a lot to offer in terms of innovation and self-starters and just a can -do at titude,” said Christopher Heiser, the co-founder of a local automotive start-up. “But there’s a lot to learn, and this is really an opportunity for all of us to really work
together and innovate.” The move to Silico n Valley has also helped these businesses reach out to Stanford students and alumni. Stanford students contributed not only to the two all-student teams, but to other projects at the showcase, too. Dante Zeviar, the chief technology officer of KleenSpeed, whose racecar placed first this year at the Refresh race for electric vehicles, said that having students on the team is one of their priorities. “[We] are about knowledge and learning, so in that spirit, I like to bring in interns and people from universities,” Zeviar said. “My objective in life is to bring in young people, the next generation. The world is full of young people, and I’m starting to get a little old. So the purpose is to bring in very smart individuals and get them involved.” Although some of those who presented
hope to commercialize their products within the next year, others, such as KleenSpeed and Optimotive, hope to use the data they’ve collected and the new techniques they’ve produced as a springboard for the future. KleenSpeed even hopes to take what it has learned from race cars and apply it to a more familiar car, the Mazda Miata, so the company can further its knowledge of how electric vehicles might function in different scenarios. One go al of the event is for such knowledge to filter back to Motor City, where the big car manufacturers would be able ensure much more widespread use. “We want to reach out to the start-ups in the area to give them visibility they won’t get otherwise, but we also want to get the incumbents inspired,” Beiker said...
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International Automotive - Update
Honda Motorcycle India Gets VFR1200F
Honda Motorcycle & Scooter India Pvt. Ltd. (HMSI), the 100% owned 2-wheeler s ubs id ia ry of t he H on da Motor Company Japan launched the long awaited new Sport Touring motorcycle, the VFR1200F, on Aug. 10th, 2010. Mr. Shinji Aoyama (President & CEO, Honda Motorcycle & Scooter India Pvt. Ltd) says: "VFR1200F is a combination of sports and touring capabilities to premium Indian customers who are actively on a look out for brands that have a high ‘FUN' quotient." "This fun bike is manufactured at the Ho nda's most advanced facility & mother plant of global motorcycles - The Kumamoto factory Japan. VFR1200F is a concept driven by extensive customer needs & adoption of state-of-the-art technologies." A truly international design team on the VFR1200F aimed at creating an exciting sports bike with long distance touring capabilit ies. There s tarting point according to Honda: "imagine deciding, impulsively, to ride 300 km, devouring highways and twisty canyon roads, just to enjoy lunch at a perfect location and then head back home."
With this inspiration came forward the first sketches of this dream fun bike. Many a refinement and passionate exchanges later, VFR1200F translated from a dreamy sketch to its fascinating self that made a big splash in the more mature USA and European motorcycle markets. The Indian market will no w get to experience the VFR 1237cc fuel injected, liquid cooled, compact V4 engine. Famous for its unique pulse feel, the V4 engine offers manageability, strong torque delivery and produces more than 9 0% of it s m ax i mu m t or q ue (129Nm/8,75 0 rpm) at 4000 rpm. The Honda VFR1200F is a bike of many technological firsts. Successor to the lege ndar y V FR800 and H on da' s CBR1100XX Super Blackbird in India, this is the first motorcycle with Honda's revolutionary Dual Clutch Transmission (DCT) technology. Th e rad ica l en gi n eerin g of t he remarkably narrow cylinder heads and cyli nder s pacing lend more mass centralization and rider comfort; while the ergonomically designed layered fairing technology claims to provide AUTOMARK | September-2010 42
extra stability to VFR1200F. The unique throttle-by-wire system in this motorcycle ensures outstanding response & seamless acceleration across the engine's rev range. While aiding control under intense deacceleration is the slipper clutch, which allows the rider to stay firmly in place. The radical combination of CBS with ABS, link the benefits of ABS with the measured application of front brakes when the rear brake lever is used. This truely international motorcycle platform utilizes the UNICAM single overhead camshaft cylinder head design and the sealed crankcase system from t h e w o r ld - cla s s H on d a C R F motocrossers. Never before used on a road bike, these technologies provide excellent throttle response and improved fuel consumption. The 2010 Honda VFR1200F makes its stylish Indian debut in the same two stunning hues- Candy Prominence Red and Seal Silver Metallic. The showroom price in Delhi for the VFR1200F is 1,75 0,000 Rupees or an estimated $37,600.00 USD.
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Car / Light Vehicle Price List
SUZUKI
HONDA
Model MEHRAN VX 800cc MEHRAN VX (CNG) 800cc MEHRAN VXR MEHRAN VXR (CNG) ALTO VX 1000cc ALTO VX (CNG) ALTO VXR ALTO VXR (CNG) SU ZUKI SWIFT 1.3L PETROL CULTUS VXR CULTUS VXR (CNG) CULTUS VXL CULTUS VXL (CNG) LIANA 1.3L RXI MT PETROL LIANA 1.3L RXI MT (CNG) LIANA 1.3L LXI MT PETROL LIANA 1.3L LXI (CNG) LIANA 1.6L Eminent AT RAVI PICKUP ST308R VX RAVI PICKUP ST308R VX CNG BOLAN VAN Petrol VX BOLAN VAN VX CNG BOLAN VAN VXR BOLAN VAN VXR CNG SUZUKI VAN CARGO
Price Rs. 433,000 Rs. 479,000 Rs. 488,000 Rs. 532,000 Rs. 556,000 Rs. 614,000 Rs. 635,000 Rs. 684,000 Rs. 1058,000 Rs. 816,000 Rs. 857,000 Rs. 865,000 Rs. 912,000 Rs. 1,114,00 Rs. 1,184,000 Rs. 1,165,000 Rs. 1,229,000 Rs. 1,230,000 Rs. 453,000 Rs. 504,000 Rs. 512,000 Rs. 564,000 Rs. 578,000 Rs. 631,000 Rs. 478,000
CHEVROLET Model CHEVROLET JOY CNG CHEVROLET JOY Petrol
Price Rs. 569,000 Rs. 539,000
NISSAN CARS Model Sunny Ex-Saloon 1.6L M/T Sunny Ex-Saloon 1.6L CNG S. Super Saloon 1.6L M/T S. Super Saloon 1.6L CNG S. Super Saloon 1.6L A/T NISSAN S. S. Saloon 1.6L A/T CNG
Price Rs. 1,225,000 Rs. 1,305,000 Rs. 1,370,000 Rs. 1,450,000 Rs. 1,470,000 Rs. 1,550,000
NISSAN DIESEL TRUCKS Diesel Truck PK B 211 Diesel Truck PK D 411H Diesel Truck PK D 411E Diesel Truck PK D CD 411 Diesel Prim e Mover C WM 454
Rs. 3,000,000 Rs. 4,150,000 Rs. 4,260,000 Rs. 4,600,000 Rs. 5,500,000
Model ACCORD ACCORD CR-V CITY I-VETC MT CITY I-VETC AT CIVIC VTI Mt CIVIC VTI Mt Oriel CIVIC VTI Pt CIVIC VTI Pt Oriel
HYUNDAI
Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Price 5,866,000 5,316,000 1,259,000 1,389,000 1,629,000 1,804,000 1,749,000 1,879,000
TOYOTA COROLLA Model XLi 1.3 VVTi GLI 1.3 VVTi 2.OD 2.OD SALOON 2.OD SAL SUNROOF ALTIS 1.8 VVTi M/T ALTIS 1.8 VVTi A/T
Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Price 1,300,000 1,426,000 1,358,000 1,713,500 1,799,000 1,713,500 1,799,000
CHERY QQ Model
Price
CHERY QQ Petrol CHERY QQ CNG
Rs. 588,000 Rs. 628,000
LAND ROVER
DAIHATSU Model Price CUORE CX Rs. 6,70,000 CX ECO (CNG) Rs. 7,15,000 CX AUTOMATIC Rs. 7,49,000
Model DEFENDER (90 S/WJEEP STD) (110 S/W A/C) (90 Soft Top)
MASTER Model Master Highland M-260 (1,5T) Master Forland Super M-330 (3T) Master Econg M-390 (3.5T) Master Grande M-410 (4.5T) Master Rocket Faw (7.5T) Master Feng EQ 1032 Strip Chassis Master Feng EQ 1061 Strip Chassis
Price Rs. 625,000 Rs. 699,000 Rs. 930,000 Rs. 11,30,000 Rs. 12,60,000 Rs. 832,000 Rs. 832,000
Price updated July’ 2010
Price Rs. 2,269,431 Rs. 2,545,000 Rs. 2,150,260
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AUTOMARK | August-2010 28
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Corporate Event - Update
Thal Engineering celebrated 5th Millions Air-conditioner ceremony
On 1 5 July 201 0 Thai Engineering celebrated 5th Millions Air-conditioner ceremony and the Chief Cuest was Mr Hikaru Sugi Managing Director Denso Corporation of Japan.
Thai Engineering Thai Engineering is a division of Thai Limited. Thai was incorporated in 1966 as a public listed company and is quoted on all the major stock exchanges of Pakistan.
Products Aut o Air Conditioners a nd parts Auto Wiring Harnesses Auto Heater / Blowers Auto Heat Exchangers
Technical Collaborations Denso Corporation Japan for Car Airconditioners and Heater / Blowers Furukawa Electric Japan for Wiring Harnesses
Mr. Niazi takes over Charge of projects CEO, EDB solved. CEO viewed that the industry of the Board
Mr. Aitazaz A. Niazi, chief Executive Officer, Engineering Development Board (EDB) has underlined the need of foreign investment in the country for creation of jobs. He was addressing senior officers of the Board on August 17, after assuming charge of the post. H e a d d ed t h a t t h e f o r e ig n ma nu fac t urin g un its s h ou ld be encouraged to set up their industries in Pakistan as it will reduce their cost of doing business due to cheap labour available in the country. Another benefit to local industry would be transfer of technology and trained manpower, CEO said. He directed that problems and issues should be resolved and required steps suggested so that these could be
could reduce their cost of production for growth in export. He said that the public sector agencies have not reached the skilled workers in far flung areas of country. With proper guidance they can be linked with global supply link, he added. Dr. Mohamm ad Zuba ir, Gen eral Manager (Tariff & HR) gave a detailed briefing t o t he CEO, on his tory, achievements, current projects in hands and future programmes of the Board. Mr. M. Farooq Khan, General Manager (Policy) briefed about various policies drafted EDB and are under submission for consideration / approval. CEO showed keen interest in the current AUTOMARK | September-2010 45
and asked searching questions. Mr. Niazi has earned hi s deg re e i n C h e m i c a l Eng ineering from Uni te d S tat es of Aitazaz A. Niazi America (USA). He New CEO, EDB did his F. Sc from Cadet College hasan Abdal. He has a lmos t d eca d es ex p er ien ce of automobile business. His appointment has been made on contract basis for two years, as per notification issued by Establishment Division on August 16.
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Exclusive Article from Previous Issue
by Mohammad Owais Khan
Pakistan needs low-priced cars India has already launched ‘Nano’ car for $1000, in Pakistan only one Japanese vendor enjoys monopoly on 800cc cars. There is no car for the lower middle class in Pakistan. In Pakistan the local assemblers have remained focused in introducing high priced cars to cater a particular rich segment of the society. Besides, the Japanese makers, who dominate local markets, perhaps have an understanding not to roll out low price engine vehicles simultaneously in a market.
The dream of Indian people to own the cheapest car is likely to be fulfilled when they will drive away $2,000 or Rs 100,000 Tata’s Nano from July this year on the most congested and chocked streets and roads of thei r country. Can our local assemblers, or any other private entrepreneur or the government either really ponder or feel ashamed on thi s milest on e a chi eved by ou r neighboring country. Will Pakistanis ever be able to have a low priced car in years to come or they will continue to rely upon Pak Suzuki Motor Company (PSMCL) for providing so called low priced 800cc car which in real terms is no longer cheaper after massive increase in prices in the last one year. The main a im of Ta ta Motors of launching the cheap car for the huge urban middle class population is to create an alternative of two wheelers and a more safer and affordable vehicle. The launch of car was also aimed at shifting those people who can afford to have Rs 100,000 cars despite the fact that bikes in India are very cheaper as compared to Pakistan. Irrespective of some demerits of Nano car like lack of air conditioning, plastic seat covers, no air vents etc in a country where scorching heat takes its toll in summer but one can surely praise the efforts of Tata Motors of rolling out something attractive in terms of price for their countrymen.
Currently, petrol producers and the marketing companies in India have also initiated hectic media campaign to save petrol and diesel for the future young generation. In one of the electronic media advertisements, a boy sitting with his father next to driving seat stuck in a huge traffic jam on a main s treet watching all the car engines in start position, suddenly cautions his dad that he is thi nki ng of opening a cycle repairing shop in future as the boy feels that the way the people are wasting fuel the young generation cannot have enough petrol to run their vehicles. Then his father switches off the engine vehicle. In another media campaign, a petrol dealer while filling fuel in a car suddenly surprises a family by saying that from now on there would be 25 per cent off on sale of petrol. The family in the car asks the dealer to repay the balance amount but the dealer repli es in affirmative saying if a car runs at a speed of 45 km per hour and if the engine ignition is switched off on red signal then it can easily save up to 25 per cent of petrol consumption. These are the initiatives being taken by the petrol producers, oil marketing comp an ies , Ta ta an d e ven t he government in India which show that they are concerned how to save fuel for upcoming generation. In Pakistan, there is no such kind of campaigns from any public and private quarters. It may be recalled here that one of a leading car vendor in Pakistan, Feroz
AUTOMARK | September-2010 46
Khan, had dared to provide inexpensive car when he launched country’s first indigenous Revo car, rolled out by Adam Motor Company Ltd (AMCL) in April 2005. With the production of Revo in 2005, Pakistan had joined the club of 16 countries which produced their own cars. The engine and transmission were the only sub-assemblies which have been imported from China. The starting deletion level was 67.5 per cent which was projected to increase 90 per cent by December 2007. The project, launched at a cost of Rs 400 million, had faced severe financial crunch. Many workers h ad been ret renc hed to cut the production cost. Rev o 800cc w as in tr odu ce d at Rs270, 000 (petrol versi on) while 1,050cc car was rolled out at Rs379,000. The installed capacity of the plant was 15,000 units per year. In 2007, the maker of Revo struggled hard to survive looking for some equity partners to pull the project out of hot water, but efforts proved a failure. Despite low pri ce and autho rized dealership network, the design failed to click the customers perhaps they had a better option in shape of Japanese car Suzuki Mehran 800cc at that time. Perhaps one of the main reasons of Revo car failure was when the car was launched in April 2005, the government had opened the floodgate for used car imports, resulting in import of 46,000
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Can our local assemblers, or any other private entrepreneur or the government either really ponder or feel ashamed on this milestone achieved by our neighboring country. Will Pakistanis ever be able to have a low priced car in years to come. cars in 2005-06. At that time a used Mitsubishi Pajero Jeep was available at Rs300,000-350,000 then how a new customer could trust a home-grown car. However, local vendors had given allout support to the Revo project. Some vendors had cautioned Mr Khan not to take risk in the volatile Pakistani car market by introducing the car from zero level (which means that Revo car design does not exist in other parts of the world). Transmission Motor Company (TMC) had also introduced green taxi in the name of Alif Motor Cab in which the provinc ia l g ov er nment had been providing a helping hand. The green taxi was fitted with CNG at a price of Rs200,500 with 200cc fourstroke engine. It was launched in June 2006. The company had invested Rs45 million in the project and it was rolling out both cars and taxi in collaboration with China. The deletion level had been achieved at 70pc as compared to 67.8pc when the project was launched in 2005. The car used to run 25 km per litre on petrol. A leading vendor said that producing a car in Pakistan on the basis of Nano would be really be a daunting task for any new investor keeping in view various things between India and Pakistan like exchange rate parity, rate of customs du ty and sa les t ax an d level of localization of parts between the two countries. He said if the same car is launched in our country then it would at least cost very high as one of the main differences is that Tata has totally produced the engine indigenously in India, while there is no engi ne producing factory in Pakistan. Besides, the Indians are not quality conscious and hence Nano may prove a revolutionary car for the masses. He recalled that Nawaz Sharif in his previous era had also tried to provide a car at Rs 150,000 with the help of a Russian car maker but the project could no t be ma terializ ed as Pakistani customers had never liked Russian items and there was no expertise of engine ma kin g fac ilit y in th e coun try . He said Pakistani people have a problem for being very choosy especially in cars as compared to bikes. It is true that low cost Chinese bikes made on the pattern
of Japanese Honda CDI-70cc have taken the market by storm due to a big price difference. Over 55 makers are rolling out low cost Chinese 70cc bikes and their parts and accessories are easily available due to mushroom growth of its vendors. In cars, the new manufacturers, who intend to launch the low priced cars, must be a very sound party of sustaining shocks of various natures especially in times of recession and falling sales. The makers of Revo car might be a big vendor but he did not have a sound backing or name of a known partner either in Pakistan or any of foreigners. People always hesitate in taking a risk of buying a new car with a new name owing to its low re-sale value and availability of parts besides they might have genuine concerns regarding its quality and car’s high quality suspension of bearing the load of passengers in dila pida ted roads an d esp ecially reaching the top of any bridges or expressway. The local people may get some attraction in case manufacturers like Toyota, Honda, Hyundai or any other wel l kno wn European car makers try to venture into Pakistan by introducing low priced cars. At least customers will have some mental satisfaction about car’s quality, parts availability and resale value even if they have to pay higher prices. People also feel that when they are
AUTOMARK | September-2010
47
paying huge amount in six digits then the product should have some worth a nd be a hi g h qua li ty produ ct . Customers can take risk in bikes as it costs between 38,000 to Rs 63,000 (Chinese to Honda 70cc bikes), but they cannot sustain huge loss of rupees in buying low quality cars. He said that there is a big difference between sale volume of India and Paki sta n keeping in view of two countries’ population. In case a new clicks the mind of people then it means that its demand will pick up and will help in the development of vending in d us t r y b es id es cr ea t in g job opportunities. In India, Tata is a big name and many people have blind trust on its reputation despite the fact that it is still working to refina nc e the tw o bill ion doll ar outstanding from a three billion dollar bridge loan which the company took to pa y for the Ja gua r-La nd Rover acquisition. Irrespective of big names, many people count road presence of any vehicle which definitely creates a feeling among customers. Chinese bikes are classic example of massive road presence as people switched over from Honda to Chi nes e bikes in hug e numbers . In cars especially, people are also conscious about branded names. When somebody owns an unbranded car like Revo or others then the person cannot stand tall and justify the qualities of low priced cars while chatting with the owners of cars like Suzuki Mehran etc as it excels in quality and high re-sale value. In Pakistan the local assemblers have remained focused in introducing high priced cars to cater a particular rich segment of the society. Besides, the Japanese makers, who dominate local markets, perhaps have an understanding not to roll out low price engine vehicles simultaneously in a market as only Pak Suzuki has been enjoying monopoly in 800cc seg ments . Th e government should now think of creating congenial business environment by ensuring consistency in economic policies and focus on saving fuel. It should encourage European car makers to introduce low priced cars rather than relying on Japanese car makers….
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MADE IN PAKISTAN MOTORCYCLES RETAIL PRICE LIST
70cc Motorcycle
Sr./ No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23.
Product & Model Name Aan AI-70 Asia Hero AH-70 Bionic AS-70 Champion CDI-70 Crown Lifan CRLF-70 Diamond SD-70 Dhoom YD-70 Eagle DG-70 Ghani GI-70 Guangta GT-70 Grace CT-70 Hero RF-70 Hero RF-70 Plus Habib HB-70 Honda CD-70 Hi-Speed SR-70 Jinan JN-70 Leader LD-70 King Hero KH-70 Moon Star MT-70 Master MD-70 Mehran SD-70 Metro Hi-Tech MR-70
Retail Price Rs. 42,500/= Rs. 38,000/= Rs. 38,000/= Rs. 37,000/= Rs. 38,500/= Rs. 38,000/= Rs. 45,300/= Rs. 38,000/= Rs. 39,500/= Rs. 41,000/= Rs. 36,000/= Rs. 46,000/= Rs. 47,000/= Rs. 41,000/= Rs. 62,900/= Rs. 40,000/= Rs. 38,000/= Rs. 37,500/= Rs. 36,500/= Rs. 38,000/= Rs. 36,000/= Rs. 40,000/= Rs. 42,900/=
Sr./ No. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47.
Product & Model Name New Asia NA-70 Pak Hero PH-70 Ravi Premium R1 Ravi Hamsafar-70 Road Prince RP-70 Royal Star RS-70 Royal RL-70 Racer AS-70 Safari SD-70 Sakai SK-70 Star DL-70 Sohrab JS-70 Sonica SM-70 Stahlco ST-70 Super Asia SA-70 Super Star SS-70 Super Power SP-70 Super Power Deluxe Toyo TG-70 Target TT-70 Unique UD-70 Union Star US-70 United US-70 Zxmco ZX-70
AUTOMARK | September-2010 50
Retail Price Rs. 38,000/= Rs. 37,000/= Rs. 47,000/= Rs. 43,000/= Rs. 38,000/= Rs. 39,000/= Rs. 42,500/= Rs. 39,000/= Rs. 40,000/= Rs. 39,000/= Rs. 39,900/= Rs. 41,500/= Rs. 42,400/= Rs. 36,500/= Rs. 39,500/= Rs. 39,500/= Rs. 38,500/= Rs. 45,000/= Rs. 36,500/= Rs. 38,500/= Rs. 41,000/= Rs. 42,000/= Rs. 38,000/= Rs. 40,500/=
Generated by Foxit PDF Creator Š Foxit Software http://www.foxitsoftware.com For evaluation only.
MADE IN PAKISTAN MOTORCYCLES RETAIL PRICE LIST
125cc Motorcycle No. 1. 2. 3. 4. 5. 6. 7. 8.
Brand & Model Name Habib HB-125 Sitara ST-125 Ghani GI-125 Hero RF-125 Honda CG-125 Honda CG-125 DX Metro MR-125 Ravi Storm-125 Euro II
Retail Price Rs. 88,000/= Rs. 55,000/= Rs. 52,500/= Rs. 75,000/= Rs. 84,900/= Rs. 106,900/= Rs. 55,500/= Rs. 78,000/=
Yamaha Motorcycle Product & Sr./ Model Name No. 1. Yamaha YD100 2. Yamana Yama4 3. Yamaha YB100 Royale
Retail Price Rs. 72,200/= Rs. 68,800/= Rs. 68,300/=
100cc Motorcycle No. 1. 2. 3. 4. 5. 6. 7. 8.
Brand &Model Name Asia Hero AH-100 Ghani GI-100 Habib HB-100 Honda CD-100 Sitara ST-100 Super Star SS-100 Super Power SP-100 Unique UD-100
Retail Price Rs. 46,000/= Rs. 45,500/= Rs. 55,000/= Rs. 69,900/= Rs. 51,000/= Rs. 46,000/= Rs. 45,500/= Rs. 52,000/=
Suzuki Motorcycle Sr./ Product & Model Name No. 1. Suzuki Sprinter ECO 2. Suzuki Sprinter STD. 3. Suzuki GS-125 4. Suzuki GS-150 5. Suzuki Shogan
AUTOMARK | September-2010 51
Retail Price Rs. 65,500/= Rs. 69,500/= Rs. 78,500/= Rs. 84,500/= Rs. 76,000/=
Generated by Foxit PDF Creator Š Foxit Software http://www.foxitsoftware.com For evaluation only.