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Production crunch hits Maruti 
(Fri, 30 Apr 11:30 am) 
 
In the last 2 hours of trade the markets were seen holding on to their opening gains and trading range bound. Stocks in the realty, auto and banking space are seeing the maximum buying interest while stocks in the metals and FMCG space are trading close to their yesterday's closing.

BSE-Sensex is trading higher by 73 points while NSE-Nifty is trading 21 points above the dotted line. BSE-Midcap Index and BSE-Smallcap index are both up by 1%. The rupee is trading at 44.45 to the US dollar.

As per a leading financial daily, Maruti Suzuki is facing a production crunch. With demand climbing and new capacities still some time away, the company has had to rethink its export strategy. The company which is already operating at full capacity is now capping its exports units and diverting production to the local markets. While Maruti has plans to increase its volumes at its Gurgaon plant by 70,000 to 80,000 units due to demand, the crunch is expected to continue until 2012. This is when the company's capacity addition at Manesar plant is expected to become operational, adding 250,000 units to the company's capacity. In the mean time Maruti will be facing tough times catering to demand which is expected to grow by 10-12% annually.

Power Finance Corporation (PFC) announced its 4QFY10 results yesterday. The company's consolidated income from operations increased by 15% YoY while the net profits fell by 41% YoY. The topline of the company grew on the back of an increase in advances as lending to transmission projects picked up. Since PFC is the nodal agency designated by the government for financing power projects in India, the company managed to grow faster than infrastructure finance companies as new power projects were sanctioned during the second half of the year. However, the bottom line was affected as a result of write back of deferred tax liabilities in 4QFY09. Given the huge investment in power we believe that the head room for growth for PFC is immense.

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May 29, 2017 (Close)

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