Truck sales rise 52% for the month of July

The sales of trucks have gone high around this season due to various reasons. The main reason is pegged to be higher demand due to our economy, which is currently buoyant. Another important reason the sales have experienced such spike, may be due to a very a different reason. Euro II standard trucks are estimated to go out of production soon around September 30th.

According to an Indian Foundation of Transport Research and Training (IFTRT) report, even after decreasing discount offers the sales of trucks have increased in various sectors of road transportation like manufacturing, import-export and agriculture. The problem that truckers are facing, is that the new Euro III and IV trucks may be definitely more expensive than the Euro II ones. So, in order to save money, truck owners and the related transportation companies are investing now in Euro II trucks. The highest increase has been seen in the 30-49 tonne multi-axle trailer category at about 2454 units.This is about an 85% increase in this category. The 25.2 to 31 tonne multi-axle category trails with an increase of about 61%. The last category, the 5-7.5 tonne, is seeing a significantly smaller share of the increase at 30%.

Another reason that might be also one of the reasons for the sales increase might be the introduction of a single composite fee of 15,000 INR for the National Permit. This has prompted the transportation service companies to upscale their business and buy more trucks. Truck rentals have also registered high sales last month. It is normally agreed that the monsoon season is a weak transportation phase but figures for this July have shown the opposite trend with a 2-3% increase in the rentals.

NHAI introduces tax free bonds to raise capital

The National Highway Authority of India has decided to float tax-free bonds to raise capital. The NHAI has received somewhat of a lacklustre response to its previous efforts in raising money through bonds. The association is pushing for tax-free bonds nonetheless. According to its estimates this new venture will raise Rs.6000 Cr. in capital.

The bonds will give a rate of interest of 8.5 per cent, significantly higher than its current 54EC tax free bonds that offer just 6 per cent. By introducing such incentives the NHAI believes that the response to this offer will be good and the necessary money will be raised.

Well, one can venture a guess as to the their motivation to introduce such a scheme. The Government has set itself an ambitious target of building 20 km of highway roads per day. The NHAI is the authority that has the responsibility to manage this target and see to it that the projects come to fruition. the time is running out for the the Government’s promise and concrete steps have to be taken. Hence the NHAI has proposed to float these bonds to raise the capital involved to meet this target.

Here is a look into NHAI’s previous efforts to raise money.NHAI raised Rs 500 cr. between April and June this fiscal through bonds. Last fiscal it raised Rs 1148 cr. through bonds and for this fiscal the authority hopes to raise Rs 2000 cr. from 54EC bonds. NHAI needs Rs 33,000 cr. for the execution of its targeted 12,000 km by 2013.

The NHAI is looking considerably upbeat about its new schemes, but financial experts beg to differ. According to them, the scheme should have a higher rate of return than what has been proposed. This is when people will be excited about the bonds and there may be a decent response

Source: Financial figures have been used from NDTV Profits website.