We are in for a Grind Nikunj Sanghi, President Dear friends, Auto market in India witnessed two great years, defying odds and belying all forecasts of impending slowdown. Every time when there was a talk of growth slowing down or moderating, the market came up with a new high in sales performance, springing surprise every now and then and beating headwinds of soaring commodity prices, inflationary expectations and rising interest rates. We, in FADA, though pleasantly surprised at the excellent run of the market, saw it coming, given the headwinds present in the environment, which had the potential of dragging down the growth. The April 2011 sales figures corroborate our apprehensions. We hope that it does not become a pointer to the unfolding scenario. While the April sales figures still make a decent reading, they do not reflect the ground reality at the retail level. I understand from my fellow dealers that the dealerships are saddled with huge inventories that had been built up in anticipation of continuing robust demand. Though it is too early to say anything on the trends, it appears that we are in for a grind. The developments and the RBI's policy pronouncements in the recent past have not helped soothe the nerves either. With the increase of 50 basis points in Repo rate in one go, the apex bank has abandoned the baby steps and gone for the kill to combat inflation that shows no sign of subsiding and continues to hover around 10% to the discomfort of the Government, the business and the Aam Admi. This step of RBI is likely to fuel further increase in interest rates and cost of production. Monetary tightening so far has not yielded the desired results and has, rather, given rise to a vicious circle. The reports of multilateral and internal agencies & think tanks revising downwards their estimates of India's economic growth in the current year are, therefore, not surprising. I feel that the Government or, for that matter, RBI is barking up the wrong tree. While the commodity prices are driven by the global market and supply-demand scenario at the global level, food inflation that is the root cause of persistent high level of inflation, can be addressed, to a large extent, through appropriate policy interventions. The age-old system of routing agricultural produce through mandis has neither helped the farmers nor the end consumers. Secondly, many parts of the country are yet not touched by the Green Revolution. There exists a huge untapped potential to increase agricultural production and avoid waste through increase in productivity and expansion in storage facilities. While some of these measures are long-term solutions and may not provide immediate relief to the people reeling under high inflation, we have to start somewhere and cannot afford to wait any more. The developments in the recent past are definitely a cause of concern. However, we still have many positive things going for us. Business sentiment remains upbeat. Of late, we have seen commodity prices climbing down, though there is no clear indication yet whether such a downtrend is the lasting one or just a flash in the pan. The industrial production growth has stabilised, so has the index for core sector. We had expected it to be much better, though. Exports have been on the rise for over a year now and continue to exceed expectations. The global economic scenario is looking up slowly but surely. The exports of passenger vehicles, which had slipped, are picking up gradually. Two-wheeler sales are steady indicating that there remains a vast untapped market. Against odds, the Indian auto market has shown resilience. The mood may be somewhat reflective right now, the market remains, by and large, unfazed. However, a single thing that can put a damper on our hopes is the recent steep increase in petrol prices. The diesel price hike is looming large on the horizon. With crude oil prices showing signs of climb-down, the Government should have shown restraint in increasing the prices of petrol. Any precipitative step at this stage can be disruptive not for the auto market alone but for the entire market. Adverting to the activities of FADA since my previous message, after a calm for a while, we were back on our feet, giving a big push to the activities on our agenda. FADA held its 256th Council Meeting at New Delhi on April 19. I am happy to inform that we have taken two momentous decisions arising out of the discussion at the Council Meeting. Continuing the past practice, FADA will be organising its next biennial convention of automobile dealers, viz. Auto Summit on 9th & 10th January 2012 at New Delhi, coinciding with Auto Expo. As in the past, my fellow dealers and other stakeholders can expect high quality discussion on the whole gamut of automotive business, including auto retail business. We will be having a galaxy of eminent speakers from the Government, the industry, the allied businesses and the internationally reputed consulting firms to address and interact with the participants. Participation in Auto Summit is an unforgettable experience for any member of auto retail in particular. I am lucky to have participated in all the Auto Summits held so far. It has been enriching and fulfilling experience for me personally and others who have participated in any of the previous Auto Summits. I am sure, my fellow dealers will avail this opportunity and participate overwhelmingly to share and enrich their experiences. You may look forward to the announcement giving detailed programme and information in the forthcoming issues of FADA Journal. Another important decision taken by the Council was to appoint a Service Tax Consultant, who would give his expert opinion and guide my fellow dealers on various issues relating to service tax of concern to the members of FADA. In fact, we are not stopping at this. FADA is seeking to have a panel of legal experts in different fields to help and support automobile dealers in dealing with the complexities of legal matters. My fellow dealers who want to seek clarification or have any query relating to service tax can send their queries to FADA Secretariat with a nominal fee of Rs. 1,000 per query. As you will kindly appreciate, it is not possible for FADA office bearers to reach out to each and every member of FADA, who are spread far and wide in the country. Council has therefore, decided to strengthen and step up its interaction with regional associations of automobile dealers, who can play the role of a bridge between FADA and members of auto retail business fraternity. As a first step to meet and interact with FADA members in various parts, FADA is planning periodic regional meetings in different States, building on the momentum gained from a grand regional summit organised in Jaipur in November 2010. These regional meets will be organised with the support and involvement of regional associations. I would request my fellow dealers to organise themselves at the State or regional levels and meet periodically to discuss their experiences and problems for a concerted action, which will benefit all and go a long way in promoting fellow feeling and camaraderie. You can always count on FADA's support. We, in FADA Council, are more than willing to support and participate in such regional initiatives and meetings. Look forward to your suggestions and inputs. With best wishes, Yours sincerely, Nikunj Sanghi