Starting a Fresh Inning S P Shah, President Dear friends, At the outset, I express my profound thanks and gratitude to the members of Council and Past Presidents for reposing their confidence in me by electing me as the President of this august body. I do appreciate and realise that an onerous responsibility is cast on me in keeping with the dignity that goes with this exalted office. My task becomes all the more difficult, particularly when our esteemed members have a lot of expectations In this difficult phase and this coveted office has been adorned in the past by doyens of retail automobile trade, who set high standards of leadership and work ethic. I shall try not be weighed down by the burden of expectations and to prove equal to the task with the support and cooperation of members at large. I assume the office of President at a difficult time when the auto market is reeling under slowdown. Inflation, soaring interest rates and credit crunch have chiefly been dampener for the auto market in India. To cap it all, the recent financial meltdown in the USA and its impact worldwide has worsened the situation further and cast a pall of gloom. We are faced with a great deal of uncertainty. To shore up the confidence that there is no liquidity crisis, the apex bank has reduced the CRR by 250 basis points Repo rate by 100 basis points. The Government and banks have come up with an assurance that India is not affected significantly by the meltdown. Dismissing fears of global financial contagion impacting India, the International Monetary Fund has said that the country's economy will continue to perform well. Somehow, the pep talk is not helping lift the sentiment, as reflected in the continuing pounding of Sensex. The slowdown in economy has been palpable ever since the commodity and crude oil prices started their northward movement, leading to inflationary expectations, higher interest rates and squeeze in finance availability in India. Its latest manifestation is found in the industrial production data relating to the month of August 2008 released by the Government recently. Led by the sharp deceleration in manufacturing activity, industrial production plunged to 1.3% in August 2008, lowest in almost a decade. With inflation still sitting at 11.8% and fiscal excesses still running high, policy options to stimulate growth are limited. Y-o-Y growth in manufacturing dropped to 1.1%, the lowest since October 1998. The fact that 10 out of 17 manufacturing sectors are in the negative terrain underscores the broad-based nature of the slowdown. Significantly, the growth in capital goods production, a leading indicator of investment activity, dropped to 2.3%, again the lowest since May 2002. The silver lining is that oil prices have fallen below $70 a barrel, but that's due to fears of a global recession, which could hurt India too. While falling oil prices is a welcome relief, the continued pressure on the rupee is offsetting the downtrend in oil prices. No doubt, a sense of fear, arising from the speculation over impact of the tighter global liquidity conditions on India, has gripped the people and investors in India at this juncture. However, I am confident that we shall be able to weather the storm as we have done umpteen times in the past. Crude oil prices are downtrending, so is the inflation, moderately though. Notwithstanding the recessionary conditions obtaining in major part of the world and the slip in industrial production during the month of August 2008, the Government as well as the international experts and analysts believe that Indian economy is set to clock a decent growth of 7-8% during the year 2007-08. A likely 7-8 per cent growth rate at a time when the world economy is on a downhill path reflects India's internal growth dynamics. That the Government employees will now get fatter pay packets thanks to the Six Pay Commission, which will leave more disposable income in their hands, is a cause of cheer for the Indian auto market. With commodity prices starting to fall, the inflation is also likely to subside, which will, hopefully, pave the way for the easing of tight monetary conditions and the softening of interest rates. I am sanguine that we are going to see the buoyancy return again. Coming to the activities of FADA for the next one year, the agenda uppermost in my mind is to organise and galvanise the automobile dealers spread across the country. I feel that the associations of automobile dealers at the city, state and regional levels have to play an active role in furthering the objectives of FADA and promoting the interest of automobile dealers fraternity as a whole. It may not be possible for FADA office bearers to reach out to each and every automobile dealer given the vast geographical spread of India. The associations at the local and regional levels, therefore have to assume the role of a bridge between FADA and individual automobile dealers across the country. Of course, FADA can always pitch in with its support in various forms as and when required by the local & regional associations of automobile dealers. I feel that many issues such as procedure for registration of vehicles, VAT, manpower training and the like can be taken care of at the State level through regular dialogue & meetings with the State Government authorities and the regional managers of the manufacturers under the aegis of local associations. I and, for that matter, my other colleagues in the Council will be happy to participate in such meetings or dialogue if the local members so desire, to share the practices and experiences of other states. To strengthen the activities and to ensure better coordination with the state-level associations, the State Chairmen for most of the States have been appointed by FADA Council. The Chairmen for the remaining States are being finalised. I would request my fellow dealers to suggest the names of members who could take lead in strengthening the activities aimed at the promotion of auto retail business in their respective States. The second major item on the top of my agenda is to give fillip to the FADA Academy programme to tide over the acute shortage of trained manpower facing the automobile dealerships all over the country. Depending upon the interest and response of local members, FADA is willing to start the training programme in various parts of the country. I shall welcome the proposals from members in this regard. The deteriorating health of automobile dealerships for a variety of reasons is the other major issue that needs to be tackled with a sense of urgency. Our endeavour would be to step up interaction with the industry and the Government so as to sensitise them on the concerns of retail automobile trade and remove the roadblocks impeding the sustained growth of automotive business. There are a host of issues and challenges facing automobile retail trade. That the auto retail is an important link in value chain needs no reiteration. This segment of organised retail has invested Rs. 25,000 crores, provides direct employment to over 6 lakh people and contributes enormously to the Central and State exchequers. We have to make our contribution count. I would welcome your inputs and suggestions. Wishing you a Very Happy & Prosperous Deepavali, Yours sincerely, S P Shah