DECEMBER 20249GAS COMPANIES CONSIDERING LNG IMPORTS AS GOVERNMENT DROPS CNG PRICESTATA ELECTRONICS PARTNERS WITH PEGATRON TO PRODUCE 5M IPHONES ANNUALLYIndia's Tata Electronics has taken a significant step toward becoming a key Apple supplier by acquiring a majority stake in Taiwanese contract manufacturer Pegatron's sole iPhone plant in India. The deal forms a joint venture, with Tata holding a 60 percent stake and overseeing daily operations, while Pegatron retains 40 percent and provides technical expertise, according to insider sources. City gas companies like Indraprastha Gas Ltd (IGL), Adani Total Gas Ltd, and Mahanagar Gas Ltd (MGL) are considering a hike in CNG prices following a second cut in the supply of low-cost natural gas from old fields within a month. The supply cuts affect natural gas sourced from fields across the Arabian Sea and Bay of Bengal, which is used to produce CNG for vehicles and piped cooking gas for households. Despite concerns, the government emphasizes the need for balanced profitability that does not excessively burden consumers.The financial terms of the agreement remain undisclosed, as neither Tata, Apple, nor Pegatron responded to inquiries. The internal announcement was made last week, and the companies plan to seek approval from the Competition Commission of India (CCI) shortly. This move follows Apple's strategic push to diversify its supply chain beyond China, driven by rising geopolitical tensions between Washington and Beijing. For Tata, acquiring Pegatron's Chennai plant aligns with its ambitions to ramp up iPhone manufacturing in India. Tata has rapidly expanded its presence in the iPhone manufacturing space, joining Foxconn as one of India's leading contract manufacturers. It previously acquired Wistron's iPhone assembly plant in Karnataka and is constructing another in Hosur, Tamil Nadu. The Hosur facility also houses a component manufacturing unit, which recently made headlines due to a fire incident in September. Analysts predict that India's contribution to global iPhone shipments will reach 20-25 percent this year, up from 12-14 percent in 2023. This acquisition underscores Tata's growing influence in Apple's supply ecosystem and highlights India's increasing role in global smartphone manufacturing. Keep up with the latest updates on Tata, Apple, and India's booming iPhone production industry. On November 16, the government reduced the supply of these cheaper inputs to city gas retailers by 20 percent, adding to a 21 percent reduction implemented on October 16. City gas retailers, including IGL, which serves the national capital region, MGL in Mumbai, and Adani Total Gas in Gujarat and other regions, have highlighted potential profitability challenges in their regulatory filings, signaling possible price increases. However, officials from the Ministry of Petroleum and Natural Gas argue that the companies operate on healthy profit margins and can absorb the increased input costs without passing them on to consumers. For instance, IGL reported a net profit of 1,748 crore on a revenue of nearly 16,000 crore in the fiscal year ending March 31, 2024, reflecting an 11 percent margin, while MGL posted a 1,300 crore profit on 7,000 crore revenue, yielding a similar margin.Officials point out that these margins are far higher than other retailers, such as Indian Oil Corporation (IOC), which reported its best-ever profit of 39,617 crore on a revenue of 8.71 lakh crore, with a margin of just 4.5 percent. They assert that if companies seek access to low-priced natural gas, they should provide a transparent cost breakdown of the final CNG pricing. "You can't demand low-cost inputs without disclosing the pricing structure of the end product," a senior official remarked.
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