Virgin takes West Coast mainline case to MPs

Virgin Trains, a group company belonging to Sir Richard Branson, will appeal to the MPs in the UK to resolve the West Coast mainline case.

Virgin Trains is aiming to legally challenge Government’s decision to award the London to Manchester route to First Group. Virgin has stressed that it cannot afford its £5.5billion bid for the project. Sir Richard Branson will use the hearing before the MPs to convince them that the system does not allow firms to run services at a profit and taxpayers money is then used to meet the gaps.

Due to the legal challenge posed by Virgin Trains, First Group is not likely to receive keys to the line on 9 December for the 14-year contract. Virgin had offered to run the line free of cost until the matter is resolved. However, some leaders might be considering the option of nationalizing the line on a temporary basis.

The leaders have raised concerns about how the decision to change the franchise would affect fares and levels of service on the route. The remarks comes after Louise Ellman, the chairman of the House of Commons transport committee wrote to transport secretary, Justine Greening urging for a delay in signing of the final contract until important issues are discussed.

More than 100,000 members of the public have signed a petition against the decision and it is also being supported by several celebrities including host of TV show The Apprentice, Lord Sugar, and celebrity chef Jamie Oliver.

Two-wheelers slide on inventory concerns

Stocks in two-wheeler companies slipped as investors are concerned over declined sales.

A survey conducted by IIFL Institutional Equities has revealed that demand for two-wheelers has worsened this year, and major manufacturers like Hero and Bajaj dealerships have inventories at a high of up to 40 days.

Brokerage firm UBS earlier this month removed Hero Moto from its model portfolio. It revised its target price on Hero Moto Corp to Rs 2,350 as it expects sales to decline further.

The brokerage said in a statement, "We cut our FY13 volume growth for Hero Moto from 8 per cent to 4 per cent and hence cut our FY13/FY14 EPS estimates by 5 per cent.”

Credit Suisse also 'downgraded' two-wheeler giant Hero from ‘outperform’ to 'neutral,' and revised its target price downwards from Rs 2,401 to Rs 2,056.

Shares in Hero Moto slipped 3 per cent in the morning trading today. However, Bajaj Auto, which also reported a fall in sales in July, saw an increase of slightly more than 1 per cent.

Market observers expect two-wheeler manufacturers to undergo major production cuts due to because of decline in demand.

One of the many factors responsible for the decline in demand for two-wheelers in India is poor monsoon. As Indian economy is basically an agriculture economy, rural sector accounts for a major portion two-wheeler market. Poor monsoon hit rural people’s pocket very hard, which in turn affected their demand for almost everything, including two-wheelers.