Fundamental Analysis of 3 Major Indian Automobile Players: Vikas Dhanuka

FUNDAMENTAL ANALYSIS OF 3 MAJOR INDIAN
AUTOMOBILE PLAYERS
A PROJECT REPORT
Submitted by
VIKAS DHANUKA
Batch 2013-15
In partial fulfilment for the award of
POST GRADUATE DIPLOMA IN MANAGEMENT
Under the guidance of
PROF. NAMRATA ACHARAYA
THAKUR INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH
KANDIVILI (EAST), MUMBAI
1
CERTIFICATE
This is to certify that this project report FUNDAMENTAL ANALYSIS OF 3 MAJOR

INDIAN AUTOMOBILE PLAYERS is a bonafide work of Vikas Dhanuka part
completion of the Post Graduate Diploma in Management and has been done under my
guidance
The Project is in the nature of original work that has not so far been submitted for any other
course in this institute or any other institute.
Reference of work and sources of information have been given at the end of the project
Signature of the Candidate
Forwarded through the Research Guide
Signature of the Guide
Prof. Namrata Acharya
2
ACKNOWLEDGEMENT
It gives me immense pleasure to present report on “FUNDAMENTAL ANALYSIS OF 3

MAJOR INDIAN AUTOMOBILE PLAYERS”. I would like to take the opportunity to
thanks number of people who directly or indirectly contributed towards this project.
It gives me a great pleasure and privilege to express my thanks and deep sense of gratitude
towards Prof. Narmata Acharya for her assistance and valuable guidance in the project
work.
I also take this opportunity to express a deep sense of gratitude to the director of our institute TIMSR,
Dr. Subhash Kulkarni his cordial support, valuable information and guidance, which helped me in
completing this task through various stages.
Also, not forgetting the college library facilities and computer lab facilities without whose
help gathering the relevant information would not have been possible.
I would like to add a vote of thanks to all my friends for their valuable inputs and support
throughout the project.
VIKAS DHANUKA
3
EXECUTIVE SUMMARY
The automobile industry, one of the core sectors, has undergone metamorphosis

with the advent of new business and manufacturing practices in the light of
liberalization and globalization. The sector seems to be optimistic of posting strong
sales in the couple of years in the view of a reasonable surge in demand. The
Indian automobile market is gearing towards international standards to meet the
needs of the global automobile giants and become a global hub. A detailed analysis
of Automobile industry has been covered in respect of past growth and
performance. Under this project to better understand the Industry we have used
Fundamental and Technical tools to make it more authentic n meaningful. An E.I.C
approach has been followed under Fundamental Analysis which covered effect of
Recession, the impact of inflation, Export, GDP etc. on Automobile Industry. The
Industry Analysis has been done with the help of five forces model, BCG Matrix,
SWOT analysis, industry life cycle and the industry specific index. For Company
Analysis as a part of Fundamental tool we have undergone with the
comparative analysis of TATA Motors as our leading company with Maruti Suzuki
India’s largest Car manufacturer and Mahindra & Mahindra. The fundamental aspect
consists financial and Non-Financial analysis of both the company. In the Technical
aspect we have considered Fibonacci series of the companies by keeping TATA
Motors and Maruti Suzuki India as our leading company. At the end conclusion and
recommendations have been specified so as to make the research work more
meaningful and purposeful.
4
LIST OF TABLE & DIAGRAM
SR.NO TOPIC PAGE NO
1 EMPLOYMENT 8
2 AUTOMOTIVE INDUSTRY & ECONOMY 9
3 GDP GROWTH 16
4 COMPARISON OF SECTOR INDICES 21
5 QUARTERLY ESTIMATES OF GROSS DOMESTIC PRODUCT 40
6 GDP GROWTH 44
7 COMPARISON OF SECTOR INDICES 49
8 INDUSTRY BCG MATRIX 52
9 COMPANY BCG MATRIX 53
10 BALANCE SHEET OF MARUTI SUZUKI INDIA 56
11 CASH FLOW OF MARUTI SUZUKI INDIA 58
12 FINANCIAL RATIOS OF MARUTI SUZUKI INDIA 59
13 FINANCIALS & VALUATIONS 61
14 BALANCE SHEET OF TATA MOTORS 63
15 CASH FLOW OF TATA MOTORS 65
16 FINANCIAL RATIOS OF TATA MOTORS 66
18 BALANCE SHEET OF MAHINDAR & MAHINDRA 71
19 CASH FLOW OF MAHINDAR & MAHINDRA 73
20 FINANCIAL RATIOS OF MAHINDAR & MAHINDRA 7
22 NET SALES TABLE 83
23 NET SALES DIAGRAM 83
24 NET PROFIT TABLE 83
25 NET PROFIT DIAGRAM 83
26 P/E TABLE 84
27 P/E DIAGRAM 84
28 SHARE PRICE TABLE 84
29 SHARE PRICE DIAGRAM 85
5
INDEX
SR. NO TOPIC PAGE NO

1 SITUATION ANALYSIS 7
1.A GLOBAL PERPECTIVE 7
1.B INDIAN PERPECTIVE 12
2 LITERATURE REVIEW 24
3 METHODOLOGY 33
4 DATA ANALYSIS 38
4.A ECONOMICS ANALYSIS 40
4.B INDUSTRY ANALYSIS 50
4.C COMPANY ANALYSIS 56
4.C.I MARUTI COMPANY 56
4.C.II TATA COMPANY 63
4.C.III MAHINDAR & MAHINDRA COMPANY 71
5 CONCLUSIONS & RECOMMENDATIONS 79
6 BIBLIOGRAPHY 86
I] SITUATION ANALYSIS
I) GLOBAL PERPECTIVE
6
A GROWTH INDUSTRY
Automobiles represent freedom and economic growth.
Automobiles are a liberating technology for people around the world. The personal
automobile allows people to live, work and play in ways that were unimaginable a century
ago. Automobiles provide access to markets, to doctors, to jobs. Nearly every car trip ends
with either an economic transaction or some other benefit to our quality of life.
The auto industry is the single greatest engine of economic growth in the world.
The global auto industry is a key sector of the economy for every major country in the world.
The industry continues to grow, registering a 30 percent increase over the past decade (1995-
2005).
Autos create jobs, jobs, jobs.
Building 60 million vehicles requires the employment of about 9 million people directly in
making the vehicles and the parts that go into them. This is over 5 percent of the world’s total
manufacturing employment. It is estimated that each direct auto job supports at least another
5 indirect jobs in the community, resulting in more than 50 million jobs owed to the auto
industry. Many people are employed in related manufacturing and services. Autos are built
using the goods of many industries, including steel, iron, aluminium, glass, plastics, glass,
carpeting, textiles, computer chips, rubber and more.
OICA - Organisation Internationale des Constructeurs d'Automobiles, commonly

abbreviated OICA, English: International Organization of Motor Vehicle Manufacturers
Source - OICA > Economic Contributions
TECHNOLOGY JOBS
The automobile industry is also a major innovator, investing almost €85 billion in research,
development and production. The auto industry plays a key role in the technology level of
7
other industries and of society and is one of the largest investors in research and
development, with several manufacturers leading the Top 10. Vehicle manufacturing and use
are also major contributors to government revenues around the world, contributing over €430
billion in twenty-six countries alone.
ALTERNATIVE FUELS
Automakers have invested hugely in reaching air quality improvements and in developing
diverse automobiles that run on alternative fuels including those from sustainable sources or
that use hybrid technology using both gasoline or diesel engines and electric power. Because
consumers, as well as different regions of the world, favour different technologies,
automakers are developing a range of automobiles that run on different fuels.
Biodiesel, CNG, Electric Battery Powered, Ethanol, Hybrid, Hydrogen, LPG
EMPLOYMENT
Argentina 12,166 Korea 246,900

Australia 43,000 Malaysia 47,000
Austria 32,000 Mexico 137,000
Belgium 45,600 Netherlands 24,500
Brazil 289,082 Poland 94,000
Canada 159,000 Portugal 22,800
China 1,605,000 Romania 59,000
Croatia 4,861 Russia 755,000
Czech Rep. 101,500 Serbia 14,454
Denmark 6,300 Slovakia 57,376
Egypt 73,200 Slovenia 7,900
Finland 6,530 South Africa 112,300
France 304,000 Spain 330,000
Germany 773,217 Sweden 140,000
Greece 2,219 Switzerland 15,500
Hungary 40,800 Thailand 182,300
India 270,000 Turkey 230,736
Indonesia 64,000 UK 213,000
Italy 196,000 USA 954,210
8
Japan 725,000

Source - OICA > Economic Contributions > Auto Jobs
Automotive Industry and Economy

(in € million) Turnover Investments Public Revenue
Argentina 3,519
Australia 18,929 887
Austria 13,900 580 8,315
Belgium 18,225 302 7,155
Brazil 26,997 1,141
Canada 77469* 2496** 9,701
China 86,984 5,330
Croatia 205 20 1
Czech Rep. 12,091 663 1,032
Denmark 1,165 46 5,867
Egypt 2,901 1,661 1,911
Finland 1,076 36 3,807
France 111,901 4,196 34,000
Germany 227,666 11,900 44,314
Greece 162 17 3,200
Hungary 8,144 432
India 16,893 1,014 11,122
Indonesia 3,858 1,071
Italy 54,135 3,450 40,954
Japan 435,610 6,450 66,444
Korea 62,993 2,239 16,615
Malaysia 6,084 1,263
Mexico 3,348
Netherlands 7,876 81 10,837
Poland 16,202 893
Portugal 4,457 176 6,897
9
Automotive Industry and Economy
(in € million) Turnover Investments Public Revenue
Romania 1,836 308
Russia 7,019 223 654
Slovakia 8,711 1,056
Slovenia 1,544 40
South Africa 20,602 277 3,459
Spain 75,104 2,740 23,212
Sweden 24,784 861 5,590
Switzerland 4,252 4,689
Thailand 11655* 443 2,871
Turkey 28,196 502 10,127
UK 58,238 1,590 46,099
USA 425,106 30,416 64,289
Total 1,889,840 84,801 433,160
*Gross production value **gross fixed capital formation

Source - OICA > Economic Contributions > Facts and Figures
ENVIROMENTAL FACTS
The industry is committed to contributing to an integrated approach, with other stakeholders,

to a cleaner environment and reduced carbon emissions. Automakers are constantly
developing more efficient engines and drive-trains to reduce fuel consumption, and a wide
range of sophisticated emissions-control technology is putting cleaner automobiles on the
road everywhere. With more and more new vehicles with modern exhaust emissions
performance on the road, clear improvements in air quality can be seen. This trend will
continue, even without further improvements to new vehicles, as older, more polluting cars
are replaced with new ones.
Dramatic progress has been made in producing cleaner autos.
10
Auto engineers have developed sophisticated emissions-control technology that is putting
cleaner automobiles on the road everywhere. Catalytic converters use precious metals to
reduce smog-forming emissions from cars. Automakers have dramatically reduced
evaporative emissions with tighter gaskets, hoses and better gas tanks. Computers have
revolutionized clean vehicle controls by precisely metering the fuel and air that go into the
engine, reducing the smog-forming emissions coming out of the engine. And, a computer
system called aeon-board diagnostics constantly monitors the performance of the vehicle to
help keep clean technology working.
As more and more new cars with modern exhaust emissions performance are put on the
road, clear improvements in air quality can be seen. This trend is going to continue, even
without the further improvements planned for new vehicles in the future, as older, more
polluting cars, which are responsible for a large proportion of all vehicle emissions, are
replaced with new ones. In fact, anything which could speed up this process would make a
much greater improvement to air quality than the further reductions in the already very low
emissions from new cars, because the effect of that will be quite small, and will take a long
time to be effective.
Automakers are developing clean, fuel-efficient technologies that run on diverse fuels.
The most dramatic changes are occurring this century. Automakers have invested hugely in
developing diverse automobiles that run on alternative fuels like clean diesel, biodiesel,
ethanol, hydrogen, and compressed natural gas or that runs on hybrid technology using both
conventional combustion engines (gasoline or diesel) and electric engines. These advanced
technology vehicles are being introduced for sale as quickly as possible. Because consumers,
as well as different regions of the world, favour different technologies, automakers are
developing a range of automobiles that run on different fuels.

Source - OICA > Autos and Fuels
II) INDIAN PERPECTIVE
11
India’s Economy Overview
Rank 10th (nominal) / 3rd (PPP)
Statistics
GDP
$2.047 trillion (nominal: 10th; 2014)
GDP growth 4.7% (2013)
5.6% (2014 EST.)
GDP by sector
Agriculture: 13.7%, industry: 21.5%, services: 64.8% (2013)
Inflation (CPI)
CPI: 5.5%, WPI: 1.7% (October 2014
Population below poverty line

29.5% (2012, Rangarajan panel)
22% (2012, Reserve Bank of India),
179.6 million People (2014, World Bank)
Labour forces 487.3 million (2013 EST.)

Labour force by occupation
Agriculture: 49%, industry: 20%, services: 31% (2012 EST.)
Unemployment 3% Urban, 2% Rural, 10.8 million Total
(2013, NSSO method)
Average gross salary $1.46 per hour ($3,036.8 yearly in 2010);

Average household income: $6,671 yearly (2011)
Main industries
12
Agriculture, petroleum products, chemicals, pharmaceuticals, software, textiles, steel,
transportation equipment, machinery, cement, mining, construction
External
Exports
$313.2 billion: merchandize exports,
$150.9 billion: services exports,
$464.2 billion: total (2013)
Export goods
Software, petrochemicals, agriculture products, jewellery, engineering goods,
pharmaceuticals, textiles, chemicals, transportation parts, ores and other commodities
Main export partners

European Union 16.8 %( 2012)
United States 12.8%
United Arab Emirates 12.4%
China 5.1%
Singapore 4.7%
Imports
$488.6 billion: merchandize imports,
$128.1 billion: services imports,
Import goods
crude oil, gold and precious stones, electronics, engineering goods, chemicals, plastics, coal
and ores, iron and steel, vegetable oil and other commodities
Main import partners China 11.1% (2012)
European Union 11.1%
Saudi Arabia 6.7%
Switzerland 5.9%
13
FDI stock
Inflows: $151.7 billion,
Outflows: $54.6 billion (2009-2013)
Budget deficit
4.8% of GDP (2012–13)
Economic aid $1.66 billion (2012)
Credit rating
BBB- (Domestic)
BBB- (Foreign)
BBB+ (T&C Assessment)
Outlook: Stable
(Standard & Poor's)
Foreign reserves
$313.68 billion (as of 17 October 2014)
Source – cia world fact sheet
The economy of India is the tenth-largest in the world by nominal GDP and the third-

largest by purchasing power parity (PPP). The country is one of the G-20 major economies, a
member of BRICS and a developing economy that is among the top 20 global traders
according to the WTO. India was the 19th-largest merchandise and the 6th largest services
exporter in the world in 2013; it imported a total of $616.7 billion worth of merchandise and
services in 2013, as the 12th-largest merchandise and 7th largest services importer. India's
economic growth slowed to 4.7% for the 2013–14 fiscal years, in contrast to higher economic
growth rates in 2000s. IMF projects India's GDP to grow at 5.6% over 2014-15. Agriculture
sector is the largest employer in India's economy but contributes a declining share of its GDP
(13.7% in 2012-13). Its manufacturing industry has held a constant share of its economic
14
contribution, while the fastest-growing part of the economy has been its services sector -
which includes construction, telecom, software and information technologies, infrastructure,
tourism, education, health care, travel, trade, banking and other components of its economy.
Source - http://www.statista.com/statistics/263617/gross-domestic-product-gdp-growth-rate-
in-india/
The automotive industry in India is one of the largest automotive markets in the world. It had
previously been one of the fastest growing markets globally, but is currently experiencing flat
or negative growth rates. India's passenger car and commercial vehicle manufacturing
industry is the sixth largest in the world, with an annual production of more than 3.9 million
units in 2011. According to recent reports, India overtook Brazil to become the sixth largest
passenger vehicle producer in the world (beating such old and new auto makers as Belgium,
United Kingdom, Italy, Canada, Mexico, Russia, Spain, France, and Brazil). Throughout the
course of 2011 and 2012, the industry grew 16-18%, selling around three million units. In
2009, India emerged as Asia's fourth largest exporter of passenger cars, behind Japan, South
Korea, and Thailand. In 2010, India beat Thailand to become Asia's third largest exporter of
passenger cars.
As of 2010, India is home to 40 million passenger vehicles. More than 3.7 million automotive
vehicles were produced in India in 2010 (an increase of 33.9%), making the country the
15
second (after China) fastest growing automobile market in the world in that year. According
to the Society of Indian Automobile Manufacturers, annual vehicle sales are projected to
increase to 4 million by 2015, no longer 5 million as previously projected.[1]
The majority of India's car manufacturing industry is based around three clusters in the south,
west and north. The southern cluster consisting of Chennai is the biggest with 35% of the
revenue share. The western hub near Mumbai and Pune contributes to 33% of the market and
the northern cluster around the National Capital Region contributes 32%. Chennai, houses the
India operations of Ford, Hyundai, Renault, Mitsubishi, Nissan, BMW, Hindustan
Motors, Daimler, Caparo, Mini, and Datsun. Chennai accounts for 60% of the country's
automotive exports. Gurgaon and Manesar in Haryana form the northern cluster where the
country's largest car manufacturer, Maruti Suzuki, is based. The Chakan corridor
near Pune, Maharashtra is the western cluster with companies like General
Motors, Volkswagen, Skoda, Mahindra and Mahindra, Tata Motors, Mercedes Benz, Land
Rover, Jaguar Cars, Fiat and Force Motors having assembly plants in the area. Nashik has a
major base of Mahindra and Mahindra with a SUV assembly unit and an Engine assembly
unit. Aurangabad with Audi, Skoda and Volkswagen also forms part of the western cluster.
Another emerging cluster is in the state of Gujarat with manufacturing facility of General
Motors in Halol and further planned for Tata Nano at their Sanand. Ford, Maruti Suzuki
and Peugeot-Citroen plants are also set to come up in Gujarat. Kolkata with Hindustan
Motors, Noida with Honda and Bangalore with Toyota are some of the other automotive
manufacturing regions around the country.
In 2011, there were 3,695 factories producing automotive parts in all of India. The average
firm made US$6 million in annual revenue with profits close to US$400 thousand.
The automobiles sector is compartmentalized in four different sectors which are as follows:
 Two-wheelers which comprise of mopeds, scooters, motorcycles and electric two-

wheelers
 Passenger Vehicles which include passenger cars, utility vehicles and multi-purpose
vehicles
 Commercial Vehicles that are light and medium-heavy vehicles
 Three Wheelers that are passenger carriers and goods carriers.
16
The automobile industry is one of the key drivers that boost the economic growth of the
country. Since the de-licensing of the sector in 1991 and the subsequent opening up of 100
percent FDI through automatic route, Indian automobile sector has come a long way. Today,
almost every global auto major has set up facilities in the country.

Austria based motorcycle manufacturer KTM, the established makers of Harley Davidson
from the US and Mahindra & Mahindra have set up manufacturing bases in India.
Furthermore, according to internal projections by Mercedes Benz Cars, India is set to become
Mercedes Benz’s fastest-growing market worldwide ahead of China, the US and Europe.

As per the data published by Department of Industrial Policy and Promotion (DIPP), Ministry
of Commerce, Government of India, the cumulative FDI inflows into the Indian automobile
industry during April 2000 to October 2013 was noted to be US$ 9,079 million, which
amounted to 4% of the total FDI inflows in terms of US $. The production of compact
superbikes is also expected to take place in India. The country has a mass production base of
16 million two-wheelers and the several global as well as Indian bike makers are looking
forward to use it as an advantage in order to roll out sports bikes in the 250 cc capacity.

The world standing for the Indian automobile sector, as per the Confederation of the Indian
industry is as follows:
 Largest three-wheeler market

 Second largest two-wheeler market
 Tenth largest passenger car market
 Fourth largest tractor market
 Fifth largest commercial vehicle market
 Fifth largest bus and truck segment
However, the year 2013-2014 has seen a decline in the industry’s otherwise smooth-running
growth. High inflation, soaring interest rates, low consumer sentiment and rising fuel prices
along with economic slowdown are the major reason for the downturn of the industry.

Except for the two-wheelers, all other segments in the industry have been weakening. There
is a negative impact on the automakers and dealers who offered high discounts in order to
17
push sales. To match the decline in demand, automakers have resorted to production cuts and
lay-offs, due to which capacity utilization for most automakers remains at a dismal level.

Despite the comprehensive market being under extreme burden, the luxury car market has
observed a robust double-digit hike during the year 2013-2014, as a result of rewarding new
launches at compelling lower price points. Further, with the measured increases in the price
of diesel, the overall market continues to shift towards petrol-fuelled cars. This has led to the
growth in sales of the 'Mini' segment of the PV market by of 5.5%

Factors determining the growth of the industry
 Fuel economy and demand for greater fuel efficiency is a major factor that affects
consumer purchase decision that will bring leading companies across two-wheeler and
four-wheeler segment to focus on delivering performance-oriented products.
 Sturdy legal and banking infrastructure
 Increased affordability, heightened demand in the small car segment and the surging
income of the Indian population
 India is the third largest investor base in the world
 The Government technology modernization fund is concentrating on establishing
India as an auto-manufacturing hub.
 Availability of inexpensive skilled workers
 Industry is perusing to elevate sales by knocking on doors of women, youth, rural and
luxury segments
 Market segmentation and product innovation

Employment Opportunities
There are a wide range of jobs available in the automobile industry. With the number of
vehicles available on the road today, the need and requirement for people who can fix these
machines is fast increasing. Careers like automobile technician, car or bike mechanics are a
great option. Becoming a diesel mechanic is also a significant alternative. Diesel mechanics
are responsible for repairing and servicing diesel engines. As they are also required to repair
engines of trucks and buses, other than cars, they are provided with hefty wages.
18

If communication with people instead of repairing cars is what interests you, then you have
the opportunity of becoming a salesperson or sales manager in an automobile company.
Career opportunities in automobile design, paint specialists, job on the assembly line and
insurance of vehicles is also available.

Employment Trends
The Automotive Mission Plan for the period of 2006-2016 aims to make India emerge as a
global automotive hub. The idea is to make India as the destination choice for design and
manufacture of automobiles and auto components, with outputs soaring to reach US$ 145
billion which is basically accounting for more than 10% of the GDP. This would also provide
further employment to over 25 million people by 2016 making the automobile the sunrise
sector of the economy.

According to the Confederation of Indian Industry, the automobile sector currently employs
over 80 lac people. An extension in production in the automobile industry is forecasted, it is
likely to rise to Rs. 600000 crore by 2016.

Future Trends in the Automobile Industry
As the auto-shows began in January 2014, the industry promised a blend of technology and
automotive. With the recession trend breaking its leashes form the past two years, 2014 is
expected to get back on track with the sales of automobiles in the country.
 Almost Self-governing cars are predicted to be on the streets by 2020

 More than half the cars on the streets are going to be powered by diesel by 2020
 Industry watcher Gartner indicates that 30 percent of motorists want parking info. The
facility is likely to come up after glitches in the infrastructure catch up.
 High Performance Hybrid cars are likely to gain greater popularity among consumers.
-By Steffi Joseph
The Indian automobile industry has a prominent future in India. Apart from meeting the
advancing domestic demands, it is penetrating the international market too. Favoured with
various benefits such as globally competitive auto-ancillary industry; production of steel at
19
lowest cost; inexpensive and high skill manpower; entrenched testing and R & D centres etc.,
the industry provide immense investment and employment opportunities.
Source - http://www.nseindia.com/content/indices/ind_cnx_auto_br.pdf
Indian Automobile Industry SWOT Analysis
A. Strengths
1. Domestic Market is large
2. Government provides monetary assistance for manufacturing units
3. Reduced Labour cost
B. Weaknesses
1. Infrastructural setbacks
2. Low productivity
3. Too many taxes levied by government increase the cost of production
20
4. Low investments in Research and Development
C. Opportunities
1. Reduction in Excise duty
2. Rural demand is rising
3. Income level is at a constant increase
D. Threats
1. Increasing rates of interest
2. Too much competition
3. Rising cost of raw materials
PEST ANALYSIS
1. Political Environment:
• The liberalization steps, such as, relaxation of the foreign exchange and equity regulations,
reduction of tariffs on imports, and refining the banking policies, have played an equally
important role in bringing the Indian Automotive industry to great heights.
• Institutionalization of automobile finance has further paved the way to sustain a long-term
high growth for the industry.
2. Economic environment:
• Rising GDP consecutively for the last 5 years has led to increased purchasing power and
hence the automobiles.
• Per capita Income is rising, which is affecting the segments of automobiles being ventured
into.
• There is cut Throat competition among many players in market.
21
• Increasing urbanization of rural India also has given rise to increase in sales.
• The concept of service in auto industry has changed into customer care now, thus
encompassing the greater value into it.
3. Social Environment:
The demand of cars has been fuelled by following factors:
• Indian families are becoming increasingly nuclear
• Increasing Propensity to spend
• Increasing distances between work-place and residence
• Increase in percentage of working women has increased number of earning members in a

family.
4. Technology:
• Alternate Fuel: increasing use of CNG and LPG instead of conventional fuel has made the
entry of new kinds of vehicle in the market.
• Advent of Internet: The customer can now use the Internet to place the order and expect the
manufacturer to fulfil his customized demand in the minimum time.
• Electric Car: With technological advancements electrical car may emerge as a preferred
option
22
II] LITERATURE REVIEW
1) Make-or-buy: a case study at an Indian automobile company
Sheshadri Vyankatrao Kulkarni and Mamata Jenamani
Strategic Outsourcing: An International Journal Vol. 1 No. 3, 2008 pp. 268-287
Literature review
MoB has been an important issue for many decades. The literature that covers MoB problem
belong to varieties of disciplines such as
- Industrial organization;
- Corporate/business strategy;
- Purchasing or supply management;
- Strategic operations management;
- Operations research; and
- Cost accounting or managerial economics ( Padillo and Diaby, 1999).
The reviewed literature helped us to understand the factors affecting the outsourcing
decision-making, theories behind it, and frameworks proposed to guide the decision maker.
We briefly discuss the literature corresponding to each of these areas.
23
2) ECONOMIC VALUE ADDED (EVA) AND OTHER ACCOUNTING
PERFORMANCE INDICATOR: AN EMPIRICAL ANALYSIS OF

INDIAN AUTOMOBILE INDUSTRY
Dr. A. Vijayakumar
March 2012 IJMT Volume 2, Issue 3 ISSN: 2249-1058
Review of Literature:
Stern (1990)1 observed that EVA as a performance measure captures the true economic profit
of an organization. EVA-based financial management and incentive compensation scheme
gives managers better-quality information and superior motivation to make decisions that will
create the maximum shareholder wealth in an organization. Stewart (1994)2 has expanded
that adoption of the EVA system by more and more companies throughout the world clearly
depicts that it provides an integrated decision - making framework, can reform energies and
redirect resources to create sustainable value for companies, customers, employees,
shareholders and for management. Grant (1996)3 found that EVA concept might have
everlastingly changed the way real profitability is measured. EVA is a financial tool that
focuses on the difference between company's after tax operating profit and its total cost of
capital. Luber (1996)4 confirmed that a positive EVA over a period of time will also have an
increasing MVA while negative EVA will bring down MVA as the market loses confidence
in the competence of a company to ensure a handsome return on the invested capital.
Banerjee (1997)5 has conducted an empirical research to find the superiority of EVA over
other traditional financial performance measures. ROI and EVA have been calculated for
sample companies and a comparison of both showing the superiority of EVA over ROI.
Ethiraj (1998)6 derived those stock prices moves up as a company adopts EVA as an internal
performance criterion. KPMG - BS study (1998)7 assessed top 100 companies on EVA,
Sales, PAT and MVA criteria. The Survey has used the BS - 1000 list of companies using a
composite index comprising sales, profitability and compounded annual growth rate of those
companies covering the period 1996-97. Sixty companies have been found able to create
positive Shareholder Value whereas 38 companies have been found to destroy it. Anand, et al
24
(1999)8 revealed that EVA and MVA are better measures of business performance that
NOPAT and EPS in terms of shareholders' value creation and competitive advantage of a
firm. Bao and Bao (1999)9 revealed that the EVA is positively and significantly correlated
with the firm value. Harihar (1999)10 highlighted some myths regarding EVA. According to
him, EVA calculations are not simple and need a lot of adjustments in the financial books.
Further, EVA figures can be manipulated to suit the needs of management. Thenmozhi
(1999)11 compared EVA with some other traditional measure of corporate performance viz.
ROI, EPS, RONW, ROE, ROCE etc. She has referred to some of the shortcomings of the
concept of EVA but maintain that EVA is a better measure of corporate performance.
Banerjee (2000)12 attempted to find out whether Market Value of Firm if the function of
current operational Value (COV) and Future Growth Value (FGV). Based on the analysis of
his data he comes to the conclusion that in many cased there was a considerable divergence
between MVA and the sum total of COA and FGV.
Manorselvi and Vijayakumar (2007) in their study revealed that the traditional measures of
performance do not reflect the real value addition to shareholders wealth and EVA has to be
explained shareholders value addition. Vijayakumar (2008) empirically indicated that Net
Operating profit After Tax (NOPAT) and Return on Net worth (RONW) are the most
significant variable with MVA followed by EVA and EPS. Soral and Shurveer (2009)
revealed that EVA has found to have significant correlation with operating margin.
Vijayakumar (2010), in his study supports the hypothesis of Stern and Stewart's that MVA of
firm was largely positively associated with EVA in all the selected sectors of Indian
Automobile industry. It appears that the concept of EVA, as an emerging concept of financial
management is fairly clear in the minds of almost all these researches whose studies have
been reviewed above. In a fast changing business environment, the investor friendly financial
performance measures may be the need of hour.
25
3) The Shock of the Shock of Crude Price, Stock Price and Selected Macro-
economic Variables on the Growth of Indian Economy
Dr. Amalendu Bhunia
Sumedha Journal of Management VOL 1, NO 2 April- June, 2012
Literature Review
This section examines relevant related literature and theoretical framework on the
relationship between oil price shocks, stock price movement and economic growth. Cavallo
and (2006) used a VAR model of three variables, they found out that following an oil price
shock, output declined and prices increased. Similarly, Raguindin and Reyes (2005)
examined the effects of oil price shocks on the Philippine economy. Their impulse response
function for a linear specification of oil prices revealed that oil price shocks lead to prolonged
declines in real GDP In the non -linear VAR however, oil price decreases play a greater role
in fluctuation of model variables than oil price increase. Rober (2008) used MA method with
OLS to find the relationship between stock prices and macroeconomic variables effects on
four emerging economies; India, Russia, Brazil and China. He used oil price, exchange rate
and moving average lag values as explanatory variables but the results were insignificant and
this showed inefficiency in the Market. He concluded that these economies are emerging so
domestic factors are more influenced by outside factors of oil price and exchange rate. To Jin
(2008), sharp increase in the international oil price and violent fluctuation of the exchange
rate are generally regarded as factors discouraging economic growth. He submitted that oil
price increase, all other things being equal, should be considered positive in oil exporting
countries and negative in oil importing countries while the reverse should be. Ahhmed
(2009), in his study found that there is unidirectional causal relationship between stock prices
and investment spending in the case of India and Bangladesh while Xiufang Wang (2010) in
the course of studying the relationship between economic activities, stock price and oil price
in three Economies: Russia, China and Japan, evidence of cointegrating relationship among
the real economic activities, stock price and oil price in Russia suggest that there is a long run
stationary relationship among the three variables. However, unlike Russia, no cointegrating
relationship among the variables was in both China and Japan.
In India, no scholars have studied the impact of oil and stock prices on Indian economy.
26
4) Shareholders' Value Creation and Market Capitalization - A Case Study
of Automobile Industry in India
Dr. Pradeep Kumar Singh, Dr. Rakesh Anand
Journal of Contemporary Research in Management, Vol. 8; No. 3 July - Sep, 2013
Review of Literature
Much work is already done at both national and international level in the area of shareholders'
value creations. Some of the researches are very useful and significant in this regards. Booth
Laurence3 explained various drivers of shareholders' value creations with the focus that stock
market values are driven by real corporate performance, as compared to market benchmarks.
As ordinary managers transformed themselves as value managers with the help of CSV
model, they are more close to value creation process. This model emphasis that the
enhancement of turnover ratios increases profit margins and as a result it increases
profitability. Baruch Lev4 examined the relationship of knowledge assets and shareholders'
value creation. He found that investors recognize the primacy of knowledge assets as value-
creators, but don't count on capital markets to value property in real time those assets. He
concluded that, these companies which most urgently need to adopt new technologies, change
organizational designs and invest in research and human resources. These companies
encounter great difficulties doing so because of the high uncertainty associated with most
knowledge assets, and investors' preference for quick gratification in the form of high
corporate earnings. Beatrice Nyiramahoro and Natalia Shooshina5 examined why old
traditional measures are criticized for having low correlation with shareholders' value
creation. The empirical part of the study showed that although the companies have
implemented many ways to create shareholders' value, little effort is being made to measure it
since majority of them are still using the traditional accounting measures. They recommended
the companies to use 'value based methods' while measuring shareholders' value creation
since they are more reliable. Pablo Fernandez6 explained various aspects of shareholders'
value creation with the help of the case study of 'General Electric' between 1991-1999. He
calculated shareholders ‘value for 142 American companies during the eight year period
1992-99 and popularize the concept of shareholders' value creation.
N Viswanadham and Poornima Luthra7 focused on the strategic profit model (SPM) and the
economic value-added (EVA) to measure shareholders' value. SPM measures the return on
27
net worth (RONW) which is the return on assets (ROA) multiplied by the financial leverage.
EVA is the firm's net operating profit after taxes (NOPAT) minus the capital charge. The
study was significant in extending the measurement of shareholders ‘value using SPM and
EVA to listed third party software providers. They concluded that fixed assets, accounts
receivables and operating expenditure are the areas that require attention by the companies to
enhance shareholders' value. Chakraborty P.K.8 stated that the shareholders' value creation is
the top most priority for the corporate world today. This move has gained added momentum
with the rising expectation of the shareholders for their value of money. He explained
different facets and principles of shareholders' value creation from professional perspective.
He stressed brand management, cost control and cost reduction, employee's interest and
retention as an important area for value creation. Mohanty B.K9 focused on market
capitalization by Indian companies in the last one decade. His analysis is based on different
classification such as large cap, midcap and small-cap. He made a systematic analysis of top
ten gainers, losers and most wealth creators based on market capitalization and how
management should focus on different aspects of wealth creation practices.
All these researches are significant but none of the study was on how intangible assets are
important in enhancement of market capitalization as well as shareholders' value creation.
28
5) Crossing the bridge to poverty, with low-cost cars
Sofie Van den waeyenberg and Luc Hens
Journal of Consumer Marketing Volume 25 · Number 7 · 2008 · 439–445
Review of the literature
We will confront the bottom of the pyramid literature with Rogers' diffusion of innovations
theory and Kotler's transactional marketing paradigm.
The bottom of the pyramid
Authors in the bottom of the pyramid field argue that success requires companies to rethink
their products and business models, including marketing, and distribution. The authors advise
companies to expand the reach of stakeholder management, to choose non-traditional
partners, and to adopt a native capability.
Non-traditional partnerships
Traditionally companies collaborate with national government and large local companies to
obtain a foothold in a foreign country. An analysis of ventures at the bottom of the pyramid
however shows that multinationals that collaborate with non-traditional partners - such as
local governments, non-profit organizations, and other groups within the community - are
more successful than traditional partnerships ( London and Hart, 2004). Prahalad and
Hammond (2002) extend the list of non-traditional partners with local entrepreneurs, business
consortia, and women.
Working with non-traditional partners has several benefits for multinationals: access to
resources and information (London and Hart, 2004; Prahalad and Hart, 2002), co-invention of
products by adding local content (London and Hart, 2004), more credibility (Prahalad and
Hart, 2002), efficient use of infrastructure, and risk reduction (Prahalad and Hammond,
2002). However, different agendas and economic and educational backgrounds could prevent
the partnership from working efficiently and effectively (Prahalad and Hart, 2002).
A native capability
Transnational corporations can achieve worldwide success by combining global efficiency,

worldwide learning, and local responsiveness (Bartlett et al., 2003). Making products locally
29
responsive, however, appears insufficient as Hart (2005) and Prahalad and Lieberthal (1998)
argue that products from transnationals are still not tailored enough to fit the needs of the
people in low- and middle-income countries. Hart (2005) calls out to multinationals to
become indigenous to the bottom of the pyramid and develop a native capability, which will
enable companies "to develop fully contextualized solutions to real problems in ways that
respect local culture and natural diversity (Hart, 2005, p. 21)." Companies can develop a
native capability by learning about the needs, lifestyles, and cultures of the people at the
bottom of the pyramid, and by co-inventing products with them (Hart, 2005; London and
Hart, 2004).
In sum, by reaching out to the poor and setting up non-traditional partnerships, companies
develop a native capability and become indigenous to the markets they want to target.
The diffusion of innovations
What would companies aim to achieve by first going to low- and middle-income countries
before going to high-income countries? Prahalad and Hart (2002) and Hart (2005) consider
profits to be a company's main long-term objective. They argue that companies can make
more profit if they launch an early version of the new product only in low- or middle-income
countries instead of continuing to work on it in R&D-departments, use the experience to
improve the product, and sell it in high-income countries (i.e. "up-market migration") (Hart,
2005; Hart and Christensen, 2002; Prahalad and Hart, 2002). In the short term, the
company's objective is not profit but sales. To maximize the learning effects - lower cost as
cumulative output increases and better quality as customers give feedback - the company
aims to sell the product in the short term to as many people as possible. Either way, the
company focuses on diffusing the new product.
The number of potential adopters in a country depends on the size of the population. In 2005
almost 5.5 billion people lived in low- and middle-income countries, five times more than the
population of all high-income countries (UNDP, 2007). Duly Prahalad and Hart (2002; Hart,
2005; Prahalad, 2006) emphasize that this market is too large to ignore. However, a large
population does not guarantee a high number of adopters. Potential customers go through
several stages, from finding out about the existence of a product to adopting or rejecting the
product (the knowledge, persuasion, decision, implementation, and confirmation stages;
Rogers, 2003). Potential customers evaluate an innovation by five criteria: relative advantage,
compatibility, complexity, trial ability, and observability (Rogers, 2003). Companies have to
30
rethink production, marketing, and distribution keeping in mind the characteristics that
distinguish low- and middle-income countries from high-income countries and that determine
a consumer's assessment of the innovation. Which characteristics affect product diffusion in
low-income countries will be discussed subsequently along with the case study.
31
III] Methodology
1) Design
1) Certificate
2) Acknowledgement
3) Executive Summary
4) List of Tables
5) Index
6) Situation Analysis
7) Literature Review
8) Data Collection (Secondary Sources)
 Overview of India’s GDP, Size of Economy
 Percentage of automobile sector in GDP
 Overview of India’s automobile sector.
 Different players in India
 Maruti company
 Financial Statements
 Financial Ratios
 M&M
 Tata Motors
9) Data Analysis
 Fundamental Analysis [ E-I-C ]
 Economy
 Industry
 Company
32
 Ratios Analysis of Financial Statements
 Bar Diagram or Pie chat Analysis
 Interpretation of the Data Analysis
10) Conclusions & Recommendations
11) References
33
2) Data collection
 Overview of India’s GDP, Size of Economy

 Percentage of automobile sector in GDP
 Overview of India’s automobile sector.
 Different players in India
 Maruti company
 M&M
 Tata Motors
34
3) Sample
 Tata Motors Ltd

 Maruti Suzuki India Ltd
 Mahindra & Mahindra Ltd
35
4) Data analysis
 Fundamental Analysis [ E-I-C ]
 Economy
 Industry
 Company
 Ratios Analysis of Financial Statements

 Bar Diagram or Pie chat Analysis
 Interpretation of the Data Analysis
36
IV] DATA ANALYSIS
Analysis of Automobile Industry
What is fundamental analysis?
Fundamental analysis is the foundation of solid investing. It helps you determine the
underlying health of a company by examining the business’ core numbers: its income
statements, its earnings releases, its balance sheet, and other indicators of economic health.
From these “fundamentals” investors evaluate if a stock is under- or overvalued.
Fundamental analysis begins with an individual stock, but it also extends to that company’s
larger context. It explores questions like these: Is the company competitive within its
industry? Is that industry growing or shrinking, compared to other sectors?
Shares of companies with strong fundamentals will tend to go up over time, while
fundamentally weak companies will see their stock prices fall. This makes fundamental
analysis especially valuable to long-term investors.
Fundamental analysis is one school of investing research. It contrasts with another popular
approach, technical analysis, which focuses not on business fundamentals but on stock-price
action as reflected in charts. Technical analysts look for recognizable patterns in price charts
that will help them estimate the stock’s future price movement.
Economic Analysis
The economy is studied to determine if overall conditions are good for the stock market. Is
inflation a concern? Are interest rates likely to rise or fall? Are consumers spending? Is the
trade balance favourable? Is the money supply expanding or contracting? These are just some
of the questions that the fundamental analyst would ask to determine if economic conditions
are right for the stock market.
37
Industry Analysis
The company's industry obviously influences the outlook for the company. Even the best
stocks can post mediocre returns if they are in an industry that is struggling. It is often said
that a weak stock in a strong industry is preferable to a strong stock in a weak industry.
Company Analysis
After determining the economic and industry conditions, the company itself is analysed to
determine its financial health. This is usually done by studying the company's financial
statements. From these statements a number of useful ratios can be calculated. The ratios fall
under five main categories: profitability, price, liquidity, leverage, and efficiency. When
performing ratio analysis on a company, the ratios should be compared to other companies
within the same or similar industry to get a feel for what is considered "normal." At least one
popular ratio from each category is shown below.
Why conduct fundamental analysis?
Fundamental analysis helps you determine if a company is a good or poor investment choice.
Imagine you’re a venture capitalist or a bank, who must decide if that company is worthy of a
loan or equity investment. How can you evaluate whether this particular company deserves
your investable capital?
Fundamental analysts consider the following in making their decision to invest (or not):
 Is the company making a profit consistently? (While this is naturally the most
important question for investors, it’s important to consider the answer in a bigger
context. A single profitable quarter for a new company might be a fluke. In the same
regard, a drop in profitability for an established blue-chip company might just be a
temporary setback.)
 Is that profit growing or declining over time?
 Is the company holding its own relative to the competition? Is it a leader in its sector?
Is that sector growing or declining in importance to the overall economy?
38
 Can the company pay its bills adequately? If you were to dismantle the company’s
operations today, what would be the intrinsic value of its assets versus the value of its
debts?
A) Economic Analysis
Economic analysis is the analysis of forces operating the overall economy a country.
Economic analysis is a process whereby strengths and weaknesses of an economy are
analysed. Economic analysis is important in order to understand exact condition of an
economy.
QUARTERLY ESTIMATES OF GROSS DOMESTIC PRODUCT
AT FACTOR COST (At Constant Prices)
Rs in Billions
Industry/ Quarter Agriculture & Mining & Manufacturing Electricity,

Year allied activities Quarrying Gas & Water
Supply
Q1 1850.84 254.9 2063.4 269.99
2013-14 Q2 1508.22 244.84 2102.11 273.69
Q3 2504.77 270.75 2123.19 270.9
Q4 2141.65 297.9 2288.35 275.6
Construction Trade, Hotel, Finance,Insurance.Real Community, Social GDP

Transport & Estate & Business & Personal Services at
Communications Services factor
cost
1028.8 3550.18 2884.94 1704.58 13608
1023.8 3702.1 2897.62 1912.05 13664
1067.6 3779.15 2989.68 1756.09 14762
1146.5 4146.83 3064.89 2022.05 15384
Source – www.rbi.org
39
GDP and Automobile Industry
India’s Economy Overview
Rank 10th (nominal) / 3rd (PPP)
Statistics
GDP
$2.047 trillion (nominal: 10th; 2014)
GDP growth 4.7% (2013)
5.6% (2014 EST.)
GDP by sector
Agriculture: 13.7%, industry: 21.5%, services: 64.8% (2013)
Inflation (CPI)
CPI: 5.5%, WPI: 1.7% (October 2014
Population below poverty line

29.5% (2012, Rangarajan panel)
22% (2012, Reserve Bank of India),
179.6 million People (2014, World Bank)
Labour forces 487.3 million (2013 EST.)
Labour force by occupation
Agriculture: 49%, industry: 20%, services: 31% (2012 EST.)
Unemployment 3% Urban, 2% Rural, 10.8 million Total
(2013, NSSO method)
Average gross salary $1.46 per hour ($3,036.8 yearly in 2010);
Average household income: $6,671 yearly (2011)
Main industries
40
Agriculture, petroleum products, chemicals, pharmaceuticals, software, textiles, steel,
transportation equipment, machinery, cement, mining, construction
External
Exports
$313.2 billion: merchandize exports,
$150.9 billion: services exports,
Export goods
Software, petrochemicals, agriculture products, jewellery, engineering goods,
pharmaceuticals, textiles, chemicals, transportation parts, ores and other commodities
Main export partners

European Union 16.8 %( 2012)
United States 12.8%
China 5.1%
Singapore 4.7%
Imports
$488.6 billion: merchandize imports,
$128.1 billion: services imports,
Import goods
crude oil, gold and precious stones, electronics, engineering goods, chemicals, plastics, coal
and ores, iron and steel, vegetable oil and other commodities
Main import partners China 11.1% (2012)
European Union 11.1%
Saudi Arabia 6.7%
41
Switzerland 5.9%
FDI stock
Inflows: $151.7 billion,
Outflows: $54.6 billion (2009-2013)
Budget deficit
4.8% of GDP (2012–13)
Economic aid $1.66 billion (2012)
Credit rating
BBB- (Domestic)
BBB- (Foreign)
BBB+ (T&C Assessment)
Outlook: Stable
(Standard & Poor's)
Foreign reserves
$313.68 billion (as of 17 October 2014)
Source – cia world fact sheet
The economy of India is the tenth-largest in the world by nominal GDP and the third-

largest by purchasing power parity (PPP). The country is one of the G-20 major economies, a
member of BRICS and a developing economy that is among the top 20 global traders
according to the WTO. India was the 19th-largest merchandise and the 6th largest services
exporter in the world in 2013; it imported a total of $616.7 billion worth of merchandise and
services in 2013, as the 12th-largest merchandise and 7th largest services importer. India's
economic growth slowed to 4.7% for the 2013–14 fiscal years, in contrast to higher economic
growth rates in 2000s. IMF projects India's GDP to grow at 5.6% over 2014-15. Agriculture
sector is the largest employer in India's economy but contributes a declining share of its GDP
(13.7% in 2012-13). Its manufacturing industry has held a constant share of its economic
42
contribution, while the fastest-growing part of the economy has been its services sector -
which includes construction, telecom, software and information technologies, infrastructure,
tourism, education, health care, travel, trade, banking and other components of its economy.
Source - http://www.statista.com/statistics/263617/gross-domestic-product-gdp-growth-rate-
in-india/
The automotive industry in India is one of the largest automotive markets in the world. It had
previously been one of the fastest growing markets globally, but is currently experiencing flat
or negative growth rates. India's passenger car and commercial vehicle manufacturing
industry is the sixth largest in the world, with an annual production of more than 3.9 million
units in 2011. According to recent reports, India overtook Brazil to become the sixth largest
passenger vehicle producer in the world (beating such old and new auto makers as Belgium,
United Kingdom, Italy, Canada, Mexico, Russia, Spain, France, and Brazil). Throughout the
course of 2011 and 2012, the industry grew 16-18%, selling around three million units. In
2009, India emerged as Asia's fourth largest exporter of passenger cars, behind Japan, South
Korea, and Thailand. In 2010, India beat Thailand to become Asia's third largest exporter of
passenger cars.
43
As of 2010, India is home to 40 million passenger vehicles. More than 3.7 million automotive
vehicles were produced in India in 2010 (an increase of 33.9%), making the country the
second (after China) fastest growing automobile market in the world in that year. According
to the Society of Indian Automobile Manufacturers, annual vehicle sales are projected to
increase to 4 million by 2015, no longer 5 million as previously projected.[1]
The majority of India's car manufacturing industry is based around three clusters in the south,
west and north. The southern cluster consisting of Chennai is the biggest with 35% of the
revenue share. The western hub near Mumbai and Pune contributes to 33% of the market and
the northern cluster around the National Capital Region contributes 32%. Chennai, houses the
India operations of Ford, Hyundai, Renault, Mitsubishi, Nissan, BMW, Hindustan
Motors, Daimler, Caparo, Mini, and Datsun. Chennai accounts for 60% of the country's
automotive exports. Gurgaon and Manesar in Haryana form the northern cluster where the
country's largest car manufacturer, Maruti Suzuki, is based. The Chakan corridor
near Pune, Maharashtra is the western cluster with companies like General
Motors, Volkswagen, Skoda, Mahindra and Mahindra, Tata Motors, Mercedes Benz, Land
Rover, Jaguar Cars, Fiat and Force Motors having assembly plants in the area. Nashik has a
major base of Mahindra and Mahindra with a SUV assembly unit and an Engine assembly
unit. Aurangabad with Audi, Skoda and Volkswagen also forms part of the western cluster.
Another emerging cluster is in the state of Gujarat with manufacturing facility of General
Motors in Halol and further planned for Tata Nano at their Sanand. Ford, Maruti Suzuki
and Peugeot-Citroen plants are also set to come up in Gujarat. Kolkata with Hindustan
Motors, Noida with Honda and Bangalore with Toyota are some of the other automotive
manufacturing regions around the country.
In 2011, there were 3,695 factories producing automotive parts in all of India. The average
firm made US$6 million in annual revenue with profits close to US$400 thousand.
The automobiles sector is compartmentalized in four different sectors which are as follows:
 Two-wheelers which comprise of mopeds, scooters, motorcycles and electric two-

wheelers
 Passenger Vehicles which include passenger cars, utility vehicles and multi-purpose
vehicles
44
 Commercial Vehicles that are light and medium-heavy vehicles
 Three Wheelers that are passenger carriers and goods carriers.
The automobile industry is one of the key drivers that boost the economic growth of the
country. Since the de-licensing of the sector in 1991 and the subsequent opening up of 100
percent FDI through automatic route, Indian automobile sector has come a long way. Today,
almost every global auto major has set up facilities in the country.

Austria based motorcycle manufacturer KTM, the established makers of Harley Davidson
from the US and Mahindra & Mahindra have set up manufacturing bases in India.
Furthermore, according to internal projections by Mercedes Benz Cars, India is set to become
Mercedes Benz’s fastest-growing market worldwide ahead of China, the US and Europe.

As per the data published by Department of Industrial Policy and Promotion (DIPP), Ministry
of Commerce, Government of India, the cumulative FDI inflows into the Indian automobile
industry during April 2000 to October 2013 was noted to be US$ 9,079 million, which
amounted to 4% of the total FDI inflows in terms of US $. The production of compact
superbikes is also expected to take place in India. The country has a mass production base of
16 million two-wheelers and the several global as well as Indian bike makers are looking
forward to use it as an advantage in order to roll out sports bikes in the 250 cc capacity.

The world standing for the Indian automobile sector, as per the Confederation of the Indian
industry is as follows:
 Largest three-wheeler market

 Second largest two-wheeler market
 Tenth largest passenger car market
 Fourth largest tractor market
 Fifth largest commercial vehicle market
 Fifth largest bus and truck segment
However, the year 2013-2014 has seen a decline in the industry’s otherwise smooth-running
growth. High inflation, soaring interest rates, low consumer sentiment and rising fuel prices
along with economic slowdown are the major reason for the downturn of the industry.
45

Except for the two-wheelers, all other segments in the industry have been weakening. There
is a negative impact on the automakers and dealers who offered high discounts in order to
push sales. To match the decline in demand, automakers have resorted to production cuts and
lay-offs, due to which capacity utilization for most automakers remains at a dismal level.

Despite the comprehensive market being under extreme burden, the luxury car market has
observed a robust double-digit hike during the year 2013-2014, as a result of rewarding new
launches at compelling lower price points. Further, with the measured increases in the price
of diesel, the overall market continues to shift towards petrol-fuelled cars. This has led to the
growth in sales of the 'Mini' segment of the PV market by of 5.5%

Factors determining the growth of the industry
 Fuel economy and demand for greater fuel efficiency is a major factor that affects
consumer purchase decision that will bring leading companies across two-wheeler and
four-wheeler segment to focus on delivering performance-oriented products.
 Sturdy legal and banking infrastructure
 Increased affordability, heightened demand in the small car segment and the surging
income of the Indian population
 India is the third largest investor base in the world
 The Government technology modernization fund is concentrating on establishing
India as an auto-manufacturing hub.
 Availability of inexpensive skilled workers
 Industry is perusing to elevate sales by knocking on doors of women, youth, rural and
luxury segments
 Market segmentation and product innovation
Employment Opportunities
There are a wide range of jobs available in the automobile industry. With the number of
vehicles available on the road today, the need and requirement for people who can fix these
46
machines is fast increasing. Careers like automobile technician, car or bike mechanics are a
great option. Becoming a diesel mechanic is also a significant alternative. Diesel mechanics
are responsible for repairing and servicing diesel engines. As they are also required to repair
engines of trucks and buses, other than cars, they are provided with hefty wages.

If communication with people instead of repairing cars is what interests you, then you have
the opportunity of becoming a salesperson or sales manager in an automobile company.
Career opportunities in automobile design, paint specialists, job on the assembly line and
insurance of vehicles is also available.

Employment Trends
The Automotive Mission Plan for the period of 2006-2016 aims to make India emerge as a
global automotive hub. The idea is to make India as the destination choice for design and
manufacture of automobiles and auto components, with outputs soaring to reach US$ 145
billion which is basically accounting for more than 10% of the GDP. This would also provide
further employment to over 25 million people by 2016 making the automobile the sunrise
sector of the economy.

According to the Confederation of Indian Industry, the automobile sector currently employs
over 80 lac people. An extension in production in the automobile industry is forecasted, it is
likely to rise to Rs. 600000 crore by 2016.

Future Trends in the Automobile Industry
As the auto-shows began in January 2014, the industry promised a blend of technology and
automotive. With the recession trend breaking its leashes form the past two years, 2014 is
expected to get back on track with the sales of automobiles in the country.
 Almost Self-governing cars are predicted to be on the streets by 2020

 More than half the cars on the streets are going to be powered by diesel by 2020
 Industry watcher Gartner indicates that 30 percent of motorists want parking info. The
facility is likely to come up after glitches in the infrastructure catch up.
 High Performance Hybrid cars are likely to gain greater popularity among consumers.
-By Steffi Joseph
47
The Indian automobile industry has a prominent future in India. Apart from meeting the
advancing domestic demands, it is penetrating the international market too. Favoured with
various benefits such as globally competitive auto-ancillary industry; production of steel at
lowest cost; inexpensive and high skill manpower; entrenched testing and R & D centres etc.,
the industry provide immense investment and employment opportunities.
Source - http://www.nseindia.com/content/indices/ind_cnx_auto_br.pdf
48
B) INDUSTRY ANALYSIS (AUTOMOBILE)
 Analysis Of Automobile Industry
The current trends of the global automobile industry reveal that in the developed countries the
automobile industries are stagnating as a result of drooping markets, whereas the automobile
industry in the developing nations, have been consistently registering higher growth rates
every passing year for their domestic flourishing domestic automobile markets.
Being one of the fastest growing sectors in the world its dynamic growth phases are
explained by the nature of competition, Product Life Cycle and consumer demand. The
industry is at the crossroads with global mergers and relocation of production centres to
emerging developing countries.
1) Five Forces Model

Michael Porter identifies five forces that influence an industry. These forces are
 Degree of Rivalry
Despite the high concentration ratio seen in the automotive sector, rivalry in
the Indian auto sector is intense due to the entry of foreign companies in the
market. The industry rivalry is extremely high with any being product being
matched in a few months by the competitors. This instinct of the industry is
primarily driven by technical capabilities acquired over years of gestation
under the technical collaboration with international players.
 Threat of Substitutes
The threat of substitutes to the automotive industry is fairly mild. Numerous

other forms of transportation are available, but none offer the utility,
convenience, independence and value offered by automobiles. The switching
cost associated with using a different mode of transportation, may be high in
terms of personal time, convenience and utility.
49
 Barriers to entry
The barriers to enter automotive industry are substantial. For a new company,
the start-up capital required to establish manufacturing capacity to achieve
minimum efficient scale is prohibitive. Although the barriers to new
companies are substantial, establishing companies are entering the new
markets through strategic partnerships or through buying out or merging with
other companies. However, a domestic company, with local knowledge and
expertise, has the potential to compete its home market against the global
firms who are not well established there.
 Supplier’s power
In the relationship between the industry and its suppliers, the power axis is
tipped in industry’s favour. The industry is comprised of powerful buyers who
are generally able to dictate their terms to the suppliers.
 Buyers’ Power
In the relationship between the automotive industry and its ultimate

consumers, the power axis is tipped in the consumers’ favour. This is due to
the fairly standardized nature and the low switching costs associated with
selecting from among competing brands.
2) BCG Matrix
In an economy, different industries are present and different industries have different growth
rate as compared to the growth of the economy. In an economy, there are a number of major
industries and they all occupy different positions in the BCG matrix according to their growth
and contribution towards the economy. In the Indian economy, some of the major sectors are
50
FMCG, automobiles, banking and insurance, steel, telecom, software, pharmacology and
retail sectors and these can be placed in the different positions in the matrix as shown below:
INDUSTRY BCG MATRIX
Sources: www.economictimes.com
BCG matrix is used to determine the relative position of the companies of an industry or
different SBU’s of any institution, in terms of the market growth rate and the market share of
the company in the industry. In the Indian automobile sector, the major players are Maruti
Suzuki Limited, General motors, Mahindra and Mahindra, Tata Motors, Hero Honda and
Bajaj auto. In the BCG matrix, the companies are placed in one of the following four
categories: Star, Cash Cows, Dogs and Question marks. In the Stars we place the companies
with high market growth and high market share, cash cows are the companies who have low
market growth rate and high relative market share, the category of the question marks include
the companies with low relative market share and high market growth rate and dogs include
the companies who have low relative market share and low market growth rate.
51
COMPANY BCG MATRIX
Sources: www.economictimes.com
3) SWOT Analysis
A. Strengths
1. Domestic Market is large
2. Government provides monetary assistance for manufacturing units
3. Reduced Labour cost
B. Weaknesses
1. Infrastructural setbacks
2. Low productivity
3. Too many taxes levied by government increase the cost of production
4. Low investments in Research and Development
C. Opportunities
1. Reduction in Excise duty
2. Rural demand is rising
3. Income level is at a constant increase
52
D. Threats
1. Increasing rates of interest
2. Too much competition
3. Rising cost of raw materials
Source - IJRMET Vol. 2, Issue 2, May - Oct 2012
4) PEST ANALYSIS
1. Political Environment:
• The liberalization steps, such as, relaxation of the foreign exchange and equity regulations,
reduction of tariffs on imports, and refining the banking policies, have played an equally
important role in bringing the Indian Automotive industry to great heights.
• Institutionalization of automobile finance has further paved the way to sustain a long-term
high growth for the industry.
2. Economic environment:
• Rising GDP consecutively for the last 5 years has led to increased purchasing power and
hence the automobiles.
• Per capita Income is rising, which is affecting the segments of automobiles being ventured
into.
• There is cut Throat competition among many players in market.
• Increasing urbanization of rural India also has given rise to increase in sales.
• The concept of service in auto industry has changed into customer care now, thus
encompassing the greater value into it.
3. Social Environment:
The demand of cars has been fuelled by following factors:
• Indian families are becoming increasingly nuclear
• Increasing Propensity to spend
• Increasing distances between work-place and residence
• Increase in percentage of working women has increased number of earning members in a
family.
53
4. Technology:
• Alternate Fuel: increasing use of CNG and LPG instead of conventional fuel has made the
entry of new kinds of vehicle in the market.
• Advent of Internet: The customer can now use the Internet to place the order and expect the
manufacturer to fulfil his customized demand in the minimum time.
• Electric Car: With technological advancements electrical car may emerge as a preferred
option
54
C) COMPANY ANALYSIS (AUTOMOBILE)
Consolidated Balance Sheet of Maruti Suzuki IndiaX
Mar '14 Mar '13 Mar '12 Mar '11 Mar '10

12 months 12 months 12 months 12 months 12 months
Sources Of Funds
Total Share Capital 151 151 144.5 144.5 144.5
Equity Share Capital 151 151 144.5 144.5 144.5
Share Application Money 0 0 0 0 0
Preference Share Capital 0 0 0 0 0
Init. Contribution Settler 0 0 0 0 0
Preference Share 0 0 0 0 0
Application Money
Employee Stock Option 0 0 0 0 0
Reserves 21,345.40 18,876.80 15,530.00 14,164.30 12,038.10
Net worth 21,496.40 19,027.80 15,674.50 14,308.80 12,182.60
Secured Loans 0 0 0 0 26.5
Unsecured Loans 1,865.30 1,568.80 1,262.20 315 794.9
Total Debt 1,865.30 1,568.80 1,262.20 315 821.4
Minority Interest 12.2 10.6 0 0 0
Policy Holders Funds 0 0 0 0 0
Group Share in Joint 0 0 0 0 144.9
Venture
Total Liabilities 23,373.90 20,607.20 16,936.70 14,623.80 13,148.90

Application Of Funds
Gross Block 22,837.20 19,985.10 14,998.90 11,933.50 10,608.50
Less: Revaluation Reserves 0 0 0 0 0
Less: Accum. Depreciation 11,803.50 9,963.40 7,253.40 6,261.70 5,437.20
Net Block 11,033.70 10,021.70 7,745.50 5,671.80 5,171.30
Capital Work in Progress 2,639.50 1,967.90 612.2 879.2 392.2
Investments 10,527.10 7,421.40 6,545.00 5,439.30 7,396.40
Inventories 1,763.20 1,887.20 1,837.80 1,438.60 1,207.90
Sundry Debtors 1,489.10 1,489.20 1,006.60 881.3 820.7
Cash and Bank Balance 648.6 814.8 2,463.40 2,532.00 116.8
Total Current Assets 3,900.90 4,191.20 5,307.80 4,851.90 2,145.40
55
Loans and Advances 3,310.20 3,868.60 2,888.80 2,264.10 1,747.50
Fixed Deposits 0 0 0 0 30.2
Total CA, Loans & 7,211.10 8,059.80 8,196.60 7,116.00 3,923.10
Advances
Deferred Credit 0 0 0 0 0
Current Liabilities 7,164.10 5,995.80 5,469.70 3,966.40 3,199.20
Provisions 873.4 867.8 692.9 516.1 619.2
Total CL & Provisions 8,037.50 6,863.60 6,162.60 4,482.50 3,818.40
Net Current Assets -826.4 1,196.20 2,034.00 2,633.50 104.7
Minority Interest 0 0 0 0 0
Group Share in Joint 0 0 0 0 84.3
Venture
Miscellaneous Expenses 0 0 0 0 0
Total Assets 23,373.90 20,607.20 16,936.70 14,623.80 13,148.90
5,322.10 5,502.20 3,333.90 2,861.80 3,708.20
Contingent Liabilities
Book Value (Rs) 711.61 629.89 542.54 495.27 421.67

Source : Dion Global Solutions Limited
Consolidated Cash Flow of Maruti Suzuki India
X Mar '14 Mar '13 Mar '12 Mar '11 Mar '10

3658.5 2991 2146.2 3108.8 3592.5
Net Profit Before Tax
Net Cash From Operating 4903.5 4384.2 2229.4 2819.4 2887.4
Activities
Net Cash (used in)/from -4892.9 -3574.1 -2918.3 343 -4783.3
Investing Activities
Net Cash (used in)/from -65.9 -966.3 616.5 -752.1 55.1
Financing Activities
Net (decrease)/increase In -55.3 -156.2 -72.4 2410.3 -1840.8
Cash and Cash
56
Equivalents
Opening Cash & Cash 125 281.2 2508.5 98.2 1939
Equivalents
Closing Cash & Cash 69.7 125 2436.1 2508.5 98.2
Equivalents
Financial Ratios of Maruti Suzuki India

Investment Valuation Ratios
Face Value 5 5 5 5 5
Dividend Per Share -- -- -- -- --
Operating Profit Per Share (Rs) 172.27 143.29 87.4 97.69 120.18
1,471.4 1,466.6 1,248.1 1,264.8 1,018.9
Net Operating Profit Per Share (Rs)
8 4 7 8 0
Free Reserves Per Share (Rs) -- -- -- 489.49 415.74
Bonus in Equity Capital -- -- -- -- --
Profitability Ratios
Operating Profit Margin (%) 11.7 9.76 6.99 9.9 11.79
Profit Before Interest And Tax
6.81 5.4 3.68 7.03 8.64
Margin (%)
Gross Profit Margin (%) 6.94 5.5 3.77 7.13 8.93
Cash Profit Margin (%) 10.92 9.61 7.57 8.86 10.9
Adjusted Cash Margin (%) 10.92 9.61 7.57 8.65 10.9
Net Profit Margin (%) 6.3 5.47 4.55 6.29 8.62
57
Adjusted Net Profit Margin (%) 6.3 5.47 4.55 6.32 8.62
Return On Capital Employed (%) 16.77 15.87 13.02 21.63 27.94
Return On Net Worth (%) 13.27 12.97 10.72 16.64 21.54
Adjusted Return on Net Worth (%) 13.17 12.86 10.42 15.69 20.34
Return on Assets Excluding
711.61 629.89 542.54 495.27 421.67
Revaluations
Return on Assets Including
711.61 629.89 542.54 495.27 421.67
Revaluations
Return on Long Term Funds (%) 17.71 16.56 13.92 21.24 28.83
Liquidity And Solvency Ratios
Current Ratio 0.78 1.04 1.13 1.47 0.92
Quick Ratio 0.68 0.9 1.03 1.14 0.69
Debt Equity Ratio 0.09 0.08 0.08 0.02 0.07
Long Term Debt Equity Ratio 0.03 0.04 0.01 0.02 0.03
Debt Coverage Ratios
Interest Cover 21.24 16.45 35.82 107.63 108.48
Total Debt to Owners Fund 0.09 0.08 0.08 0.02 0.07
Financial Charges Coverage Ratio 32.71 25.96 54.7 169.26 133.59
Financial Charges Coverage Ratio
27.93 22.94 47.16 140.91 104.47
Post Tax
Management Efficiency Ratios
Inventory Turnover Ratio 25.21 23.48 19.64 25.83 30.61
Debtors Turnover Ratio 29.85 35.5 38.23 43.66 33.7
Investments Turnover Ratio 25.21 23.48 21.79 33.35 30.61
Fixed Assets Turnover Ratio 1.96 2.24 2.44 3.13 2.78
Total Assets Turnover Ratio 1.92 2.17 2.16 2.55 2.22
Asset Turnover Ratio 2.02 2.36 2.28 2.63 2.78

Average Raw Material Holding -- -- -- 9.87 10.52
Average Finished Goods Held -- -- -- 4.5 5.29
Number of Days In Working Capital -4.93 1.35 20.31 20.82 1.28
Profit & Loss Account Ratios
Material Cost Composition 71.98 74.97 79.68 80.16 78.19
Imported Composition of Raw
-- -- -- -- --
Materials Consumed
Selling Distribution Cost
-- -- -- 2.69 3.38
Composition
Expenses as Composition of Total
-- -- -- -- --
Sales
Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit 14.86 11.45 14.97 10.56 7.69
Dividend Payout Ratio Cash Profit 8.53 6.48 8.85 7.37 5.83
Earning Retention Ratio 85.03 88.46 84.59 88.8 91.85
Cash Earning Retention Ratio 91.43 93.49 91 92.32 93.92
58
Adjusted Cash Flow Times 0.38 0.36 0.45 0.09 0.25

Financials
Y/E Mar 2015E 2016E 2017E
Sales 514.3 625.1 749
EBITDA 66.2 90.7 114.3
Adj. PAT 38.2 54.8 71.6
Adj EPS,INR# 129 184 240
EPS Gr. (%) 36.8 42.5 30.1
BV/Sh. (INR) 798 944 1,138
RoE (%) 15.9 19.2 20.8
RoCE (%) 18.4 23.1 25.4
Payout (%) 18.4 19.2 18.4
Valuations
P/E (x) 26.2 18.4 14.1
P/CE (x) 16.2 12.3 9.9
EV/EBITDA (x) 13.9 9.7 7.2
Div. Yield (%) 0.6 0.9 1.1
th
CMP: INR3,390 on 14 Nov TP: INR4,800 Buy
CMP: INR3,609 on 25th Jan
Nov-14 above estimate, with ~19.5% YoY growth
Strong growth in Vans and Compact segment
 Nov-14 volumes grew by 19.5% YoY (flat MoM) to ~110,147 units (v/s est 98,000
units), driven by ~17% growth in domestic volumes and ~53% growth in exports. We
estimate ~14.4% growth in FY15, implying ~17% residual growth or ~121,336
59
residual run-rate.
 Domestic volumes grew 17% YoY to ~100,024 units (v/s est 90k). We estimate
~14.4% growth in FY15 in domestic volumes implying 16.7% residual growth or
~112k/month of run-rate.
 Compact segment (Alto, Wagon-R, Swift, Celerio, Ritz etc) grew by ~16% YoY to
~63,074 units (v/s est 55,770 units).
 Sedan (A3) segment saw a healthy growth of 24% YoY to 19,232 units (v/s est
20,132 units), driven by Ciaz which saw volumes of 5,232 units. Dzire volumes have
de-grown YoY, impacted by launch of new Swift.
 UV segment (Ertiga) de-grew by 6% YoY to 5,515 units (v/s est 5,678 units), on high
base of last year.
 The management has guided for ~10% growth for FY15, implying residual volume
growth of ~4.5% or ~108.7k units. We believe volume momentum at ground level
will pick-up further with several new launches of MSIL, including Ciaz, refreshed
Swift, Alto K-10 (with AMT) and refreshed Dzire (in 4QFY15).
 We estimate EPS of ~INR129/INR184/INR240 for FY15/16/FY17. The stock trades

at 18.4x/14.1x FY16E/17E consolidated EPS. Maintain Buy.
Source: Company, MOSL
60
Consolidated Balance Sheet of Tata Motors
12 months 12 12 months 12 months 12 months
Sources Of Funds months
Total Share Capital 643.78 638.07 634.75 637.71 570.6

Equity Share Capital 643.78 638.07 634.75 637.71 570.6
Share Application Money 0 0 0 0 0
Preference Share 0 0 0 0 0
Application Money
Employee Stock Option 0 0 0 0 0
Reserves 64,959.67 36,999.23 32,515.18 18,533.76 7,641.30
Net worth 65,603.45 37,637.30 33,149.93 19,171.47 8,211.90
Secured Loans 14,608.75 16,981.04 15,774.04 18,745.66 21,290.03
Unsecured Loans 40,345.72 26,741.24 22,930.03 11,616.49 13,902.33
Total Debt 54,954.47 43,722.28 38,704.07 30,362.15 35,192.36
Minority Interest 420.65 370.48 307.13 246.6 213.51
Group Share in Joint 0 0 0 0 0
Venture
Total Liabilities 1,20,978.5 81,730.06 72,161.13 49,780.22 43,617.77
7

61
Gross Block 1,23,773.3 98,046.05 87,926.36 71,757.47 68,274.70
9
Less: Revaluation 0 0 0 0 185.73
Reserves
Less: Accum. 54,681.72 42,877.77 43,565.95 36,408.42 34,413.52
Depreciation
Net Block 69,091.67 55,168.28 44,360.41 35,349.05 33,675.45
Capital Work in Progress 33,262.56 18,417.70 15,945.83 11,456.79 8,068.02
Investments 10,686.67 9,057.72 8,917.71 2,544.26 2,219.12
Inventories 27,270.89 20,969.01 18,216.02 14,070.51 11,312.03
Sundry Debtors 10,574.23 10,942.66 8,236.84 6,525.65 7,191.18
Cash and Bank Balance 29,711.79 21,112.67 18,238.13 11,409.60 6,059.95
Fixed Deposits 0 0 0 0 2,683.37
Total CA, Loans & 1,06,957.4 87,382.75 76,158.69 51,664.08 42,955.61
Advances 2
Provisions 20,160.97 16,071.74 12,841.76 9,957.13 7,643.50
Net Current Assets 7,937.67 -913.64 2,937.18 430.12 -344.82
Group Share in Joint 0 0 0 0 0
Venture
Miscellaneous Expenses 0 0 0 0 0
Total Assets 1,20,978.5 81,730.06 72,161.13 49,780.22 43,617.77
7
28,191.10 21,360.25 23,479.60 26,001.29 7,670.17
Book Value (Rs) 203.82 117.98 104.46 302.1 143.93

62
Consolidated Cash Mar '14 Mar '13 Mar '12 Mar '11 Mar '10
Flow of Tata MotorsX

334.52 301.81 1242.23 1811.82 2240.08
Activities
Net Cash (used in)/from 2552.91 991.5 144.72 -2521.88 -11848.29
Net Cash (used in)/from -5033.81 -4045.69 -4235.59 1648.42 5348.49
Net (decrease)/increase In -6.89 -714.07 -432.5 635.87 86.23
Cash and Cash
Equivalents
Opening Cash & Cash 205.57 919.64 1352.14 716.27 630.04
Equivalents
Closing Cash & Cash 198.68 205.57 919.64 1352.14 716.27
Equivalents
63
Financial Ratios of Tata Mar '14 Mar '13 Mar '12 Mar '11 Mar '10
MotorsX
Investment Valuation Ratio
Dividend Per Share 2 2 4 20 15
Operating Profit Per Share -2.73 5.39 13.16 73.51 70.68
(Rs)
Net Operating Profit Per 106.63 140.33 171.12 742 619.98
Share (Rs)
Free Reserves Per Share (Rs) -- -- -- -- 229.67
Bonus in Equity Capital 17.28 17.44 17.53 17.45 19.5
Operating Profit Margin (%) -2.56 3.83 7.69 9.9 11.4
Profit Before Interest And -7.73 -0.21 4.68 6.95 8.38
Tax Margin (%)
Gross Profit Margin (%) -8.59 -0.22 4.73 7.01 8.47
Adjusted Net Profit Margin 0.87 0.64 2.26 3.81 6.26
(%)
Return On Capital Employed 2.52 5.95 10.26 10.75 10.37
(%)
Adjusted Return on Net 4.55 3.8 9.31 9.78 9.61
Worth (%)
Return on Assets Excluding 59.58 59.98 61.84 315.36 259.03
Revaluations
Return on Assets Including 59.58 59.98 61.84 315.36 259.46
Revaluations
Return on Long Term Funds 2.94 7.31 11.38 12.55 12.26
(%)
Liquidity And Solvency
Ratios
Current Ratio 0.43 0.42 0.5 0.52 0.44
Quick Ratio 0.36 0.4 0.43 0.54 0.44
64
Interest Cover 0.64 1.43 2.58 2.69 2.61
Financial Charges Coverage 2.18 2.74 3.9 3.68 3.56
Ratio
Ratio Post Tax
Management Efficiency
Ratios
Average Raw Material -- -- -- -- 15.66
Holding
Average Finished Goods -- -- -- -- 17.7
Held
Number of Days In Working -69.68 -40.55 -48.91 -25.66 -60.19
Capital
Profit & Loss Account Ratios
Imported Composition of 5.07 4.18 4.82 5.9 5.94
Raw Materials Consumed
Selling Distribution Cost -- -- -- -- 4.47
Composition
Expenses as Composition of 20.22 10.91 6.77 7.14 8.61
Total Sales
Dividend Payout Ratio Net 193.87 213.77 103.09 70.32 38.34
Profit
Dividend Payout Ratio Cash 26.96 30.44 44.95 40.16 25.13
Profit
Cash Earning Retention Ratio 77.98 74.66 62.71 61.62 66.96
1.04 0.95 3.91 28.55 39.26
Earnings Per Share
Book Value 59.58 59.98 61.84 315.36 259.03
65
Financials
Y/E March 2015E 2016E 2017E
Net Sales 2,630 3,245 3,775
EBITDA 463 588 692
NP 196 271 327
Adj. EPS (INR) 60.8 84.1 101.6
EPS Gr. (%) 32.9 38.4 20.7
BV/Sh. (INR) 264 347 447
RoE (%) 26 27.5 25.6
RoCE (%) 26 28.7 28.3
Payout (%) 4 2.9 3.6
Valuations
P/E (x) 8.6 6.2 5.2
P/BV (x) 2 1.5 1.2
EV/EBITDA (x) 3.9 2.8 2.1
Div. Yield (%) 0.4 0.4 0.6
CMP: INR536 on 14th Nov TP: INR618 Buy

CMP: INR 588 on 25th Jan
Above estimate, with 2% YoY growth
66
M&HCV recovery continues, while cars also witnesses growth
 Tata Motors Nov-14 sales volumes grew 2% YoY to 41,720 units (v/s est 35,993
units). We estimate overall volume de-growth of ~12% in FY15, implying residual
growth of 5% or run-rate of ~44k.
 HCV sales grew 40% YoY 10,752 units (est 9,234 units). Our industry interaction
indicates that freight rates have started inching upwards driven by gradual increase in
fleet operator’s utilization. Over the next few months, we expect recovery in MHCV
volumes to gather pace on expectation of pick-up in economic activity and pent up
demand due to sharply lower volumes of last two years. We estimate ~12% HCV
growth in FY15, implying 20% residual growth or run-rate of ~12,808 units.
 LCV sales continue to decline, with 17% YoY to 18,654 (est 15.7k units). Our
industry interaction indicates that credit availability has been difficult due to rise in
defaults. We estimate decline of 24.4% in LCVs in FY15, implying 6% residual de-
growth or run- rate of ~19k.
 Car sales witnessed growth for first time in many month, with growth of 27.5% YoY
to 10,486 units (est 9,044 units). Recently launched Zest (compact sedan) has
received encouraging response after launch but the pace seems to slow down. We
estimate decline of 7% in passenger cars in FY15, implying 7.5% residual growth or
~9,490 units.
 UV sales were at 1,828 units (est 2,020 units), a de-growth of 28% YoY. We estimate
4.9% UV de-growth in FY15, implying 18% residual growth or run-rate of 3,107
units.
 The stock trades at 6.2x/5.2x FY16E/17E consol. EPS respectively. Maintain Buy.
67
Consolidated Balance Mar '14 Mar '13 Mar '12 Mar '11 Mar '10
Sheet of Mahindra and

Mahindra X
Sources Of Funds
Total Share Capital 295.16 295.16 294.52 293.62 282.95
Equity Share Capital 295.16 295.16 294.52 293.62 282.95
Share Application Money 0 0 0 0.02 0
Preference Share Application 0 0 0 0 0
Money
Employee Stock Option 0 0 0 0 8.01
Reserves 23,011.70 19,665.54 16,409.29 13,990.44 8,912.18
Net worth 23,306.86 19,960.70 16,703.81 14,284.08 9,203.14
Secured Loans 19,326.24 16,848.99 13,687.30 10,406.43 9,446.27
Unsecured Loans 8,946.16 6,379.75 5,247.42 3,707.88 4,241.88
Total Debt 28,272.40 23,228.74 18,934.72 14,114.31 13,688.15
Minority Interest 5,733.10 5,296.97 4,525.16 4,336.64 2,462.35
Group Share in Joint Venture 0 0 0 0 2,188.86
Total Liabilities 57,312.36 48,486.41 40,163.69 32,735.03 27,542.50

68
Gross Block 38,010.48 36,663.93 33,765.58 16,871.11 13,692.14
Less: Revaluation Reserves 0 0 0 0 11.67
Less: Accum. Depreciation 19,629.52 18,356.59 16,567.31 0 5,651.36
Net Block 18,380.96 18,307.34 17,198.27 16,871.11 8,029.11
Capital Work in Progress 2,191.05 1,631.20 1,488.29 -754.98 1,967.69
Investments 8,082.35 6,440.41 5,347.21 4,713.97 3,475.37
Inventories 8,353.54 8,416.90 7,157.67 5,449.15 3,541.72
Sundry Debtors 5,725.42 5,176.97 5,345.06 4,210.14 2,877.36
Cash and Bank Balance 6,522.79 4,760.20 3,484.72 2,220.57 1,010.00
Fixed Deposits 0 0 0 0 1,623.96
Total CA, Loans & Advances 59,615.90 50,090.84 39,752.00 29,837.78 20,207.94
Provisions 5,088.66 4,283.33 4,175.49 3,297.57 1,835.26
Net Current Assets 28,658.00 22,107.46 16,129.92 11,904.93 11,439.05
Group Share in Joint Venture 0 0 0 0 2,626.70
Miscellaneous Expenses 0 0 0 0 4.58
Total Assets 57,312.36 48,486.41 40,163.69 32,735.03 27,542.50
6,334.18 5,319.43 5,966.26 4,987.04 3,778.61
Book Value (Rs) 378.42 338.13 283.58 243.24 162.48
69
Consolidated Cash Flow of Mahindra and Mahindra
X Mar '14 Mar '13 Mar '12 Mar '11 Mar '10

4316.64 4356.47 3497.62 3402.13 2756

Activities
Net Cash (used in)/from -2407.08 -2895.95 -1936.54 -3734.99 -1345.44
Net Cash (used in)/from -823.93 -1221.89 -306.15 -383.75 -783.87
Net (decrease)/increase In 496.63 27.87 492.26 -1138.96 207.18

Cash and Cash Equivalents
Opening Cash & Cash 1208.98 1136.09 695.97 1753.13 1543.63

Equivalents
Closing Cash & Cash 1705.61 1163.96 1188.23 614.17 1750.81
Equivalents
70
Financial Ratios of Mar '14 Mar '13 Mar '12 Mar '11 Mar '10
Mahindra and
MahindraX
Investment Valuation
Ratios
Dividend Per Share 14 13 12.5 11.5 9.5
Operating Profit Per 76.66 76.7 61.41 56.26 53.31
Share(Rs)
Net Operating Profit Per 657.72 658.67 518.81 382.13 327.2
Share (Rs)
Free Reserves Per Share (Rs) -- -- -- -- 120.24
Bonus in Equity Capital 57.8 57.8 57.92 58.1 60.29
Operating Profit Margin (%) 11.65 11.64 11.83 14.72 16.29
Profit Before Interest And 9.35 9.75 9.88 12.72 14.04
Tax Margin (%)
Gross Profit Margin (%) 9.52 9.88 10.02 12.96 14.29
Adjusted Net Profit Margin 9.11 8.17 8.9 11.14 11.08
(%)
Return On Capital Employed 22.28 25.42 23.85 27.5 27.7
(%)
Adjusted Return on Net 22.06 22.25 22.76 24.67 26.23
Worth (%)
Return on Assets Excluding 272.63 238.75 198.23 167.99 137.95
Revaluations
Return on Assets Including 272.63 238.75 198.23 167.99 138.15
Revaluations
Return on Long Term Funds 22.28 25.5 23.85 27.52 27.73
(%)
Liquidity And Solvency
Ratios
71
Current Ratio 1.19 1.02 0.99 0.97 1.11
Quick Ratio 0.93 0.77 0.72 0.73 0.86
Interest Cover 17.65 23.79 22.49 47.93 18.9
Ratio
Ratio Post Tax
Management Efficiency
Ratios
Average Raw Material -- -- -- -- 15.22
Holding
Average Finished Goods -- -- -- -- 13.32
Held
Number of Days In Working 21.28 2.77 -1.1 -4.27 11.77
Capital
Profit & Loss Account
Ratios
Imported Composition of 2.9 3.41 3.48 1.79 1.51
Raw Materials Consumed
Selling Distribution Cost -- -- -- -- 4.33
Composition
Expenses as Composition of 5.57 5.81 5.83 4.68 4.11
Total Sales
Dividend Payout Ratio Net 22.94 23.8 26.65 26.52 26.32

Profit
Dividend Payout Ratio Cash 18.65 19.64 22.21 22.95 22.35
Profit
Cash Earning Retention Ratio 81.13 79.92 77.07 76.14 77.29
72
61.02 54.61 46.89 43.36 36.89
Earnings Per Share
Book Value 272.63 238.75 198.23 167.99 138.02
Financials
Y/E March 2015E 2016E 2017E
Sales 425.5 508.1 602.8
EBITDA 48.3 57.1 68.1
NP (incl. MVML) 35 40.6 48.3
Adj. EPS (INR) * 58.4 67.8 80.7
EPS Gr. (%) -10.5 16.1 19
Cons. EPS (INR) 71.6 93.6 115
BV/Share (INR) 328 381 445
RoE (%) 17.9 17.7 17.9
RoCE (%) 18.6 19 19.8
Payout (%) 29.7 25.8 21.8
Valuations
P/E (x) 22.2 19.1 16.1
Cons. P/E (x) 18.1 13.8 11.3
P/BV (x) 4 3.4 2.9
73
EV/EBITDA (x) 15.7 13.1 10.7
Div. Yield (%) 1.2 1.2 1.2
CMP: INR1,296 on 14th Nov TP: INR1,379 Neutral

CMP: INR1.360 on 25th Jan
Nov-14 below estimate, with 21% YoY de-growth

Tractors ~34% YoY, UV declines ~12.5% YoY
 Nov-14 volumes de-grew by 21% YoY to ~49,625 units (v/s est 62,314 units),
impacted by ~34% YoY de-growth in tractors and ~12.5% decline in UVs (incl pick-
ups). We estimate flat growth in FY15, implying ~15% residual growth or ~71,567
units.
 Tractor volumes declined by 34% YoY to 15,333 units (v/s est 23,350 units), with
FY15YTD de-growth of 6%. We are assuming flat volumes for FY15, implying a
residual growth of 19% or 21,506 units.
 UV (incl pick-ups) de-grew by 12.5% YoY to 28,585 units (v/s est 31,856 units), with
passenger UVs declining by ~17% and pick-ups by 3%. We estimate just 1% growth
in FY15 for UVs, implying residual growth rate of 15% or 43,226 units for the year.
 Speaking on the monthly performance, Pravin Shah, Chief Executive, Automotive

Division & International Operations (AFS), Mahindra & Mahindra Ltd. said, "The
auto industry continues to face its sluggish demand on the back of factors such as low
consumer sentiments and high interest rates. The reducing international crude prices
and the subsequent lowering of fuel prices should help in revival of demand in the
coming months.”
 Commenting on the monthly performance, Rajesh Jejurikar, Chief Executive, FES &
2Ws, M&M said, "The tractor industry has been difficult due to delayed rains and
sowing. A delayed paddy crop, low yield and low prices for sugarcane, cotton and
paddy have led to a low demand and low cash in hand. There is also a base effect to
some extent as Diwali this year was in October 2014 vis-à-vis in November last year.”
74
 We see significant downside risk to our EPS estimates, impacted by severe pressure
on both UVs and tractors. While tractor is undergoing cyclical pressure, UV business
is witnessing structural challenges. Based on our current estimates, the stock trades at
13.8x/11.3x FY16E/17E consolidated EPS. Maintain Neutral.
Maruti Suzuki BUY

Tata Motors BUY
Mahindra & Mahindra NEUTRAL
V] CONCLUSION AND RECOMMENDATION

Conclusion
FOR MARUTI SUZKI INDIA
 Nov-14 volumes grew by 19.5% YoY (flat MoM) to ~110,147 units (v/s est 98,000
units), driven by ~17% growth in domestic volumes and ~53% growth in exports. We
estimate ~14.4% growth in FY15, implying ~17% residual growth or ~121,336
residual run-rate.
 Domestic volumes grew 17% YoY to ~100,024 units (v/s est 90k). We estimate
~14.4% growth in FY15 in domestic volumes implying 16.7% residual growth or
~112k/month of run-rate.
 Compact segment (Alto, Wagon-R, Swift, Celerio, Ritz etc) grew by ~16% YoY to
75
~63,074 units (v/s est 55,770 units).
 Sedan (A3) segment saw a healthy growth of 24% YoY to 19,232 units (v/s est
20,132 units), driven by Ciaz which saw volumes of 5,232 units. Dzire volumes have
de-grown YoY, impacted by launch of new Swift.
 UV segment (Ertiga) de-grew by 6% YoY to 5,515 units (v/s est 5,678 units), on high
base of last year.
 The management has guided for ~10% growth for FY15, implying residual volume
growth of ~4.5% or ~108.7k units. We believe volume momentum at ground level
will pick-up further with several new launches of MSIL, including Ciaz, refreshed
Swift, Alto K-10 (with AMT) and refreshed Dzire (in 4QFY15).
 We estimate EPS of ~INR129/INR184/INR240 for FY15/16/FY17. The stock trades

at 18.4x/14.1x FY16E/17E consolidated EPS. Maintain Buy.
76
FOR TATA MOTORS
 Tata Motors Nov-14 sales volumes grew 2% YoY to 41,720 units (v/s est 35,993
units). We estimate overall volume de-growth of ~12% in FY15, implying residual
growth of 5% or run-rate of ~44k.
 HCV sales grew 40% YoY 10,752 units (est 9,234 units). Our industry interaction
indicates that freight rates have started inching upwards driven by gradual increase in
fleet operator’s utilization. Over the next few months, we expect recovery in MHCV
volumes to gather pace on expectation of pick-up in economic activity and pent up
demand due to sharply lower volumes of last two years. We estimate ~12% HCV
growth in FY15, implying 20% residual growth or run-rate of ~12,808 units.
 LCV sales continue to decline, with 17% YoY to 18,654 (est 15.7k units). Our
industry interaction indicates that credit availability has been difficult due to rise in
defaults. We estimate decline of 24.4% in LCVs in FY15, implying 6% residual de-
growth or run- rate of ~19k.
 Car sales witnessed growth for first time in many month, with growth of 27.5% YoY
to 10,486 units (est 9,044 units). Recently launched Zest (compact sedan) has
received encouraging response after launch but the pace seems to slow down. We
estimate decline of 7% in passenger cars in FY15, implying 7.5% residual growth or
~9,490 units.
 UV sales were at 1,828 units (est 2,020 units), a de-growth of 28% YoY. We estimate
4.9% UV de-growth in FY15, implying 18% residual growth or run-rate of 3,107
units.
 The stock trades at 6.2x/5.2x FY16E/17E consol. EPS respectively. Maintain Buy.
77
FOR MAHINDRA & MAHINDRA
 Nov-14 volumes de-grew by 21% YoY to ~49,625 units (v/s est 62,314 units),
impacted by ~34% YoY de-growth in tractors and ~12.5% decline in UVs (incl pick-
ups). We estimate flat growth in FY15, implying ~15% residual growth or ~71,567
units.
 Tractor volumes declined by 34% YoY to 15,333 units (v/s est 23,350 units), with
FY15YTD de-growth of 6%. We are assuming flat volumes for FY15, implying a
residual growth of 19% or 21,506 units.
 UV (incl pick-ups) de-grew by 12.5% YoY to 28,585 units (v/s est 31,856 units), with
passenger UVs declining by ~17% and pick-ups by 3%. We estimate just 1% growth
in FY15 for UVs, implying residual growth rate of 15% or 43,226 units for the year.
 Speaking on the monthly performance, Pravin Shah, Chief Executive, Automotive

Division & International Operations (AFS), Mahindra & Mahindra Ltd. said, "The
auto industry continues to face its sluggish demand on the back of factors such as low
consumer sentiments and high interest rates. The reducing international crude prices
and the subsequent lowering of fuel prices should help in revival of demand in the
coming months.”
 Commenting on the monthly performance, Rajesh Jejurikar, Chief Executive, FES &
2Ws, M&M said, "The tractor industry has been difficult due to delayed rains and
sowing. A delayed paddy crop, low yield and low prices for sugarcane, cotton and
paddy have led to a low demand and low cash in hand. There is also a base effect to
some extent as Diwali this year was in October 2014 vis-à-vis in November last year.”
 We see significant downside risk to our EPS estimates, impacted by severe pressure
on both UVs and tractors. While tractor is undergoing cyclical pressure, UV business
is witnessing structural challenges. Based on our current estimates, the stock trades at
13.8x/11.3x FY16E/17E consolidated EPS. Maintain Neutral.
78
 Indian Automobile has a lot of scope for both two wheelers and four wheelers due to
development in infrastructure of the country.
 According to Indian Statistical Organization the per capita income (Rs.38000) is

increasing and national income at the rate of 14.4% which shows potential to buy
vehicle in auto industry. The growth rate of Indian Automobile is so fast that by 2016
Indian Industry will be world 7 largest manufacturer in all sections.
 The Indian auto market is still untapped the majority of the people in country don’t
own a four wheeler and all the major auto companies are trying to increase their sales
by several moves.
 By analyzing the current trend of Indian Economy and Automobile Industry we can
say that there is lot of scope for growth
79
Recommendation
Y/E Mar 2015E 2016E 2017E
Maruti Net Sales 514.3 625.1 749
Tata Net Sales 2,630 3,245 3,775
M&M Net Sales 425.5 508.1 602.8
Net Sales
30
26.2
25
22.2
20 18.4 19.1
16.1
15 14.1
10 8.6
6.2
5.2
5
0
2015E 2016E 2017E
Maruti P/E Tata P/E M&M P/E
The expected net sales for coming years have been projected and observed that Tata will have
highest sales after Maruti. So it is advisable to invest in Tata and Maruti.
Y/E Mar 2015E 2016E 2017E

Maruti NP 38.2 54.8 71.6
Tata NP 196 271 327
M&M NP 35 40.6 48.3
NP
30
26.2
25
22.2
20 18.4 19.1
16.1
15 14.1
10 8.6
6.2 5.2
5
0
2015E 2016E 2017E
80
The expected net profit for coming years have been projected and observed that Tata will
have highest profits after Maruti. So it is advisable to invest in Tata and Maruti.
Y/E Mar Maruti Tata M&M

P/E (x) 2015E 26.2 18.4 14.1
P/E (x) 2016E 8.6 6.2 5.2
P/E (x) 2017E 22.2 19.1 16.1
P/E
30
26.2
25
22.2
20 18.4 19.1
16.1
15 14.1
10 8.6
6.2
5.2
5
0
2015E 2016E 2017E
The expected P/E for coming years have been projected and observed that Maruti and M&M
are better compare to Tata. But M&M is having more stable P/E. So it is advisable to invest
in M&M and Maruti.
By seeing future projections for 3 Years of Maruti, Tata and M&M of Net sales, Net profit
and P/E. It is advisable to investors to invest in Maruti and Tata.
339
CMP on 14th Nov 0
360
Maruti CMP on 25th Jan 9
480
TP 0
CMP on 14th Nov 536
Tata CMP on 25th Jan 588
TP 618
129
CMP on 14th Nov 6
136
M&M CMP on 25th Jan 0
TP 137
81
9
Share Price
6000
5000 4800
4000 3609
3390
3000
2000
1296 1360 1379
1000 536 588 618
0
1
Maruti CMP on 14th Nov Maruti CMP on 25th Jan Maruti TP

Tata CMP on 14th Nov Tata CMP on 25th Jan Tata TP
M&M CMP on 14th Nov M&M CMP on 25th Jan M&M TP
Maruti Suzuki BUY

Tata Motors BUY
Mahindra & Mahindra NEUTRAL
Share price is for Short term investment. Based on share price it is advisable to invest in
Maruti and Tata.
82
VI] BIBLIOGRAPHY
 OICA > Economic Contributions
 OICA > Economic Contributions > Auto Jobs
 OICA > Economic Contributions > Facts and Figures
 OICA > Autos and Fuels
 cia world fact sheet
 http://www.statista.com/statistics/263617/gross-domestic-product-gdp-growth-rate-
in-india
 www.nseindia.com/content/indices/ind_cnx_auto_br.pdf
 Sheshadri Vyankatrao Kulkarni and Mamata Jenamani, Strategic Outsourcing: An
International Journal Vol. 1 No. 3, 2008 pp. 268-287
 Dr. A. Vijayakumar, March 2012 IJMT Volume 2, Issue 3 ISSN: 2249-1058
 Dr. Amalendu Bhunia, Sumedha Journal of Management VOL 1, NO 2 April- June,
2012
 Dr. Pradeep Kumar Singh, Dr. Rakesh Anand, Journal of Contemporary Research
in Management, Vol. 8; No. 3 July - Sep, 2013
 Sofie Van den waeyenberg and Luc Hens, Journal of Consumer Marketing Volume
25 · Number 7 · 2008 · 439–445
 www.rbi.org
 www.economictimes.com
 Dion Global Solutions Limited
 Company, MOSL
83

Fundamental Analysis of 3 Major Indian Automobile Players: Vikas Dhanuka

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Fundamental Analysis of 3 Major Indian Automobile Players: Vikas Dhanuka

Uploaded by

Copyright:

Available Formats

FUNDAMENTAL ANALYSIS OF 3 MAJOR INDIAN

In partial fulfilment for the award of

POST GRADUATE DIPLOMA IN MANAGEMENT

Under the guidance of

PROF. NAMRATA ACHARAYA

THAKUR INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH

KANDIVILI (EAST), MUMBAI

This is to certify that this project report FUNDAMENTAL ANALYSIS OF 3 MAJOR

Signature of the Candidate

Forwarded through the Research Guide

Signature of the Guide

Prof. Namrata Acharya

It gives me immense pleasure to present report on “FUNDAMENTAL ANALYSIS OF 3

The automobile industry, one of the core sectors, has undergone metamorphosis

SR. NO TOPIC PAGE NO

Automobiles represent freedom and economic growth.

Autos create jobs, jobs, jobs.

OICA - Organisation Internationale des Constructeurs d'Automobiles, commonly

Source - OICA > Economic Contributions

Biodiesel, CNG, Electric Battery Powered, Ethanol, Hybrid, Hydrogen, LPG

Argentina 12,166 Korea 246,900

OICA - Organisation Internationale des Constructeurs d'Automobiles, commonly

Source - OICA > Economic Contributions > Auto Jobs

Automotive Industry and Economy

OICA - Organisation Internationale des Constructeurs d'Automobiles, commonly

Source - OICA > Economic Contributions > Facts and Figures

The industry is committed to contributing to an integrated approach, with other stakeholders,

Dramatic progress has been made in producing cleaner autos.

OICA - Organisation Internationale des Constructeurs d'Automobiles, commonly

Source - OICA > Autos and Fuels

II) INDIAN PERPECTIVE

Rank 10th (nominal) / 3rd (PPP)

Population below poverty line

Labour forces 487.3 million (2013 EST.)

Average gross salary $1.46 per hour ($3,036.8 yearly in 2010);

Main export partners

The economy of India is the tenth-largest in the world by nominal GDP and the third-

 Two-wheelers which comprise of mopeds, scooters, motorcycles and electric two-

 Largest three-wheeler market

 Almost Self-governing cars are predicted to be on the streets by 2020

-By Steffi Joseph

Indian Automobile Industry SWOT Analysis

1. Domestic Market is large

2. Government provides monetary assistance for manufacturing units

3. Reduced Labour cost

3. Too many taxes levied by government increase the cost of production

1. Reduction in Excise duty

2. Rural demand is rising

3. Income level is at a constant increase

1. Increasing rates of interest

2. Too much competition

3. Rising cost of raw materials

• There is cut Throat competition among many players in market.

The demand of cars has been fuelled by following factors:

• Indian families are becoming increasingly nuclear

• Increasing Propensity to spend

• Increasing distances between work-place and residence

• Increase in percentage of working women has increased number of earning members in a

1) Make-or-buy: a case study at an Indian automobile company

Sheshadri Vyankatrao Kulkarni and Mamata Jenamani

Strategic Outsourcing: An International Journal Vol. 1 No. 3, 2008 pp. 268-287

- Purchasing or supply management;