HINDUSTAN MOTORS

Presented By
Index
Introduction

Hindustan
Motors
Hindustan Motors Limited
Brands
Plants
Collaborations
Automobile Industry
Milestones
Milestones
Till 1980s
MUL’s Entry
1990’s
Strategy
Strategy
Porters Model Analysis
Porters Model Analysis
Problems
Need for Turnaround
Mckinsey & Co. findings
Implementation
Turnaround Efforts -1
Turnaround Efforts -2
Turnaround Efforts -2
Effects
Sector Analysis
Industry Overview

 Key industry propelling Indian Economy

 Contribution to GDP: About 4%
 100% FDI allowed via automatic route
 Major generator of employment (450 million in
2007)

(Source: Automotive mission plan 2006-2016)

Contribution of Automobile
Sector to GDP

(Source:
SIAM)
Mission Plan 2006 - 2016

 Objective
• Investment Planned – $ 35 to 40 bn
• Increase share in GDP (to 10%)
• Generate employment opportunities

 Government Plans
• Reduction in excise duty (to 5% - 7.5%)
• Development of NATRIP
Automotive Mission Plan
(AMP)

 Decade-long plan launched in 2006

 Key Objectives:
 Reduce & Simplify tax laws
 Create flexible labor laws
 Emphasize on R&D investments
 Lower interest rates
 Encourage capacity addition ; Bharat Forge
followed suit with 20% addition in FY’07
Industry Structure

 Highly fragmented industry

 Around 500 organized players account for 77%
of the value added in the sector
 Organized market led by Bharat Forge,
Sundaram Clayton
 Around 6000 unorganized players account for
23% of the value added in the sector
Ancillary Leaders
Industry Players (Op Profit Margin)

Source: www.economictimes.com
Effect of Inflation

 Brake on Growth Plans of Auto Companies

 Increase in Sale Price by 3-4%

 Auto Industry growth in revenues

• 2007: 17.15%
• 2008: 6.4%
(Source: SIAM & www.financialexpress.com)
Competition
Key Growth Drivers of Indian
Automotive Industry
Competitors in Passenger
cars and LCV segments
Continuous innovation and new
product launches by competitors
Continuous innovation and new
product launches by competitors
Three major auto clusters exist in India-
Location Advantage for competitors
Three major auto clusters exist in India-
Location Advantage for competitors
Three major auto clusters exist in India-
Location Advantage for competitors
Auto financing- another
differentiator for competitors

 Tata Motors – Tata Motor Finance

 Maruti Suzuki - Citicorp Maruti Finance Ltd. , Maruti

Countrywide Auto Finance Ltd.

 M&M – Mahindra First Choice, Mahindra Finance

Increasing thrust on distributor management for
robust After sales services which is high margin
business

 Tata Motors has over 3500 touch points for all its
product offerings

 Maruti Suzuki has over 600 sales outlet and 2500+

authorized service centers

 Hyundai has network of 250 dealers and 1000 after

sales service centers

 Toyota has developed exclusive network of 63

dealers for sales and servicing
JVs with Multinationals has brought
modern technology and opened doors of
global markets

 Toyota- Kirloskar JV

 M&M – Renault : New products and increased

access to technology

 Tata Motors- Fiat, JLR acquisition gives access to

world class components from Ford

 Maruti – Suzuki : strategic partnership for Suzuki

 Ashok Leyland – Nissan

Competitors taking benefits of government
policies for developing Automotives sector

 Automotive Mission Plan aims to make India a hub of

Small car export station.
- Hyundai exports 36% of its production to 67 countries
- Suzuki plans to export 200,000 cars from India by 2010
- Ford Motor exports 58% of its production from India

NHDP and increased spending on developing road

infrastructure critical to develop LCV market
- Hub-and-spoke model is gradually developing
- Tata Motors strategic acquisition of Daewoo
- Ashok Leyland- Nissan JV to produce LCV in Chennai
- Boom in retail and FMCG sector a big driver for this
vertical
Financials
Peer Comparison
Value Driver Formula

 ROIC = (1-T) * (Price - Cost) * Quantity

Capital Invested
Sales (INR Crore)
Net profit (INR Crore)
Operating Cash Margins
Fixed Asset Turnover Ratio
Inventory Turnover
Exports as % of sales
Recommendation
Thank You