Project Report

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INDEX
1. OBJECTIVE.. 5 2 INDIAN STOCK MARKET ..6 3. INTRODUCTIOON OF THE ORGANIZATION 14-20 4 METHODOLOGY21 8.FUNDAMENTAL ANALYSIS..22- 78
I. POLITICO-ECONOMIC ANALYSIS22-37
ECONOMIC GROWTH SCENARIO22 GROWTH RATE OF DOMESTIC PRODUCT.24 INDUSTRIAL GROWTH...27 INFLATION.29 UNEMPLOYMENT32 FISCAL SITUATION.34 MONETARY POLICY OF THE GOVT.36
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II. INDUSTRY ANALYSIS38- 50
AUTOMOBILE INDUSTRY SNAPSHOT...............38
MAJOR SEGMENTS OF AUTOMOTIVE INDUSTRY...41 KEY INDUSTRY DRIVERS..42 INDIAN AUTOMOBILE INDUSTRY...44 BUDGET.....46 SWOT ANALYSIS.49
III.
COMPANY ANALYSIS..51- 94 BAJAJ..51 MARUTI SUZUKI..................60 TATA MOTORS ...................................69 MAHINDRA AND MAHINDRA .............76 HERO HONDA MOTORS 87
9 COMPARITIVE ANALYSIS..97
10. ANNEXURE98-117 11 CONCLUSSION ..............................................................................................118
12 REFRENCE.119
ACKNOWLEDGMENT
I wish to express my gratitude to India Bulls Securities LTD management for giving me an opportunity to be a part of their organization and enhance our knowledge by granting Permission to do our summer training project under their guidance.
I am grateful to Mr. JITENDRA SINGH (Relationship Manager), our guide, for his invaluable guidance and cooperation during the course of the project. He provided us with his assistance and support whenever needed that has been instrumental in completion of this project.
The learning during the project was immense and invaluable. Our work included the study of how was share market works and what is the work of Relationship Manager.
ABSTRACT
The project includes the study of future prospective of Indian auto mobile companies in stock market. To analyze the data and past performance of Indian auto mobile companies.
On the basis of secondry data we can analyze how the Indian auto mobile companies perfomed in recent years. On the basis of companies recent performance analyze and current situation of these companies in stock market,we can predict their future in stock market.
OBJECTIVE
The primary motive for buying a stock is to sell it subsequently at a higher price. In many cases, dividends will be expected also. Dividends and price changes are the principal ingredients in what investors regard as return or yield.
If an investor had impeccable information and insight about dividends and stock prices over subsequent periods, he would be well on his way to great riches. But the real world of investing is full of political, economic, social, and other forces that we do not understand sufficiently to permit us to predict anything with absolute certainty.
For the security analyst, what primary influences will determine the dividends to be paid on a stock in the future and what the stock price will be in the future are the ultimate questions to be answered. A logical systematic approach to estimating future dividends and stock price is indispensable.
One, most important aspect of this study is to follow an investment philosophy.
Indian Stock Market Overview:
The Bombay stock exchanges (BSE) and the National Stock Exchange of India Ltd (NSE) are the two primary exchange in India. In addition, there are 22Regional Stock Exchanges However, the BSE and NSE have established themselves as the two leading exchanges and account for about 80% of the equity volume traded in India.
The average daily turnover at the exchanges has increased from Rs. 851 crore in 1997-98 to Rs. 1,284 crore in 1998-99 and further to Re. 2273 crore in 1999-2000 (April- August 1999). NSE has around 1500 shares listed with a total market capitalization of around Rs. 921500 crore (Rs. 9215 Bln). The BSE has over 6000 stocks listed and has a market capitalization of around Rs. 968000 crore (9680 Bln). Most key stocks are traded on both the exchanges and hence the investor could buy them on either exchange. Both exchanges have a different settlement cycle, which allows investors to shift their positions on the bourse. The primary index of BSE is BSE Sensex comprising 30 stocks. NSE has the S&P NSE 50 index (Nifty) which consists of fifty stocks.
The BSE Sensex is the older and more widely followed index. Both these indices are calculated on the basis of market capitalization and contain the heavily traded shares from key sectors. The markets are closed on Saturdays and Sundays. Both the exchanges have switched over from the open outcry trading system to a fully automated computerized mode of trading known as BOLT (BSE On Line Trading) and NEAT (National Exchange Automated Trading) System. It facilitates more efficient processing, automatic order matching, faster execution of trades and transparency.
The Scripts traded on the BSE have been classified into A, B1, B2, C, F and Z groups. The A group shares represent those, which are in the carry forward system (Badla). The F group represents the debt market (fixed income securities) segment. The
Z group scripts are the blacklisted companies. The C group covers the odd lot securities in A, B1& B2 groups and Rights renunciations.
Bombay Stock Exchange :

The Bombay Stock Exchange Limited (formerly, The Stock Exchange, Mumbai; popularly called The Bombay Stock Exchange, or BSE) is the oldest stock exchange in Asia. It is also the biggest stock exchange in the world in terms of listed companies with 4,800 listed companies as of August 2007.[1] It is located at Dalal Street, Mumbai, India.
On 31 December 2007, the equity market capitalization of the companies listed on the BSE was US$ 1.79 trillion, making it the largest stock exchange in South Asia and the tenth largest in the world.[2]
The Bombay Stock Exchange was established in 1875. Around 4,800 Indian companies list on the stock exchange,[3] and it has a significant trading volume. The BSE SENSEX (Sensitive index), also called the "BSE 30", is a widely used market index in India and Asia. Though many other exchanges exist, BSE and the National Stock Exchange of India account for most of the trading in shares in India.
BSE indices
The BSE SENSEX (also known as the BSE 30 index) is a value-weighted index composed of thirty scrips, with the base April 1979 = 100. The set of companies which make up the index has been changed only a few times in the last twenty years. These companies account for around one-fifth of the market capitalization of the BSE.
Apart from BSE SENSEX, which is the most popular stock index in India, BSE uses other stock indices as well:
BSE 500 BSE 100 BSE 200 BSE PSU BSE MIDCAP BSE SMLCAP BSE BANKEX BSE Teck BSE Auto BSE Pharma BSE Fast Moving Consumer Goods (FMCG) BSE Consumer Durables BSE Metal
Following is the timeline on the rise and rise of the Sensex through Indian stock market history-:
1000, July 25, 1990 On July 25, 1990, the Sensex touched the magical four-digit figure for the first time and closed at 1,001 in the wake of a good monsoon season and excellent corporate results.
5000, October 8, 1999 On October 8, 1999, the Sensex crossed the 5,000-mark as the BJP-led coalition won the majority in the 13th Lok Sabha election.
8000, September 8, 2005 On September 8, 2005, the Bombay Stock Exchange's benchmark 30-share index -- the Sensex -- crossed the 8000 level following brisk buying by foreign and domestic funds in early trading.
10,000, February 6, 2006 The Sensex on February 6, 2006 touched 10,003 points during mid-session. The Sensex finally closed above the 10K-mark on February 7, 2006.
15,000, July 6, 2007 The Sensex on July 6, 2007 crossed the magical figure of 15,000 to touch 15,005 points in afternoon trade. It took seven months for the Sensex to move from 14,000 to 15,000 points.
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18,000, October 09, 2007 The BSE Sensex crossed the 18,000-mark on October 09, 2007. It took just 8 days to cross 18,000 points from the 17,000 mark. The index zoomed to a new all-time intra-day high of 18,327. It finally gained 789 points to close at an alltime high of 18,280. The market set several new records including the biggest single day gain of 789 points at close, as well as the largest intra-day gains of 993 points in absolute term backed by frenzied buying after the news of the UPA and Left meeting on October 22 put an end to the worries of an impending election.
20,000, October 29, 2007 The Sensex crossed the 20,000 mark on the back of aggressive buying by funds ahead of the US Federal Reserve meeting. The index took only 10 trading days to gain 1,000 points after the index crossed the 19,000-mark on October 15. The major drivers of today's rally were index heavyweights Larsen and Toubro, Reliance Industries, ICICI Bank, HDFC Bank and SBI among others. The 30-share index spurted in the last five minutes of trade to fly-past the crucial level and scaled a new intra-day
peak at 20,024.87 points before ending at its fresh closing high of 19,977.67, a gain of 734.50 points. The NSE Nifty rose to a record high 5,922.50 points before ending at 5,905.90, showing a hefty gain of 203.60 points.
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21,000, January 8, 2008 The sensex crossed the 21,000 mark in intra-day trading after 49 trading sessions. This was backed by high market confidence of increased FII investment and strong corporate results for the third quarter. However, it later fell back due to profit booking.
15,200, June 13, 2008 The sensex closed below 15,200 mark, Indian market suffer with major downfall from January 21,2008
14,220, June 25, 2008 The sensex touched an intra day low of 13,731 during the early trades, then pulled back and ended up at 14,220 amidst a negative sentiment generated on the Reserve Bank of India hiking CRR by 50 bps. FII outflow continued in this week.
12,822, July 2, 2008 The sensex hit an intra day low of 12,822.70 on July 2nd, 2008. This is the lowest that it has ever been in the past year. Six months ago, on January 10th, 2008, the market had hit an all time high of 21206.70. This is a bad time for the Indian markets, although Reliance and Infosys continue to lead the way with mostly positive results. Bloomberg lists them as the top two gainers for the Sensex, closely followed by ICICI Bank and ITC Ltd.
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National Stock Exchange of India :
The National Stock Exchange of India Limited (NSE), is a Mumbai-based stock exchange. It is the largest stock exchange in India in terms of daily turnover and number of trades, for both equities and derivative trading[1]. Though a number of other exchanges exist, NSE and the Bombay Stock Exchange are the two most significant stock exchanges in India , and between them are responsible for the vast majority of share transactions. The NSE's key index is the S&P CNX Nifty, known as the Nifty, an index of fifty major stocks weighted by market capitalisation.
NSE is mutually-owned by a set of leading financial institutions, banks, insurance companies and other financial intermediaries in India but its ownership and management operate as separate entities [2]. As of 2006, the NSE VSAT terminals, 2799 in total, cover more than 1500 cities across India [3]. In October 2007, the equity market capitalization of the companies listed on the NSE was US$ 1.46 trillion, making it the second largest stock exchange in South Asia. NSE is the third largest Stock Exchange in the world in terms of the number of trades in equities.[4]It is the second fastest growing stock exchange in the world with a recorded growth of 16.6%.[5]
NSE Indices
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NSE also set up as index services firm known as India Index Services & Products Limited (IISL) and has launched several stock indices, including: S&P CNX Nifty CNX Nifty Junior CNX 100 (= S&P CNX Nifty + CNX Nifty Junior) S&P CNX 500 (= CNX 100 + 400 major players across 72 industries) CNX Midcap (introduced on 18 July 2005 replacing CNX Midcap 200)
INTRODUCTION TO THE ORGANIZATION
India bulls is India leading Financial services and Real Estate company having over 640 branches all over India. India bulls serve the financial needs of more than 4,50,000 customers with its wide range of financial range and product from securities, derivatives trading, depositary services, research & advisory services, consumer secured & unsecured credit, loan against shares and mortgage & housing finance. With around 4000 Relationship Managers, Indiabulls helps its clients to satisfy their customized financial goals. Indiabulls through its group companies has entered Indian Real Estate business in
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2005. It is currently evaluating several large-scale projects worth several hundred million dollars. Indiabulls Financial Services Ltd is listed on the National Stock Exchange, Bombay Stock Exchange and Luxembourg Stock Exchange. The market capitalization of Indiabulls is around USD 6,300 million (31st December, 2007). Consolidated net worth of the group is around USD 905 million (31st December, 2007). Indiabulls and its group companies have attracted more than USD 800 million of equity capital in Foreign Direct Investment (FDI) since March 2000. Some of the large shareholders of Indiabulls are the largest financial institutions of the world such as Fidelity Funds, Goldman Sachs, Merrill Lynch, Morgan Stanley and Farallon Capital.
Business of the company has grown in leaps and bounds since its inception. Revenue of the company grew at a CAGR of 159% from FY03 to FY07. During the same period, profits of the company grew at a CAGR of 184%.
Indiabulls became the first company to bring FDI in Indian Real Estate through a JV with Farallon Capital Management LLC, a respected US based investment firm. Indiabulls has demonstrated deep understanding and commitment to Indian Real Estate market by winning competitive bids for landmark properties in Mumbai and Delhi.
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Indiabulls Securities Limited (IBSL) is engaged in the securities brokerage industry. IBSL provides range of services to its clients in securities brokerage, including equities, commodities, wholesale debt, futures and options; depositary services; research services; insurance, initial public offering (IPO), and mutual fund distribution. Power Indiabulls is an online trading system designed for the high-volume trader, which provides trade information and order execution on an integrated software-based trading platform.
Dos and Donts while trading with Indiabulls Securities Ltd.
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METHODOLOGY
In analyzing a firms prospects it often makes sense to start with the broad economic environment, examining the state of the aggregate economy and even the international economy. From there, one considers the implications of the outside environment on the industry in which the firms operates. Finally the firms position within the industry and ranking among its competitors within the industry is to be examined.
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FUNDAMENTAL ANALYSIS:
1. POLITICO-ECONOMIC ANALYSIS 2. INDUSTRY ANALYSIS 3. COMPANY ANALYSIS
1. POLITICO- ECONOMIC ANALYSIS
Economic Growth Scenario: 2007-08
The economy has been growing on a high growth path at and above 9 per cent in the past two years, i.e., 2005-06 and 2006-07. The current financial year, 2007-08, the first year of the 11th Five Year Plan, is important from the point of sustenance of the GDP growth at 9 per cent because the Plan document assumes 9 per cent annual growth rate during the Plan period and secondly, from the point of view of the potential based on current trends.
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According to the advance estimates released by Central Statistical Organisation (CSO), the real GDP growth rate was placed at 8.7 per cent in 2007-08 as compared with 9.6 per cent in 2006-07, reflecting moderation in growth in all the three sectors, viz., agriculture and allied activities, industry and services. Notwithstanding the moderation, the growth performance was in tune with the high average real GDP growth of 8.7 per cent per annum during the five-year period, 2003-04 to 2007-08. The macro economy is the environment in which all firms operate. It is important to
predict the course of the national economy because economic activity affects corporate profits, investor attitudes and expectations, and ultimately security prices. An outlook of sagging economic growth can lead to lower corporate profits, a prospect that can engender investor pessimism and lower security prices. Some industries might be expected to hold up better, and stock prices of companies in these industries may not
decline as much as securities in general. The key for the analyst is that overall economic activity manifests itself in the behavior of stocks in general or the stock market.
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The key variables commonly used to describe the state of the macro economy are: 1. Growth rate of gross domestic product 2. Industrial growth rate 3. Inflation 4. Employment 5. Fiscal policy of the government 6. Monetary policy of the government 7. External sector
1. Growth rate of gross domestic product Gross domestic product is the measure of the economys total production of goods and services. The GDP growth rate represents the average of the growth rates of the three principal sectors of the economy, viz. the services sector, the industrial sector, and the agricultural sector. Rapidly growing GDP indicates an expanding economy with ample opportunity for a firm to increase sales. Country's economic growth forecast for the 2008/09 fiscal year that began in April to 7.7 per cent from 8.2 per cent, citing weakening investment and industrial output. The RBI expects the gross domestic product (GDP) to grow 8-8.5 percent in the current fiscal year, lower than last fiscal year's 9.0 per cent.
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"Generally, economic growth in India is holding up well and better than we expected," UBS said. "The structural story remains supported by lower corporate leverage, lower nonperforming loans and fiscal stability," it said. Asia's third largest economy has grown an average of 8.8 per cent over the last five years. UBS expects wholesale price inflation
to range between 9-9.5 per cent over the next month. Annual inflation hit a 3- year high of 8.24 per cent on May 24.
"Further currency depreciation could push it beyond 10 percent over the next quarter," UBS said. It expects inflation to return to around 7 per cent by the end of March 2009, higher than the central bank's forecast of 5.5 per cent.
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Year GDP - real growth rate Rank Percent Change 2003 2004 2005 2006 2007 2008 4.30 % 8.30 % 6.20 % 8.40 % 9.20 % 8.50 % 54 16 43 24 23 22 93.02 % -25.30 % 35.48 % 9.52 % -7.61 %
Date of Information 2002 est. 2003 est. 2004 est. 2005 est. 2006 est. 2007 est.
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2. Industrial growth rate:-
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Indias overall industrial growth rate rose to 7 per cent in April 2008 from the previous months 3.9 per cent, although the figure was far from robust as compared to the 11.3 per cent growth posted in April 2007. A slowdown in the manufacturing sector owing to high
interest rates and rising input costs is attributed to the year-on-year fall in the first month of the fiscal year.
The figures for April, however, acted as a positive trigger for stock markets on Thursday, which were in gloom earlier in the day. The benchmark Sensex, which had shed over 400 points in morning trade, recovered to close higher by over 60 points at 15,250 after the better-than-expected 7 per cent growth seemingly boosted investor confidence.
According to Index of Industrial Production (IIP) data released by the Central Statistical Organisation (CSO) here on Thursday, the slump in relative overall growth in April was primarily on account of dismal shows by two major sectors, manufacturing and electricity generation. During the month, the growth rate in manufacturing slipped to 7.5 per cent from 12.4 per cent in April 2007. And electricity generation witnessed a much sharper
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fall from 8.7 per cent to 1.4 per cent. The only exception was the mining sector, which recorded a robust growth of 8.6 per cent as compared to 2.6 per cent in April last.
Despite the year-on-year decline, the IIP data revealed that the overall performance in April was still much better as compared to the 3.9 per cent growth rate notched up in March 2008, the last month of fiscal 2007-08. Thus, even though a slowdown in the economy is discernible, the improvement in industrial growth rate within a month provides some assurance that the downturn may not be as severe as anticipated earlier.
3. Inflation:As there seems no sign of abatement in oil prices, fuel prices may be hiked further in October 2008, causing inflation to peak in December 2008 to reach 14-14.5 per cent, reveals the ASSOCHAM Eco Pulse (AEP) Study.
As per the AEP Report on Inflation and Interest Rates, the trickle down impact of hiked fuel prices spilling over to other commodities by the month of December this year . Coupling with low-base effect, inflation as measured by WPI Index would peak to 14 14.5 per cent level as compared to 3.8 per cent in December 2007.
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The study found that if the lending rates go up by another 50-100 basis points, non-food credit off take may come down to 19-20 per cent in the present financial year and home loan growth may dip to 5-7 per cent.
During April-May 2008, inflation has been in the range of 7.7 per cent to 8.75 per cent. In the same time period in 2007, it hovered about 6.44 per cent to 5.15 per cent. However, with the beginning of July 2007, the rate of increase in the WPI Index had
reduced to the levels of 4 per cent. Subsequently, it had gone down to the levels of 3 per cent till December 2007.
As the interest rates started rising in 2004, the growth rate of housing loans and non-food credit has been declining. The housing loan growth has fallen to about 12 per cent in 2007-08 (as on February 15, 2008 on yearly basis), from 49 per cent in the financial year 2004-05. The non-food credit off take has been slowing from 26.5 per cent in fiscal 2005 to 22.3 per cent in fiscal 2008, with an exception of 2005-06, when it grew at 31.8 per cent. Non-food credit expanded at 26.55 per cent on yearly basis as on June 20, 2008.
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While the demand for corporate borrowings may increase by oil companies, it may be partially offset by players from other sectors who are likely to prefer suppliers credit
instead of bank credit. The suppliers credit costs around 8-9 per cent against 12-14 per cent being charged by the banks for working capital financing.
Home loans have suffered a double whammy of increasing interest rates and high property prices. With the upward revision home loan rates by 50-100 basis points by a majority of players, the interest rates have almost doubled in the past four years. The interest rate on fixed-rate home loan charged by few of the players is more than 14 per
cent. The property prices, on the other hand, had registered a 50-100 per cent increase in 2007-08 alone.
Though real estate prices have softened in some areas, the affordability has not improved as the prices are still high and interest rates have been increasing relentlessly. Thus, expectation of further corrections and higher interest rates would keep the demand of home loans low in the current fiscal.
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Despite the increase in deposits rate effected since July 2008 and negative sentiment in the equity markets, the current inflation may reduce the deposits growth to 20 per cent in 2008-09. The growth rate in deposits had gone up to more than 22 per cent in 2006-07 from 12.7 per cent in 2004-05. It was 21.2 per cent in the last fiscal.
According to the latest data available, the year-on-year expansion in deposits has fallen to 21.95 per cent as on June 20, 2008. It is significantly down from 23.2 per cent on June 6, 2008.
The return on deposits with maturity of more than one year had increased to 7.5-9.6 per cent in 2007-08 from 5.25-6.25 per cent in 2004-05. It has reached 8.25-10 per at present and may go up by about 25 basis points before the end of the current financial year.
5. Unemployment:-
Unemployment rate: 7.2%
Year Unemployment rate Rank Percent Change Date of Information 2003 8.80 % 2004 9.50 % 110 105 7.95 % 2002 2003
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2005 9.20 % 2006 8.90 % 2007 7.80 % 2008 7.20 %
83 91 92 86
-3.16 % -3.26 % -12.36 % -7.69 %
2004 est. 2005 est. 2006 est. 2007 est.
According to a study India will have a prodigious 30 per cent unemployment rate in 2020 a worrisome figure that suggests a country teeming with more than 21 crore jobless people. The study suggests that the current population of Indians who will be of an employable age in 2020 will continue to hurtle towards a depressing future unless the present trends change dramatically. The study says the annual average growth in employment has slowed primarily because agriculture has failed to create jobs since the 1990s. .
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6. Fiscal Situation
The process of fiscal correction and consolidation under the Fiscal Responsibility and Budget Management (FRBM) Act continued for the Central Government during 2007-08; the revised estimates (RE) for the year placed the revenue deficit and gross fiscal deficit at 1.4 per cent and 3.1 per cent of GDP, respectively, which were lower than the budget estimates, both in absolute terms and relative to GDP. The reduction in GFD and revenue deficit by 0.4 per cent and 0.5 per cent
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of GDP, respectively, during 2007-08 (RE) over 2006-07 met the stipulated minimum threshold levels of 0.3 per cent and 0.5 per cent of GDP for GFD and revenue deficit, respectively, under the FRBM Rules, 2004. Gross primary surplus of the Centre was placed higher at 0.6 per cent of GDP during 2007-08 (RE) than 0.2 per cent in the budget estimates for the same year.
According to the Reserve Bank records, gross and net market borrowings (including 364-day Treasury Bills) during 2007-08 amounted to Rs.1,88,205 crore and Rs.1,09,504 crore, respectively, accounting for 99.7 per cent and 99.9 per cent of the estimated borrowings for the year. The weighted average maturity of dated securities issued during 2007-08 at 14.90 years was higher than that of 14.72 years during the previous year. The weighted average yield of dated
securities issued during 2007-08 was 8.12 per cent as compared with 7.89 per cent during 2006-07.
The State Governments budgeted a revenue surplus of 0.3 per cent of GDP in 2007-08 as against revenue deficit (RD) of 0.1 per cent in 2006-07 (RE). The gross fiscal deficit (GFD) was budgeted at 2.3 per cent of GDP in 2007-08, lower by 0.4 percentage points over the previous year.
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During 2007-08, the States (including the Union Territory of Puducherry) raised market loans amounting to Rs. 67,779 crore (84.1 per cent of gross allocation) through auctions, as compared with Rs.20,825 crore (78.3 per cent of gross allocation) during the previous year. The cut-off yield was placed at 7.84-8.90 per cent. The weighted average yield on market loans firmed up to 8.25 per cent during 2007-08 from 8.10 per cent in the previous year.
The average daily utilisation of WMA and overdraft by the States during 2007-08 was Rs.648crore, as against Rs.248 crore during 2006-07. The cash surplus position of the States, as reflected in their investments in Treasury Bills (14-day and auction Treasury Bills), remained sizeable. The average investment by the
States in Treasury Bills during 2007-08 amounted to Rs.73,680 crore as against Rs.63,718crore during the previous year.
The Union Budget for 2008-09 proposed to continue the fiscal consolidation process, with the key deficit indicators, viz., revenue deficit and GFD, budgeted to be lower by 0.4-0.6 percentage points and primary surplus higher by 0.5
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percentage points of GDP in 2008-09 than in the previous year. While the FRBM targets relating to GFD are set to be achieved in accordance with the mandate, the Budget proposed to reschedule the stipulated target of zero revenue deficit by 2008-09 under FRBM Rules, 2004, primarily on account of a shift in plan priorities in favour of revenue expenditure-intensive programmes and schemes.
7. Monetary and Liquidity Conditions
Broad money growth (M3), on a year-on-year (y-o-y) basis, was at 20.7 per cent (Rs. 6,86,096 crore) as at end-March 2008 as compared with 21.5 per cent (Rs. 5,86,548 crore) a year ago.
Aggregate deposits of banks, y-o-y, increased by 21.2 per cent (Rs.5,99,687 crore) as at end-March 2008 as compared with 22.3 per cent (Rs. 5,16,134 crore) a year ago.
Growth in bank credit moderated during 2007-08 after the strong pace in the preceding three years. Non-food credit by scheduled commercial banks (SCBs)
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expanded by 22.3 per cent (Rs.4,19,425 crore), y-o-y, as on March 28, 2008 as compared with 28.5 per cent (Rs.4,18,282 crore) a year ago.
Reserve money growth was higher at 30.9 per cent, y-o-y, as on March 31, 2008 than 23.7 per cent a year ago, reflecting the year-end liquidity requirements of the banks. Adjusted for the first round impact of the hike in the cash reserve ratio, reserve money growth was 25.3 per cent as compared with 18.9 per cent a year ago.
Liquidity conditions during 2007-08 continued to be influenced by variation in cash balances of the Governments and capital flows. The Reserve Bank continued with the policy of active management of liquidity through appropriate use of the cash reserve ratio (CRR) and open market operations (OMO), including issuances of securities under the market stabilisation scheme (MSS) and operations under the liquidity adjustment facility (LAF).
2- Industrial Analysis
AUTOMOBILE INDUSTRY
INDUSTRY SNAPSHOT:
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The global automotive industry is a highly diversified sector that comprises of manufacturers, suppliers, dealers, retailers, original equipment manufacturers,
aftermarket parts manufacturers, automotive engineers, motor mechanics, auto
electricians, spray painters or body repairers, fuel producers, environmental and transport safety groups, and trade unions. United States, Japan, China, Germany and South Korea are the top five automobile manufacturing nations throughout the world. The United States of America is the worlds largest producer and consumer of motor vehicles and automobiles accounting for 6.6 million direct and spin-off jobs and represents nearly 10%
of the S10 trillion US economy. The automobile is one of the important industries in the world, which provides employment to 25 million people in the world.
The automobile and automotive parts manufacturers constitute a major chunk of automotive industry throughout the world. The automotive manufacturing sector consists of automobile and light truck manufacturers, motor vehicle body manufacturers, and motor vehicle parts and supplies manufacturers. This establishment is engaged in manufacturing of automotives and light duty motor vehicles, motor vehicle bodies,
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chassis, cabs, trucks, automobile and utility trailers, buses, military vehicles, and motor vehicle gasoline engines.
The worldwide automobile industry is largely dominated by five leading automobile manufacturing corporations namely Toyota, General Motors, Ford Motor Company, Volkswagen AG, and Daimler Chrysler. These corporations have their presence in almost every country and they continue to invest into production facilities in emerging markets namely Latin America, Middle East, Eastern Europe, China, Malaysia and other markets in Southeast Asia with the main aim of reducing their production costs.
SIZE OF THE AUTOMOTIVE INDUSTRY:
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The automotive industry occupies a leading position in the global economy, accounting for 9.5% of world merchandise trade and 12.9% of world export of manufacturers. This industry manufactures self-powered vehicles, including passenger cars, motorcycles, buses, trucks, farm equipment, other commercial vehicles, automotive components and parts.
The United States of America is the major revenue source for the global automotive industry with a market share of $432.1 billion, occupying for 37.2 percent of the worlds marketplace. In the year 2006, America sold around 16.5 million vehicles. The automobile industries revenue was $85,620,000,000 in the year 2006. There were 200
countries that conducted foreign trade with the U.S. in 2006, exactly the same as year 2005. The leading countries that did trade with US in 2006 were: Canada, $49,844,026,000 $25,749,794,000 (28.67%); (14.81%); Japan, Mexico, $45,906,127,000 $17,745,627,000 (26.40%); (10.21%); Germany, and Korea,
$9,525,028,000 (5.48%).
MAJOR SEGMENTS OF AUTOMOTIVE INDUSTRY:
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The global automotive industry is highly diverse, comprising of various sectors such as utility vehicles, commercial vehicles, two wheelers, and four wheelers.
Four Wheelers industry is one of the largest segments of global automotive industry that produces different type of four wheelers namely cars, passenger cars, jeeps, vans etc. The key manufacturers of four wheelers in the world are General Motors, Toyota, Ford, Volkswagen AG, Daimler Chrysler AG, Nissan Motor Company Ltd., Honda, and PSA Peugeot.
Two wheelers industry comprises of four broad segments i.e. scooters, motorcycles, mopeds and bicycles. Japan, India and China are the largest producers of two wheelers in the world. The total production of two wheelers in Japan in 2005-06 was 10,799,659 while India produced 7600801.
Commercial Vehicles industry comprises of units engaged in manufacturing and selling of commercial motor vehicles. The commercial vehicles include light commercial vehicles, rigid vehicles, articulated trucks, buses and non-freight carrying truck. United States, Japan and China are the largest manufacturers of commercial vehicles in the
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world. The global market share for commercial vehicles in 2005 was 4.34bn, which is expected to rise in the coming years.
Utility Vehicles industry consists of units engaged in manufacturing and selling of Sports Utility Vehicle and the Multi Utility Vehicles. The key utility vehicles manufacturing regions of the world are North America, Europe, China and India.
KEY INDUSTRY DRIVERS:
The highlighting features of global automotive industry are:
Offers support to other industries such as iron, steel, rubber, glass, plastic, petroleum, textiles, oil & gas, paints & coatings, transportation industries.
Rising foreign investments have led to the rapid growth in terms of automobile production and exports. Overseas companies are making huge investments and are installing extensive production capacities in developing countries.
Continuous investment in research & development has resulted in increased productivity and better quality automobiles, automotive accessories and parts.
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Increase in standards of living and purchasing power parity have resulted in the increase demand of automobiles especially four-wheelers in developing nations, mostly in South Asian region.
This sector provides employment to major chunk of human population in the world i.e. 25 million. This industry not only provides millions of jobs to the people, but also produces billions of dollars in terms of worldwide revenues.
Adequate infrastructural facilities in form of power supply, machinery, capital, ready availability of raw materials and labor help in the tremendous growth of this industry.
FUTURE OUTLOOK:
The automotive industry is witnessing tremendous and unprecedented changes these days. This industry is slowly and gradually shifting towards Asian countries, mainly because of saturation of automobile industry in the western world. The principal driving markets for Asian automotive industry are China, India and ASEAN nations. Low cost vehicles namely scooters, motorcycles, mopeds and bicycles have led to the massive growth of some of the fastest developing economies like China and India. The future of automotive industry in the Asian countries such as Thailand, Philippines, Indonesia, and
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Malaysia is bright and promising because of the ASEAN free trade area under which the export tariffs are very less.
Due to rising pressures on cost and quality, computer aided designing and computeraided manufacturing tools are increasingly adopted by the automotive companies so as to save months of time in designing and improving the quality of automobiles. The other technologies being used by automotive industry are rapid prototyping, virtual reality, onboard systems, global positioning systems, and display maps. Most of the automotive manufacturers are now resorting to environment friendly fuel vehicles like Electric, fuel cell, and hybrid cars.
INDIAN AUTOMOBILE INDUSTRY:
The Indian automotive industry has flourished like never before in the recent years. This extra-ordinary growth that the Indian automotive industry has witnessed, is a result of a two major factors namely, the improvement in the living standards of the middle class, and an increase in their disposable incomes.
Moreover, the liberalization steps, such as, relaxation of the foreign exchange and equity regulations, reduction of tariffs on imports, and refining the banking policies, initiated by
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the Government of India, have played an equally important role in bringing the Indian Automotive industry to great heights. It is estimated that the sale of passenger cars have tripled compared to their sale in the last five years. Thus, the sale of cars has reached a figure of 1 million users and is expected to increase further. Its also to be noted that the demand for luxurious models, SUVs, and mini-cars for family owners, have shot up, largely due to increase in the consumers buying capacity.
The increased demand for Indian automobiles has resulted in a large number of multinational auto companies, especially from Japan, U. S. A., and Europe, entering the Indian market and working in collaboration with the Indian firms. Also, the institutionalization of automobile finance has further paved the way to sustain a long-term high growth for the industry.
The basic objective of this market research report "Indian Automobile Industry--Recent Trends" is to estimate the demand for automobiles from 2005 till 2012. The increasing role of auto finance is also scrutinized by proving a series of surveys conducted across the country covering all categories of private and commercial vehicles finance. The report also examines the region-wise demand and growth trends for the selected vehicles, and how they influenced Indias GDP growth.
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BUDGET: The effect of the union budget on AUTOMOBILE sector concerned is as follows:
1. Budget Measures a) Reduction in excise duties from 16% to 12% on manufacturing of 2&3 wheelers, buses and small cars.
b) Agricultural credit outlay increased to Rs 2,80,000 crore.
c) 10% increase in defence sector allocation to Rs 1,05,600 crore.
d) Dividend tax paid by parent company allowed to be set off against the same paid by its subsidiary.
e) Higher allocation towards road development programme such as the NHDP.
2.
Budget Impact
a) Excise duty reductions will help lower prices and stimulate demand for 2&3 wheelers and small cars.
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b) Increased demand for new buses from STUs (State Transport Undertakings) as well as private players.
c) Higher defence allocation will spur investment in new vehicles.
d) Higher agricultural credit outlay will help boost demand for tractors.
e) Increased thrust on road infrastructure is a positive for all the automobile manufacturers especially passenger vehicles and CVs.
3- Company Impact
a) 2&3 wheeler makers like Hero Honda, Bajaj and TVS Motors to benefit from reduction in excise duties.
b) Small car players like Tata Motors and Maruti will reap the benefit from small cars excise duty reductions.
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c) Ashok Leyland and Tata Motors, the leading bus manufacturers will benefit from excise duty reductions on buses.
d) Suppliers to the defence sector like M&M and Ashok Leyland to benefit from higher defence sector allocation.
e) Increased agriculture credit outlay will benefit two-wheeler makers as well as tractor manufacturers like M&M and Punjab Tractors.
3.
Industry Wish list
a) Excise duty of 16% which is applicable currently only on the small cars of certain engine and length specifications should be made applicable to vehicles across all the segments.
b) The weighted deduction of 150% of the expenses incurred on scientific research should be extended for a further period of at least 10 years even after 2012. Small cars, which attract 16% excise duty, should be defined on the basis of the length of 4,000 mm and the criteria based on engine capacity should be removed.
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c) Definition of capital goods should be amended to treat motor vehicle as capital goods for service providers such as Architect, Chartered Accountant, Cost Accountant, Company Secretary and the like.
d) No interest shall be charged on differential excise duty paid on finalization of prices. Alternatively this exemption from interest can be given for moveable inputs or in the situation where gap between provisionally assessed price and finally assessed price is up to 20%.
e) An appropriate procedure/form etc. should be introduced for exempting goods from levy of CST, which is to be used in manufacture of products to be exported.
SWOT ANALYSIS OF INDIAN AUTOMOBILE INDUSTRY: Strengths:

Globally cost competitive Adheres to strict quality controls Has access to latest technology Provides support to critical infrastructure and metal industries
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Weaknesses:
Industry has low level of research and development capability Industry is exposed to cyclical downturns in the automotive industry Most component companies are dependent on global majors for technology
Opportunities:
May serve as sourcing hub for global automobile majors Significant export opportunities may be realised through diversification of export basket Implementation of Value-Added-Tax (VAT) in FY2004 negated the cascading impact of prices
Threats:
The presence of a large counterfeit components market poses a significant threat Pressure on prices from OEMs continues Imports pose price based competition in the replacement market Further marginalization of smaller players likely
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3 -Company Analysis
1)BAJAJ 2)MARUTI SUZUKI 3)TATA MOTORS 4)MAHINDRA AND MAHINDRA 5) HERO HONDA MOTORS
BAJAJ
COMPANY OVERVIEW:
It is one of India's top ten companies in terms of market capitalization and among the top five in terms of annual turnover.
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Established in 1945, it was incorporated as a trading company. From 1948 till 1959, it imported scooters and three wheelers from Italy and sold them in India. It then obtained a
production license in 1959 and struck a technical collaboration with Piaggio of Italy in 1960.
Scooter production commenced in 1961. Three wheeler production followed in 1962. Its collaboration with Piaggio expired in 1971 and since then the Company's scooters and three wheelers are sold under the "Bajaj" brand name.
Under the "Horizontal transfer of technology" policy, Maharashtra Scooters Ltd., a Company with 24% equity participation by the Company and 27% participation from Maharashtra State Government's Western Maharashtra Development Corp. was formed in 1975. Production facilities are located at Satara, in Maharashtra State. This helped augment production capacities. The unit continues to assemble scooters from CKDs supplied by the Company. These scooters are marketed through the Company's distribution network and under the Company's brand name.
The Company's second plant was set up in 1984 at Aurangabad, in Maharashtra State. In this plant, scooter production commenced in 1986; three wheeler production commenced in 1987; and scooterettes and motorcycle facilities were commissioned in 1990 & 1991
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respectively.
From 1961 when the annual production was about 4000 units, today the Company has become a market leader with annual production in excess of 1.35 million units and with product offerings in all segments (mopeds & scooterettes, scooters, motorcycles, three wheelers).
SWOT ANALYSIS:
Strengths: Highly experienced management. Product design and development capabilities. Extensive R & D focus. Widespread distribution network. High performance products across all categories. High export to domestic sales ratio. Great financial support network (For financing the automobile) High economies of scale. High economies of scope.
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Weaknesses: Hasn't employed the excess cash for long. Still has no established brand to match Hero Honda's Splendor in commuter segment. Not a global player in spite of huge volumes. Not a globally recognizable brand (unlike the JV partner Kawasaki)
Threats: The competition catches-up any new innovation in no time. Threat of cheap imported motorcycles from China. Margins getting squeezed from both the directions (Price as well as Cost) TATA Ace is a serious competition for the three-wheeler cargo segment.
Opportunities: Double-digit growth in two-wheeler market. Untapped market above 180 cc in motorcycles. More maturity and movement towards higher-end motorcycles. The growing gearless trendy scooters and scooterette market.
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Growing world demand for entry-level motorcycles especially in emerging markets.
FINANCIALS:
YEAR E P S (Rs.) Mar ' 06 96.43 Mar ' 07 98.96 Mar ' 08 53.67
Book Value Per Share (Rs.) Debt/Equity Current Ratio Quick Ratio
471.49 0.30 0.78 0.68
546.96 0.29 0.85 0.75
109.73 0.84 0.88 0.64
Dividend Per Share
40.00
40.00
20.00
Dividend payout Ratio
41.89
38.24
44.78
RATIO ANALYSIS:-
1.)EARNING PER SHARE:- It measures the profit available to the equity shareholders
on a per share basis, that is, the amount that they can get on every share held. It is calculated by dividing the profits available to the shareholders by number of outstanding
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shares. The profits available to the ordinary shareholders are arrived at by net profit after taxes and preference dividend.
EPS 120 100 80 EPS 60 40 20 0 2006 2007 YEAR 2008 EPS
As we can analyze from the graph that earning per share of the company in 2006 is Rs 98 and then in the next year EPS has slightly gone up. It means that shareholders are happy
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from the performance of the company, but in the next year it drops down to Rs 55 which is not a good news for shareholders.
2.) CURRENT RATIO: It is the most popularly used ratio to judge liquidity of the
firm. It is defined as the ratio between current assets and current liability i.e.
Current ratio= Current assets / Current liability
Current ratio 0.9 0.88 0.86 0.84 0.82 0.8 0.78 0.76 0.74 0.72 2006 2007 YEAR 2008 Current ratio
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As a conventional rule, a current ratio of 2:1 or more is considered satisfactory We can
see from the graph current ratio for the company is 0.78 in 2006 and in 2007 it slightly increased. It shows that company assets are increasing which can easily be converted into cash or we may say companies liabilities are
decreasing. Graph shows that company has negative working capital (current assets-current liability). It can be interpreted that company has inventory that can be converted into cash quickly .As per the interpretation of less than 1 current ratio it can be said that company is facing a liquidity crisis.
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3.) DebtEquity ratio:- A measure of a company's financial leverage calculated by

dividing its total liabilities by stockholders' equity. It indicates what proportion of equity and debt the company is using to finance its assets.
Debt-equity ratio = Total Liability / Shareholders Equity
A high debt/equity ratio generally means that a company has been aggressive in financing its growth with debt. This can result in volatile earnings as a result of the additional interest expense.
DEBT-EQUITY 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2006 2007 YEAR 2008 DEBT-EQUITY
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From the graph we can conclude that till 2007 company is not utilizing debt fully and using more of equity. But in 2008 this ratio has gone up from 0.3 in 2006 to 0.85 in 2008, it shows that now company is using debt and equity both.
MARUTI SUZUKI
OVERVIEW
Maruti Suzuki, formerly known as Maruti Udyog is one of India's leading automobile manufacturers and the market leader in the passenger car segment. The company was established in February 1981 through an act of Parliament, as a Government company in technological collaboration with Suzuki Motor Corporation (SMC) of Japan. The
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government held a controlling stake of 74 per cent with SMC holding the rest. Over the years, SMC has increased its stake in the company to 54.2 per cent as on 31 March 2008.
Post liberalization of the automobile industry in 1992, the government gradually divested its stake in the company and exited it completely in May 2007. Maruti's first product -- Maruti 800 made its debut in December 1983, when there were only two car companies in India. Suzuki's car technology helped the company gain a strong foothold in the Indian car market. The company has led the Indian car market for over two decades and became the first Indian car company to mass produce and sell more
than a million cars by 1994. Till March 2007, the company has produced and sold over six million cars.
Maruti accounts for over 50 per cent of the total Indian passenger car market with respect to volumes. However, in terms of revenues generated from car sales, the company's market share stood at 38.5 per cent in 2005--06. It has a negligible one per cent share of the MUV segment. Maruti derives nearly 93 per cent of its income from automobile sales while spares, dyes, moulds and services account for the rest.
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The company has a portfolio of 11 car brands with over 50 variants, including the people's car -- Maruti 800, compact cars -- Alto, Zen Estilo and WagonR, premium compact car -- Swift, off-roader jeep -- Gypsy, mid-size sedan -- Swift DZire, luxury sedan -- SX4, MPVs -- Omni and Versa and luxury SUV -- Grand Vitara. Maruti has predominantly been a small car maker. Mini and compact cars make up for around 83 per cent of total cars sold by the company. Through its subsidiaries, the company also provides allied services like sale and purchase of pre-owned cars, lease and fleet management service for corporate clients, insurance and finance services, etc. The company topped the customer satisfaction survey conducted by J.D.Power & Associates
for the eighth successive year in 2007. Through a network of 500 dealer outlets and 2,445 service workshops, Maruti's national reach is spread over 1,172 cities, the largest network by any automobile company.
The company's registered office is in Delhi and its plants are located in Gurgaon and Manesar, south of Delhi. The Gurgaon plant has an installed capacity of 3.5 lakh cars per annum. In 2006--07, the company took over Maruti Suzuki Automobiles India Ltd having a facility at Manesar housing a car manufacturing plant with a capacity of one lakh cars per annum and a diesel engine manufacturing plant with a capacity of one lakh units per annum. Maruti has optimally utilised its capacity over the years. Its capacity utilisation
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level has crossed 100 per cent in each of the last five years. The Gurgaon and the Manesar facilities have a combined capability of producing over seven lakh vehicles per annum. The company has chalked out an investment plan of Rs.9, 000 crore to expand its installed capacity to one million cars by 2010
CURRENT SCENARIO
Soaring depreciation costs combined with currency derivatives loss have led Maruti `Suzuki to post a decline in its net profit for the fourth quarter ended March 2008, even as its net sales grew.
However, for the fiscal 2007-08, the company recorded a healthy increase in its profits as well as sales. The board of directors recommended a dividend of 100 per cent for 200708 as against 90 per cent in the previous fiscal. Maruti said that the newly adopted depreciation policy since April 1, 2007, under which the company made an additional provision of Rs 212 crore for fiscal 2007-08, impacted the profit figures for the quarter. The depreciation policy has brought down the lifecycle of its tools and equipment to eight years instead of 13 years and for dies four years instead of five. During the quarter, Maruti's net loss on account of its forex cover stood at Rs 50.4 crore, computed on a "marked-to-market basis on various derivative instruments.
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During fiscal 2007-08, Maruti Suzuki sold 7, 64,842 vehicles, up 13.3 per cent. The company's exports at 53,024 units grew at the fastest pace of 34.9 per cent during the year.
FINANACIAL PERFORMANCE
Maruti Suzuki posted a drop in net profit in Q1 despite higher sales, mainly on account of a sharp increase in raw material prices and a shift to a new depreciation policy. The company posted a 7-per cent decline in net profit at Rs 465.8 crore during the first quarter of the current financial year. The company, however, said that the figures were not
comparable due to the impact of Rs 61 crore, resulting from the new depreciation policy introduced in the last quarter of the previous financial year. The new depreciation policy
will reduce the life span of its tools and equipment to eight years from 13 years. Maruti is expecting that the recurring impact of this policy would be felt in the coming few years. Domestic sales grew by 12.1 per cent to 1,80, 093 units led by compact hatchback Swift, entry level sedan Swift DZire and WagonR.
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In the premium segment, Marutis share inched to 26.4 per cent with SX4 and DZire, up from 21.2 per cent in the same period last year. Maruti launched two new models in the sedan segment - SX4 in March last year and DZire, the entry level car on the Swift platform.
FINANCIALS:-
RATIO
DIVIDEND PER SHARE DIVIDEND PAYOUT DEBT EQUITY CURRENT QUICK INTEREST COVERAGE RATIO PAT
2003 1.50 32.92 0.14 1.57 1.20 5.59 1.57
2004 1.50 9.02 0.08 1.17 0.85 16.35 4.52
2005 2.00 7.73 0.07 1.68 1.25 36.02 7.35
2006 3.50 9.69 0.01 1.77 1.31 87.25 9.67
2007 4.50 9.72 0.09 1.42 1.13 60.42 10.23
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RATIO ANALYSIS:-
1. Earning per share: It measures the profit available to the equity shareholders on a per share basis, that is, the amount that they can get on every share held. It is calculated by dividing the profits available to the shareholders by number of outstanding shares. The profits available to the ordinary shareholders are arrived at by net profit after taxes and preference dividend.
EPS 60 50 40 30 20 10 0 2003 2004 2005 2006 2007 EPS
From the graph we can conclude that since 2003 Earning per share of the company is continuously increasing which is good for shareholders. In 2003 EPS is Rs 3 increases to Rs 54. It shows that to maximize the wealth of a shareholder it is a good company as it is
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shown that the share holder of the company have a good growth in terms of return also continuous growth shows the great probability for the future growth with good potential.
2. Current ratio:- It is the most popularly used ratio to judge liquidity of the firm. It is defined as the ratio between current assets and current liability i.e.
Current ratio 2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2003 2004 2005 2006 2007 Current ratio
From the graph we can see that this ratio is fluctuating for the company. In 2003 it is around 1.6 and then it has been decreased to 1.2 in the next year. Till 2006 it went up to
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1.79 and then again falls to 1.4.It can be said that company is using its financial resource properly.
3. DebtEquity ratio: A measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity. It indicates what proportion of equity and debt the company is using to finance its assets.
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Debt-equity 0.16 0.14 0.12 0.1 0.08 0.06 0.04 0.02 0 2003 2004 2005 2006 2007 Debt-equity
We can conclude from the graph that company is not utilizing debt and mainly running on equity. In 2003 ratio is 0.14 then it further decreased to 0.01 in 2006 which is very less. In 2007 it slightly increased to 0.9, so it shows company is using equity as major portion while financing. It can be said that company has good potential for raising debt which is good for the company.
TATA MOTORS
OVERVIEW:
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Tata Motors, formerly known as Tata Engineering & Locomotive Company (TELCO) is one of the leading automobile manufacturer in India with a portfolio that includes trucks, buses, utility vehicles and passenger cars.
It also has a strong auto finance operation, TML Financial Services Limited, supporting customers to purchase Tata Motors vehicles
HISTORY:
Tata Motors was established in 1945 by Tata group initially as Tata Locomotive and Engineering Company to manufacture steam locomotives The company changed its name to Tata Engineering and Locomotive Company (TELCO) in 1960 In early 2005, Tata Finance was merged with Tata Motors and it received an order for 1070 bus chassis from various state transport corporations in Karnataka.
ACQUISITION:
ACQUISITION OF JAGUAR AND LAND ROVER On June 2, 2008, Tata Motors completed the acquisition of businesses of Jaguar and Land Rover (part of Premier
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Automotive Group of Ford Motor Co.) for US$ 2.3 billion (on a cash free, debt free basis). Both are iconic British brands purchased by Ford in 1989 and 2000 respectively. Out of the purchase consideration paid to Ford, Ford has contributed around US$ 600 million into the Jaguar Land Rover pension schemes (in UK).
Jaguar and Land Rover (JLR) are in the business of development, manufacture and sale of high end luxury cars and SUVs respectively. JLR has 3 manufacturing plants, 1 component manufacturing facility and 2 state of the art design and engineering centers in the UK, with 16,000 employees across the world, sales in more than 100 countries and have over 2,200 dealers. Acquisition of JLR provides the Company with a strategic
opportunity to acquire iconic brands with a great heritage and global presence, and increase the Company's business diversity across markets and product segments.
SWOT Analysis of the company
Strengths
Weaknesses
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Strong market position
Dependent on vendors
Strong revenue growth
Overdependence on Indian market
Research & Development Opportunities Road Development Threats Global competition
Territorial Expansion
Government regulations
Car Penetration in India
Diesel fuel issues
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Financials:
Year end EPS(Rs.) Book value(Rs.) Debt/equity Interest coverrage ratio
Dividend Per Share
Mar-2004 21.93 101.69 0.44 7.38

8.00
Mar-05 32.44 113.64 0.49 8.58

12.50
Mar-06 37.59 143.93 0.56 8

13.00
Mar-07 47.1 177.57 0.56 7.98

15.00
Mar-08 50.52 202.68 0.7 7.05

15.00
Quick Ratio
Dividend payout Ratio
0.47
39.27
0.76
41.68
0.96
37.13
0.91
35.34
0.66
32.51
RATIO ANALYSIS:
1. Earning Per Share:- It measures the profit available to the equity shareholders on a per share basis, that is, the amount that they can get on every share held. It is calculated by dividing the profits available to the shareholders by number of outstanding shares. The profits available to the ordinary shareholders are arrived at by net profit after taxes and preference dividend.
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EPS 50 45 40 35 30 25 20 15 10 5 0 2004 2005 2006 2007 2008 EPS
From the graph we can conclude that since 2004 Earning per share of the company is continuously increasing which is good for shareholders. In 2004 EPS is Rs 22.5 increases to Rs 44. In year 2008 there is a little decline in the EPS. As per the consideration of whole 5 years company has shown on an average good growth in EPS. There is a potential for the future growth for the company.
2. Current Ratio: - It is the most popularly used ratio to judge liquidity of the firm. It is defined as the ratio between current assets and current liability i.e.
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Current ratio 1.4 1.2 1 0.8 Current ratio 0.6 0.4 0.2 0 2004 2005 2006 2007 2008
Current ratio of the companyshows that in years 2004-05 comapany has negative working capital. Which becomes positive in 2006-07 and again negative in 2008 .Since EPS also increasing shows profitability of company .Also,Current ratio shows that company have highly liquid assets or we may say inventory.
3. DebtEquity Ratio: - A measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity. It indicates what proportion of equity and debt the company is using to finance its assets.
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Debt-equity 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2004 2005 2006 2007 2008 Debt-equity
From graph it can be concluded that company is continuously increasing debt for capital financing for the company. Company might be doing this to increase PAT because debt is a cheap source of finance (because debt is tax deductible while equity is not) , by doing so company can increase shareholders wealth.
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Since this ratio is increasing we can say that firm has greater reliance on debt as a source of finance.
MAHINDRA AND MADINDRA LIMITED
HISTORY:
Mahindra and Mahindra Limited was incorporated on October 2, 1945 as a private limited company under the Indian Companies Act of 1913 by two brothers, Mr. J.C. Mahindra and Mr. K.C. Mahindra. It was converted into a public limited company on June 15, 1955. Mahindra & Mahindra Ltd, one of the largest private sector company in India, is the flagship company of the Mahindra Group. The company commenced operations in 1945 to manufacture General Purpose Utility Vehicles and later on entered into manufacturing of Tractors and Light Commercial Vehicles (LCVs). Over the years, the company has expanded its operations from automobiles and tractors to steel, trading and manufacturing of Ash Handling Plants & Traveling Water Screens. The company is
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focussed to become a world giant in the tractor business. It has already made its presence felt in countries in Europe, Latin America, Africa and United States of America.
OVERVIEW:
The company's core business comprises of utility vehicles, light commercial vehicles and tractors. During FY2000, the commercial vehicles (i.e both utility vehicles and light commercial vehicles) contributed 37.77% to the total sales revenue, tractors contributed 56.65% and other sales like those of parts and engines contributed about 5.58% to the total sales. The company also has 40% market share in the 30-40 HP segment in the US market.
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Mahindra & Mahindra is highly dependent on good monsoon as major portion of its revenues comes from tractors and farm implements. The slowdown in the agriculture sector in the last two years has had a negative impact on the company's bottomline. The
agricultural thrust in the recent budget is expected to benefit the company. The customs duty on used cars and MUVs has been raised to 105% which is triple the current rate. This would prvent the import of MUVs and might benefit the company which is one of the major producers of the same. In the recent budget the government has announced its plans to bring the service stations under the purview of service tax. This would have a negative impact on the company's bootomline as the company is planning to expand its distribution and services network.
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Mahindra & Mahindra follows the strategy of continuous introduction of new products in the automotive segment. In the last seven years, 30% of the sales volume in this segment came from products which were less than five years old. The company continuously launches new products so that none of the competitor's products can hold the customers for long.
In the tractors segment, the company is all set to counter the threat posed by the entry of foreign players like New Holland and John Deere. The company has planned to introduce a wide range of tractors and to strengthen its distribution and services network
PRODUCTS:
The company produces tractors in three categories viz., less than 30 HP, 30-40 HP and greater than 40 HP. It also produces farm implements like cultivators, tillers, ploughs,etc. Some of the well known brands of M&M in the utility vehicles are the Commander, Armada, Voyager and Bolero.
CURRENT SCENERIO:
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Mahindra & Mahindra acquires a leading German Forging Company Schoneweiss & Co. GmbH. Mahindra unveils new Bolero in Gujarat. Mahindra and Mahindra (M&M) has launched the line of sports utility vehicles (SUV) and pick up trucks that it plans to begin selling in the United States starting from 2009. M&M unveils Mahindra Pik-Up in Australia. The latest product from Mahindra Defence Systems, the Axe FAV is an extreme offroading multi terrain defence purpose vehicle. Mahindra & Mahindra acquires renowned Italian design house, GRD Italy.
SWOT ANALYSIS:
STRENGTHS:
Over the years the company has emerged as one of the top players in the world in terms of number of tractors sold. This gives a clear indication that the company's market share is one of its biggest strengths.
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The company's ability to introduce new products in the market and to generate sales from those new products is a major strength. The reason being that this is
very essential for any company, for its survival in the long run.
The company has established its brand name in other countries of the world as well. This is evident from the 40% market share that it holds in the 30-40 HP tractors market in the US.
WEAKNESSES:
The company is highly dependent on the rural sector, and the rural sector in turn is highly dependent on the monsoons. As a result, if there happen to be bad monsoons (less of rains) for two consecutive years it could have an adverse impact on the demand of tractors for the company.
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OPPORTUNITIES:
The government has been trying to strengthen the exports of agricultural products. As a result, the quality of agricultural products necessarily has to be very high. For this, they need better rural and agricultural infrastructure. This might result in an increase in demand for tractors.
In India, the penetration of tractors is 10 tractors per 1000 hectares of cropped area, which is much below the world average of 19 tractors for the same. Thus there is scope for the demand to increase.
THREATS:
The company has a history of having invested in unrelated diversifications such as telecom, holiday and resort inns, financial services, etc. which it has hived off as subsidiaries from time to time when these turned unmanageable. This is a cause for concern as such diversifications could divert the company's attention from its
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core business. It is a dangerous tendency as it leads to destruction of shareholders value
The entry of foreign players in the tractors segment could pose a threat to the company as these foreign players are technically more competitive than Mahindra & Mahindra.
FINANCIALS:-
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RATIO ANALYSIS:
Year end
Adjusted E P S (Rs.)
Mar-2004
26.46
Mar-05
43.83
Mar-06
25.61
Mar-07
40.38
Mar-08
37.29
Book value(Rs)
Total Debt/Equity
151.72
0.41
176.64
0.52
124.06
0.30
148.72
0.46
181.44
0.59
Interest coverage ratio

Dividend Per Share Quick Ratio Dividend payout Ratio (Net Profit)
6.7
9.00 0.65 33.79
24.62
13.00 0.78 33.54
33.02
10.00 0.83 32.45
72.64
11.50 1.01 30.39
14.88
11.50 0.74 29.10
1. Earning Per Share: - EPs is one of the measure to calculate profitability on shareholders investment. It is the ratio of profit after tax to average no. of ordinary shares outstanding.
EPS = (PAT/Average no. of equity shares outstanding)
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EPS 50 45 40 35 EPS 30 25 20 15 10 5 0 2004 2005 2006 YEAR 2007 2008 EPS
From the graph we can see that the EPS of the company is fluctuating (increasingdecreasing) year after year. By this we can not say that companies performance is decreasing or profits are decreasing. Since there in trend of increase-decrease in the EPS we can say that company might be giving bonus shares or there may be stock split which does not harm overall profitability or there might be presence of more dilutive securities(such as bonds, warrants that are converted to equity) have diluted EPS. on alternate years that
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1-Current Ratio: - The current ratio is the measure of companies short term solvency.
A ratio greater than one shows company has more current assets than liabilities.
CURRENT RATIO = Current assets / Current liability
CURRENT RATIO 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2004 2005 2006 year 2007 2008 CURRENT RATIO
As we can see from the graph current ratio of company is greater than one for five years and continuously increasing except decrease in 2008, overall it shows that company have more current assets than current liabilities. Current ratio depicts the margin of safety for
90
investors. Since ratio is greater than one firm has more ability to meet current obligations which is considered good for investors.
1. DebtEquity Ratio:-
DEBT-EQUITY 0.7 0.6 0.5 0.4 DEBT-EQUITY 0.3 0.2 0.1 0 2004 2005 2006 YEAR 2007 2008
91
From graph it can be concluded that company is continuously increasing debt for capital financing for the company except debt component has decreased in year 2006.Company might be doing this to increase PAT because debt is a cheap source of finance (because
debt is tax deductible while equity is not) , by doing so company can increase shareholders wealth .
As the interpretation, Increases or decreases in debt-equity suggest a greater or lesser reliance ondebt as a source of financing.
HERO HONDA MOTORS LIMITED
OVERVIEW:
Hero Honda Motors Limited, based in Delhi, India, is the world's largest manufacturer of motorcycles1. Hero Honda is a joint venture that began in 1984 between the Hero
92
Group of India and Honda of Japan. It has been the world's biggest manufacturer of 2wheeled motorized vehicles since 2001, when it produced 1.3 million motorbikes in a single year.
Hero Honda's Splendor is the world's largest selling motorcycle.
CURRENT SCENARIO:
The company currently has two factories in Haryana, but plans to part-shift production to the new factory. Uttarakhand offers full exemption from excise for 10 years, while giving complete income tax exemption for first five years and reduced levels for the next five years.
While exemption on income tax gives Hero Honda higher profits, the exemption on excise helps the company manufacture bikes cheaper, giving it more elbow room to price products competitively.
The majority of production at Haridwar is of Hero Honda's best-seller Splendor model
and higher volumes would mean greater profits. Production at Haridwar has prompted the company to up its net profit projections for this fiscal as its tax goes down.
93
The annualized tax rate was likely to come down to 22% from 31-32% earlier, leading to lower provisions in all the four quarters of this fiscal. The company beat street expectations in the first quarter itself as it reported a good 43.7% rise in net profit, the higher earnings coming at a time of high raw material costs and greater advertising spends.
Sales for Hero Honda grew 11% in the April-June'08 quarter, faster than the industry's 8% growth rate. The momentum would cool down In the coming months due to record high interest rates (on retail finance) and tight retail financing.
JOINT VENTURE:-
Hero Honda, a joint venture between India's Hero Group and Honda, is the largest manufacturer of two wheelers in the world. Honda of Canada Manufacturing is based in Alliston, Ontario. Honda has also created joint ventures around the world, such as Honda Siel Cars India Ltd, Hero Honda Motorcycles India Ltd, Dongfeng Honda Automobile Company in China and Honda Atlas Cars Pakistan
ABOUT HONDA:-
94
The company manufactures automobiles and motorcycles, trucks, scooters, robots, jets and jet engines, ATV, water craft, electrical generators, marine engines, lawn and garden equipment, and aeronautical and other mobile technologies. Honda's line of luxury cars is branded Acura in North America and China. More recently they have ventured into mountain bikes.
Honda is the 5th largest automobile manufacturer in the world as well as the largest engine-maker in the world, producing more than 14 million internal combustion engines each year. Currently, Honda is the second largest manufacturer in Japan behind Toyota and ahead of Nissan.
SWOT ANALYSIS
STRENGTHS:-
o Ability to understand customers needs and wants o Recognized and established brand name o Effective advertising capability
95
WEAKNESSES:-
o R&D is not close to the Hero manufacturing plant o Hero is vulnerable in the joint venture because Honda Motor Company has so much power
OPPORTUNITIES:-
o Global expansion into the Caribbean and Central America o Expansion of target market (include women) o Become Indias leader in the scooter market
THREATS:-
o Honda Motorcycles and Scooters India can take away market share and cause joint venture to go sour o Bajaj Motors is a strong competitor
PRODUCTS:-
96
Hero Honda Motors Limited is currently manufacturing the following models of two wheelers:
Pleasure - Scooter with 102 cc air-cooled four-stroke engine Price: Rs 36,240 Delhi ex-showroom
Karizma - Motorbike with 223 cc four-stroke air-cooled engine Price: Rs 79,000 Delhi ex-showroom
Super Splendor - Motorcycle with 125 cc four-stroke air cooled engine Splendor + - Motorbike with 97 cc four stroke air cooled engine Price: Rs 40,579 Delhi ex-showroom
Glamour - Motorbike with 125 cc (9 bhp) "quantum core" engine Passion + - Motorbike with 97 cc four stroke air-cooled engine Price: Rs 41,885 Delhi ex-showroom
CD Deluxe - Motorbike with 97 cc four-stroke air cooled engine Price: Rs 53,779 Delhi ex-showroom
CD 100 SS - Motorbike with 97 cc four-stroke air-cooled engine Price Rs 38,821 Delhi ex-showroom
97
CD Dawn - Motorcycle with 97 cc four-stroke air-cooled engine Price: Rs 31,899 Delhi ex-showroom
Achiever - Motorcycle with 149 cc four-stroke air-cooled engine Price: Rs 48,200 Delhi ex-showroom
Financials :-
YEAR E P S (Rs.) Dividend Per Share Total Debt/Equity Current Ratio Quick Ratio Dividend payout Ratio
Mar ' 03 25.62 18.00 0.15 0.40 0.23 69.82
Mar ' 04 30.75 20.00 0.15 0.37 0.23 61.86
Mar ' 05 35.72 20.00 0.13 0.34 0.21 56.25
Mar ' 06 43.44 20.00 0.09 0.48 0.35 46.88
Mar ' 07 37.26 17.00 0.06 0.56 0.39 46.29
Book Value Per Share (Rs.)
42.54
57.03
74.79
100.62
123.70
98
RATIOS:
1).EPS:-
EPS = (PAT/Average no. of equity shares outstanding)
99
EPS 50 45 40 35 30 EPS 25 20 15 10 5 0 2003 2004 2005 YEAR 2006 2007
EPS
From the graph it can be depicted that there is a continuous growth in the earning per share of the company except a little decline in year 2007. Since the company has shown good growth in terms of PAT and increasing EPS. Cmpany have good opportunities for the investors.
2.) CURRENT RATIO:-
100
CURRENT RATIO 0.6 0.5 0.4 0.3 0.2 0.1 0 2003 2004 2005 YEAR 2006 2007 CURRENT RATIO
We can see from the graph current ratio for the company is 0.4 in 2003 and in 2004-05 it slightly decreased and increased thereafter in years 200607.Since ratio is less than 1 . It shows that company assets can easily be converted into cash. Graph shows that company has negative working capital(current assets-current liability). It can be interpreted that company has inventory that can be converted into cash quickly.
3.) DEBT-EQUITY RATIO:-
101
DEBT-EQUITY 0.16 0.14 0.12 0.1 0.08 0.06 0.04 0.02 0 2003 2004 2005 YEAR 2006 2007 DEBT-EQUITY
We can conclude from the graph that company is not utilizing debt and mainly running on equity. In 2003 ratio is 0.15 then it further decreased to 0.06 in 2007 which is very less. It shows company is using equity as major portion of financing. .It can be said that company has good potential for raising debt which is good for the company.
COMPARATIVE ANALYSIS :-
102
As Per The Comparison Of Earnings Per Share Mahindra And Mahindra Has Shown Highest Growth In Eps In Year 2007 Over 2006 As Compared These Companies On 2nd No. Growth Is Of Tatamotors Then Comes Maruti Suzuki At Third No. Hero Honda Motors On 4th No And At Last Bajaj Comes Among These Companies
EARNING
GROWTH IN
PER SHARE GROWTH
YEAR COMPANY BAJAJ MARUTI SUZUKI TATA MOTORS MAHINDRA AND MAHINDRA HERO HONDA MOTORS
2006
2007
96.43 44 35.59 25.61 35.72
98.96 55 47.1 40.38 43.44
2.623665 25 32.34055 57.67278 21.61254
ANNEXURE:Bajaj
103
As on Assets Gross Block Net Block Capital WIP Investments Inventory Receivables Other Current Assets Balance Sheet Total(BT) Liabilities Equity Share Capital Reserves Total Debt Creditors and Acceptances Other current liab/prov. Balance Sheet Total(BT)
31-Mar-08 Rs mn 29178.20 12580.80 347.40 11298.20 3496.10 2753.10 18830.70 49306.30 Rs mn 1446.80 14323.80 13343.40 9444.60 10747.70 49306.30 %BT 59.18 25.52 0.70 22.91 7.09 5.58 38.19 100.00 %BT 2.93 29.05 27.06 19.15 21.80 100.00
Maruti
Balance Sheet
104
As on Assets Gross Block Net Block Capital WIP Investments Inventory Receivables Other Current Assets Balance Sheet Total(BT) Liabilities Equity Share Capital Reserves Total Debt Creditors and Acceptances Other current liab/prov. Balance Sheet Total(BT)
MAHINDRA AND MAHINDRA
105
Balance Sheet As on Assets Gross Block Net Block Capital WIP Investments Inventory Receivables Other Current Assets Balance Sheet Total(BT) Liabilities Equity Share Capital Reserves Total Debt Creditors and Acceptances Other current liab/prov. Balance Sheet Total(BT) 31-Mar-07 Rs mn 31973.97 15677.60 2805.99 20019.20 8784.84 7008.87 25731.06 80027.54 Rs mn 2380.33 32745.15 16360.07 19069.19 9472.81 80027.54 %BT 39.95 19.59 3.51 25.02 10.98 8.76 32.15 100.00 %BT 2.97 40.92 20.44 23.83 11.84 100.00 31-Mar-06 Rs mn 28721.91 13619.25 1791.86 12436.67 8787.44 6379.69 17137.47 60152.38 Rs mn 2334.00 26424.95 8833.62 15032.50 7527.32 60152.38 %BT 47.75 22.64 2.98 20.68 14.61 10.61 28.49 100.00 %BT 3.88 43.93 14.69 24.99 12.51 100.00 31-Mar-05 Rs mn 26846.35 13498.37 1107.28 10357.13 7598.30 5115.28 12391.30 50067.66 Rs mn 1160.09 18575.58 10525.65 12269.84 7536.51 50067.65 %BT 53.62 26.96 2.21 20.69 15.18 10.22 24.75 100.00 %BT 2.32 37.10 21.02 24.51 15.05 100.00
TATA MOTORS
106
Balance Sheet As on Assets Gross Block Net Block Capital WIP Investments Inventory Receivables Other Current Assets Balance Sheet Total(BT) Liabilities Equity Share Capital Reserves Total Debt Creditors and Acceptances Other current liab/prov. Balance Sheet Total(BT) 31-Mar-07 Rs mn 87153.40 38553.10 25133.20 23585.10 25009.50 7821.80 71537.80 191640.50 Rs mn 3854.10 64483.00 40091.40 57135.10 26076.90 191640.50 %BT 45.48 20.12 13.11 12.31 13.05 4.08 37.33 100.00 %BT 2.01 33.65 20.92 29.81 13.61 100.00 31-Mar-06 Rs mn 79106.50 35436.50 9511.90 18377.80 20122.40 7157.80 72614.10 163220.50 Rs mn 3828.70 51136.90 29368.40 55358.70 23527.80 163220.50 %BT 48.47 21.71 5.83 11.26 12.33 4.39 44.49 100.00 %BT 2.35 31.33 17.99 33.92 14.41 100.00 31-Mar-05 Rs mn 65774.40 31576.70 5388.40 13830.00 16013.60 8113.20 63652.60 138574.50 Rs mn 3617.90 37314.40 24954.20 50770.10 21917.90 138574.50 %BT 47.47 22.79 3.89 9.98 11.56 5.85 45.93 100.00 %BT 2.61 26.93 18.01 36.64 15.82 100.00
HERO HONDA:
107
Key financials
(Rs.in Crs.)
Year end
Mar 07 11542.04 1387.49 857.89 39.94
Mar 06 10086.16 1529.78 971.34 39.94
Mar 05 8596.81 1308.56 810.47 39.94
Mar 04 6747.35 1147.51 728.32 39.94
Mar 03 5101.71 949.68 580.76 39.94
Net sales Operating profit Net profit Equity cap pd
Cash flow analysis

(Rs.in Crs.)
Year end
Mar 07 859.00 625.05 1540.19
Mar 06 973.35 936.08 1731.34
Mar 05 811.76 746.83 1168.64
Mar 04 729.49 972.93 1672.54
Mar 03 581.90 619.01 954.42
NOPAT Operating cash flow Free cash flow
Key operating ratios
Year end
Mar 07 40.07 123.69
Mar 06 45.84 100.62
Mar 05 37.75 74.78
Mar 04 33.91 57.03
Mar 03 26.78 43.12
EPS(Rs) Book value(Rs)
108
CEPS(Rs) NPM(%) OPM(%) ROCE(%) ROE(%) Debt/equity Interest cover
47.07 7.43 12.02 51.66 38.30 0.08 774.98
51.57 9.63 15.17 72.75 55.46 0.11 484.64
42.23 9.43 15.22 81.04 61.58 0.14 631.70
37.58 9.65 15.32 83.21 65.11 0.15 558.33
29.95 11.38 18.61 99.22 75.09 0.16 512.31
Valuation ratios
(Price Rs 827.05 ,Market Cap Rs 16516.19 cr, as on 11 Aug 2008)
Year end
Mar 07 17.10 5.54 14.56 9.95
Mar 06 19.38 8.83 17.22 11.61
Mar 05 14.52 7.33 12.98 8.51
Mar 04 14.46 8.60 13.05 8.66
Mar 03 7.04 4.37 6.29 4.08
P/E P/BV P/CEPS EV/EBIDTA
109
Market cap/sales
1.19
1.76
1.27
1.45
0.74
110
Mar ' 08 Income : Operating Income 8,827.15
Mar ' 07
Mar ' 06
9,420.24
7,572.13
Expenses Material Consumed Manufacturing Expenses Personnel Expenses Selling Expenses Adminstrative Expenses Expenses Capitalised 6,692.19 122.92 350.09 351.70 248.08 -23.04 6,970.40 153.87 310.07 419.60 268.93 -32.05 5,397.61 138.59 282.45 258.92 240.02 -24.81
Cost Of Sales
7,741.94
8,090.82
6,292.78
Operating Profit
1,085.21
1,329.42
1,279.35
Other Recurring Income
250.40
357.93
370.48
Adjusted PBDIT
1,335.61
1,687.35
1,649.83
Financial Expenses Depreciation Other Write offs
5.16 173.96 1.12
5.34 190.26 0.39
0.34 191.00 3.62
Adjusted PBT
1,155.37
1,491.36
1,454.87
111
Tax Charges
378.78
490.09
479.11
Adjusted PAT Non Recurring Items Other Non Cash adjustments
776.59 -80.13 59.32
1,001.27 209.23 26.60
975.76 88.48 59.03
Reported Net Profit
755.95
1,237.96
1,101.63
Earnigs Before Appropriation
755.78
1,237.10
1,123.27
Equity Dividend Preference Dividend Dividend Tax Retained Earnings
289.37 0.00 49.18 417.23
404.73 0.00 68.78 763.59
404.74 0.00 56.76 661.77
Bajaj auto ltd.
Mar ' 08 PER SHARE RATIOS
Mar ' 07
Mar ' 06
Adjusted E P S (Rs.) Adjusted Cash EPS (Rs.) Reported EPS (Rs.) Reported Cash EPS (Rs.)
53.67 65.78 52.25 64.35
98.96 117.80 122.35 141.19
96.43 115.67 108.87 128.11
112
Dividend Per Share Operating Profit Per Share (Rs.) Book Value (Excl Rev Res) Per Share (Rs.) Book Value (Incl Rev Res) Per Share (Rs.) Net Operating Income Per Share (Rs.) Free Reserves Per Share (Rs.)
20.00 75.01 109.73 109.73 610.10 99.73
40.00 131.39 546.96 546.96 931.01 535.16
40.00 126.44 471.49 471.49 748.36 459.69
PROFITABILITY RATIOS
Operating Margin (%) Gross Profit Margin (%) Net Profit Margin (%) Adjusted Cash Margin (%) Adjusted Return On Net Worth (%) Reported Return On Net Worth (%) Return On long Term Funds (%)
12.29 10.32 8.32 10.48 48.91 47.61 39.71
14.11 12.09 12.66 12.18 18.09 22.36 20.97
16.89 14.37 13.86 14.73 20.45 23.09 23.32
LEVERAGE RATIOS
Long Term Debt / Equity Total Debt/Equity Owners fund as % of total Source Fixed Assets Turnover Ratio
0.84 0.84 54.33 2.95
0.28 0.29 77.29 2.96
0.30 0.30 76.47 2.62
LIQUIDITY RATIOS
113
Current Ratio Current Ratio (Inc. ST Loans) Quick Ratio Inventory Turnover Ratio
0.88 0.88 0.64 29.33
0.85 0.84 0.75 36.88
0.78 0.78 0.68 34.14
PAYOUT RATIOS
Dividend payout Ratio (Net Profit) Dividend payout Ratio (Cash Profit) Earning Retention Ratio Cash Earnings Retention Ratio
44.78 36.36 56.41 64.43
38.24 33.14 52.71 60.28
41.89 35.60 52.71 60.57
COVERAGE RATIOS
Adjusted Cash Flow Time Total Debt Financial Charges Coverage Ratio Fin. Charges Cov.Ratio (Post Tax)
1.40 258.84 181.43
1.36 315.98 268.53
1.25 4,852.44 3,813.50
COMPONENT RATIOS
Material Cost Component(% earnings) Selling Cost Component Exports as percent of Total Sales Import Comp. in Raw Mat. Consumed
76.58 3.98 23.53 2.37
73.98 4.45 18.36 5.56
71.92 3.41 12.46 4.58
114
Long term assets / Total Assets
0.63
0.67
0.70
tata motors
(Rs in Cr.)
Mar ' 07
Mar ' 06
Mar ' 05
Mar ' 04
26,664.25
20,088.63
17,199.17
13,028.17
Expenses Material Consumed Manufacturing Expenses Personnel Expenses Selling Expenses Adminstrative Expenses Expenses Capitalised 20,931.81 1,230.14 1,544.57 1,179.48 1,982.79 -1,131.40 19,529.88 1,200.36 1,367.83 1,068.56 1,488.16 -577.05 14,376.11 929.82 1,143.13 759.54 1,042.52 -308.85 12,101.28 830.45 1,039.34 598.75 911.73 -282.43 8,720.10 628.73 882.49 455.56 758.90 -144.89
Cost Of Sales
25,737.39
24,077.74
17,942.27
15,199.12
11,300.89
Operating Profit
3,000.91
2,586.51
2,146.36
2,000.05
1,727.28
115
389.03
887.23
685.18
399.94
235.65
Adjusted PBDIT
3,389.94
3,473.74
2,831.54
2,399.99
1,962.93
471.56 652.31 64.35
455.75 586.29 85.02
350.24 520.94 73.78
234.30 450.16 67.12
225.96 382.60 51.64
Adjusted PBT
2,201.72
2,346.68
1,886.58
1,648.41
1,302.73
Tax Charges
547.55
660.37
524.93
415.50
482.55
1,654.17 374.75 0.00
1,686.31 227.15 -0.07
1,361.65 167.23 0.00
1,232.91 4.04 -1.54
820.18 -6.82 -3.02
Reported Net Profit
2,028.92
1,913.46
1,528.88
1,236.95
810.34
3,042.75
2,690.15
2,094.54
1,601.21
934.05
578.43 0.00 81.25 2,383.07
578.07 0.00 98.25 2,013.83
497.94 0.00 69.84 1,526.76
452.19 0.00 63.42 1,085.60
282.11 0.00 36.14 615.80
116
Mar ' 07
Mar ' 06
Mar ' 05
Mar ' 04
Adjusted E P S (Rs.) Adjusted Cash EPS (Rs.) Reported EPS (Rs.) Reported Cash EPS (Rs.) Dividend Per Share Operating Profit Per Share (Rs.) Book Value (Excl Rev Res) Per Share (Rs.) Book Value (Incl Rev Res) Per Share (Rs.) Net Operating Income Per Share (Rs.) Free Reserves Per Share (Rs.)
42.91 61.50 52.63 71.22 15.00 77.84 202.54 203.20 745.47 182.38
43.76 61.18 49.65 67.07 15.00 67.12 177.33 178.00 691.91 157.16
35.57 51.10 39.94 55.47 13.00 56.06 143.58 144.26 524.73 123.34
34.08 48.38 34.19 48.49 12.50 55.29 113.15 113.15 475.44 93.85
23.24 35.54 22.96 35.26 8.00 48.94 101.08 101.08 369.11 81.54
10.44 8.17 6.96 8.13 21.18 25.98 22.73
9.70 7.50 6.94 8.55 24.67 28.00 31.18
10.68 8.09 7.35 9.41 24.77 27.81 28.65
11.62 9.01 7.02 9.94 30.12 30.21 28.72
13.25 10.32 6.10 9.45 22.98 22.71 32.21
LEVERAGE RATIOS
117
0.50 0.80 55.43 2.68
0.31 0.58 63.05 3.08
0.41 0.53 65.23 2.55
0.59 0.60 62.22 2.62
0.32 0.35 74.02 2.18
LIQUIDITY RATIOS
0.89 0.64 0.66 14.43
1.24 0.85 0.91 13.26
1.24 1.07 0.96 12.63
0.99 0.98 0.76 14.06
0.72 0.69 0.47 14.91
PAYOUT RATIOS
32.51 24.02 60.13 72.18
35.34 26.16 59.90 71.32
37.13 26.73 58.31 70.98
41.68 29.39 58.18 70.54
39.27 25.57 61.20 74.63
COVERAGE RATIOS
2.65 7.19 6.82
1.70 7.62 6.67
1.50 8.08 7.06
1.43 10.24 8.49
1.00 8.69 6.51
118
COMPONENT RATIOS
Material Cost Component(% earnings) Selling Cost Component Exports as percent of Total Sales Import Comp. in Raw Mat. Consumed Long term assets / Total Assets
72.69 4.10 9.89 4.60 0.58
74.55 4.00 10.18 3.88 0.45
72.84 3.78 11.87 4.64 0.39
71.19 3.48 8.70 2.30 0.47
65.84 3.49 7.80 2.43 0.62
Maruti Suzuki India Ltd.
Industry BSE Code Market Lot
Auto - Cars & J 532500 1
Business Group NSE Code Face Value
MNC Associate MARUTI Rs. 5.00
Chairman / Chai ISIN No Book Closure
Mr. Shinzo Nakanishi INE585B01010 02/09/2008
Mar ' 06
Mar ' 05
Mar ' 04
Mar ' 03
Adjusted E P S (Rs.) Adjusted Cash EPS (Rs.)
53.69 63.09
43.87 53.75
28.85 45.23
21.16 40.80
4.10 16.59
119
Reported EPS (Rs.) Reported Cash EPS (Rs.) Dividend Per Share Operating Profit Per Share (Rs.) Book Value (Excl Rev Res) Per Share (Rs.) Book Value (Incl Rev Res) Per Share (Rs.) Net Operating Income Per Share (Rs.) Free Reserves Per Share (Rs.)
54.07 63.46 4.50 76.30 237.23 237.23 512.49 231.89
41.16 51.04 3.50 64.59 188.73 188.73 422.20 183.18
29.55 45.92 2.00 54.35 151.56 151.56 382.34 144.13
18.76 38.40 1.50 43.35 123.74 123.74 327.07 116.91
5.07 17.55 1.50 17.19 104.16 104.16 255.92 97.89
14.88 13.05 10.29 12.01 22.63 22.78 30.74
15.29 12.95 9.53 12.45 23.24 21.80 33.47
14.21 10.08 7.57 11.59 19.03 19.49 28.12
13.25 8.01 5.61 12.21 17.10 15.16 22.71
6.71 2.36 1.93 6.34 3.93 4.86 8.42
LEVERAGE RATIOS
0.08 0.09 91.57 2.41
0.01 0.01 98.70 2.46
0.06 0.07 93.43 2.19
0.08 0.08 92.00 2.07
0.14 0.14 87.16 1.64
120
LIQUIDITY RATIOS
1.42 1.40 1.13 28.76
1.77 1.77 1.31 18.78
1.68 1.67 1.25 22.97
1.17 1.15 0.85 30.43
1.57 1.56 1.20 22.28
PAYOUT RATIOS
9.72 8.28 90.21 91.67
9.69 7.81 90.91 92.58
7.73 4.97 92.09 94.95
9.02 4.40 92.01 95.86
32.92 9.50 59.33 89.95
COVERAGE RATIOS
0.34 68.23 49.76
0.04 104.61 73.28
0.23 49.70 37.85
0.26 32.32 25.71
0.95 11.60 9.93
COMPONENT RATIOS
Material Cost Component(% earnings) Selling Cost Component
73.36 3.37
77.25 2.91
78.30 3.34
74.47 7.05
76.62 8.22
121
Exports as percent of Total Sales Import Comp. in Raw Mat. Consumed Long term assets / Total Assets Bonus Component In Equity Capital (%)
3.90 12.62 0.61 0.00
4.78 18.75 0.49 0.00
8.89 19.69 0.52 0.00
9.96 20.40 0.62 0.00
8.39 26.04 0.43 0.00
Search Company
Maruti Suzuki India Ltd.
Industry BSE Code Market Lot
Auto - Cars & J 532500 1
Business Group NSE Code Face Value
MNC Associate MARUTI Rs. 5.00
Chairman / Chai ISIN No Book Closure
Mr. Shinzo Nakanishi INE585B01010 02/09/2008
View Income statement of last five years. (Rs in Cr.)
Mar ' 06
Mar ' 05
Mar ' 04
Mar ' 03
12,197.90
11,046.30
9,449.50
7,393.70
Expenses Material Consumed 11,063.70 9,223.70 8,508.50 7,033.50 5,767.50
122
Manufacturing Expenses Personnel Expenses Selling Expenses Adminstrative Expenses Expenses Capitalised
489.80 288.40 499.90 274.50 -14.30
359.60 228.70 356.00 170.60 -6.70
273.80 196.00 369.90 150.20 -22.40
219.40 177.90 666.20 112.90 -12.80
199.60 213.60 607.80 114.10 -5.50
Cost Of Sales
12,602.00
10,331.90
9,476.00
8,197.10
6,897.10
Operating Profit
2,204.40
1,866.00
1,570.30
1,252.40
496.60
361.10
268.10
218.90
198.90
162.50
Adjusted PBDIT
2,565.50
2,134.10
1,789.20
1,451.30
659.10
37.60 271.40 0.00
20.40 285.40 0.00
36.00 456.80 16.30
44.90 494.90 72.40
56.80 322.10 38.60
Adjusted PBT
2,256.50
1,828.30
1,280.10
839.10
241.60
Tax Charges
705.30
560.90
446.50
227.70
123.10
1,551.20 -23.00 33.40
1,267.40 -83.70 5.40
833.60 -31.40 51.40
611.40 -151.90 82.60
118.50 -10.90 38.80
123
Reported Net Profit
1,562.00
1,189.10
853.60
542.10
146.40
5,947.10
4,631.20
3,611.00
2,878.00
2,416.30
130.00 0.00 21.90 5,795.20
101.10 0.00 14.20 4,515.90
57.80 0.00 8.20 3,545.00
43.30 0.00 5.60
42.70 0.00 5.50
CONCLUSSION-
On the basis of these all analysis , we can see for any company whether its auto mobile company or any other company , we find there are many factor which influence its growth and market position . And also we can analysis how its performing at future.
After analysis of these all Indian auto mobile companies various ratios and factors, which shows any company position, we find these all companies performing well in past/recent years. But for future prospective of these companies we should be analysis many factors- Inflation rate, crude oil rates, Income growth and GDP rate of
124
our country. These all factors are influence very affectively future of Indian as well as world auto mobile companies future.
REFERENCE:-
1. WWW. MYIRIS.COM
2. WWW. INDIABULLS.COM
3. WWW. KARVY.COM
4. BSE INDIA .COM
125
5. WWW.MONEYCONTROL.COM
6. WWW.USECTRADE.COM
7. PROWESS- CMIE COMPANY DATABASE.
8. ANNUAL REPORT OF COMPANIES.
9. SECURITY ANALYSIS AND PORTFOLIO MANG. PRASANNA CHANDRA
10. WWW. REDIFF.COM
126

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II. INDUSTRY ANALYSIS38- 50

AUTOMOBILE INDUSTRY SNAPSHOT...............38

10. ANNEXURE98-117 11 CONCLUSSION ..............................................................................................118

One, most important aspect of this study is to follow an investment philosophy.

Indian Stock Market Overview:

Bombay Stock Exchange :

National Stock Exchange of India :

INTRODUCTION TO THE ORGANIZATION

Dos and Donts while trading with Indiabulls Securities Ltd.

1. POLITICO-ECONOMIC ANALYSIS 2. INDUSTRY ANALYSIS 3. COMPANY ANALYSIS

1. POLITICO- ECONOMIC ANALYSIS

Economic Growth Scenario: 2007-08

2. Industrial growth rate:-

Unemployment rate: 7.2%

2005 9.20 % 2006 8.90 % 2007 7.80 % 2008 7.20 %

-3.16 % -3.26 % -12.36 % -7.69 %

2004 est. 2005 est. 2006 est. 2007 est.

7. Monetary and Liquidity Conditions

aftermarket parts manufacturers, automotive engineers, motor mechanics, auto

SIZE OF THE AUTOMOTIVE INDUSTRY:

MAJOR SEGMENTS OF AUTOMOTIVE INDUSTRY:

KEY INDUSTRY DRIVERS:

The highlighting features of global automotive industry are:

INDIAN AUTOMOBILE INDUSTRY:

b) Agricultural credit outlay increased to Rs 2,80,000 crore.

c) 10% increase in defence sector allocation to Rs 1,05,600 crore.

e) Higher allocation towards road development programme such as the NHDP.

c) Higher defence allocation will spur investment in new vehicles.

Industry Wish list

SWOT ANALYSIS OF INDIAN AUTOMOBILE INDUSTRY: Strengths:

Growing world demand for entry-level motorcycles especially in emerging markets.

471.49 0.30 0.78 0.68

546.96 0.29 0.85 0.75

109.73 0.84 0.88 0.64

Dividend Per Share

Dividend payout Ratio

EPS 120 100 80 EPS 60 40 20 0 2006 2007 YEAR 2008 EPS

Current ratio= Current assets / Current liability

As a conventional rule, a current ratio of 2:1 or more is considered satisfactory We can

3.) DebtEquity ratio:- A measure of a company's financial leverage calculated by

Debt-equity ratio = Total Liability / Shareholders Equity

2003 1.50 32.92 0.14 1.57 1.20 5.59 1.57

2004 1.50 9.02 0.08 1.17 0.85 16.35 4.52

2005 2.00 7.73 0.07 1.68 1.25 36.02 7.35

2006 3.50 9.69 0.01 1.77 1.31 87.25 9.67

2007 4.50 9.72 0.09 1.42 1.13 60.42 10.23

EPS 60 50 40 30 20 10 0 2003 2004 2005 2006 2007 EPS

Current ratio= Current assets / Current liability

Debt-equity ratio = Total Liability / Shareholders Equity

SWOT Analysis of the company

Strong market position

Strong revenue growth

Overdependence on Indian market

Research & Development Opportunities Road Development Threats Global competition

Car Penetration in India

Diesel fuel issues

Mar-2004 21.93 101.69 0.44 7.38

Mar-05 32.44 113.64 0.49 8.58

Mar-06 37.59 143.93 0.56 8

Mar-07 47.1 177.57 0.56 7.98

Mar-08 50.52 202.68 0.7 7.05

EPS 50 45 40 35 30 25 20 15 10 5 0 2004 2005 2006 2007 2008 EPS

Current ratio= Current assets / Current liability