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AN ALYSIS OF INDIAN AUTOMOBILE INDUSTRY

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PROJECT REPORT ON ANALYSIS OF INDIAN AUTOMOBILE INDUSTRY

SUBMITTED TO :MR. KUMAR BIJOY

SUBMITTED BY:ISHEETA NIRMAL (195) DEEPIKA GARG (188) RASHMI SHARMA (215) ROSHAN AGARWAL(218) VIKAS GUPTA (229) NIKHIL MAHAJAN (240)

NEW DELHI INSTITUTE OF MANAGEMENT60, 50(B&C), TUGHLAKABAD INSTITUTIONAL AREA NEW DELHI-110062NEW DELHI INSTITUTE OF MANAGEMENT- PGDM(2008-10) GROUP-15, FINANCE-II

AN ALYSIS OF INDIAN AUTOMOBILE INDUSTRY

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DECLARATIONWe hereby declare that the work presented in this Project entitled Analysis ofIndian Automobile Industry submitted to Prof. Bijoy kumar (visiting Faculty) at

New Delhi Institute Of Management, New Delhi is an authentic record of our original work.

Signature of Mentor

Signature of Candidates

Date:

NEW DELHI INSTITUTE OF MANAGEMENT- PGDM(2008-10)

GROUP-15, FINANCE-II

AN ALYSIS OF INDIAN AUTOMOBILE INDUSTRY

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ACKNOWLEDGEMENTThe satisfaction and joy that accompanies the successful completion of a task is incomplete without mentioning the name of the person who extended his help and support in making it a success. We are greatly indebted to Mr. Bijoy (Guest Faculty at NDIM), my Project Guide and Mentor for devoting his valuable time and efforts towards my project. We thank him for being a constant source of knowledge, inspiration and help during this period of making project.

ISHEETA NIRMAL DEEPIKA GARG RASHMI SHARMA ROSHAN AGARWAL VIKAS GUPTA NIKHIL MAHAJAN

NEW DELHI INSTITUTE OF MANAGEMENT- PGDM(2008-10)

GROUP-15, FINANCE-II

AN ALYSIS OF INDIAN AUTOMOBILE INDUSTRY

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PREFACEIndian automobile industry has grown leaps and bounds since 1898, a time when a car had touched the Indian streets for the first time. At present it holds a promising tenth position in the entire world with being # 1 in Two Wheelers and # 4 in commercial vehicles. Withstanding a growth rate of 18% per annum and an annual production of more than 2 million units, it may not be an exaggeration to say that this industry in the coming years will soon touch a figure of 10 million units per year. The automobile industry in India the ninth largest in the world with an annual production of over 2.3 million units in 2008 is expected to become one of the major global automotive industries in the coming years. In this project we have undergone a detailed analysis of India automobile industry by using Fundamental and Technical tools. In order to better understand the performance of the industry we have made comparative analysis of Two players Tata motors as (leading player) and Maruti Suzuki. The project report is divided into 5 chapters. The first two chapters include Executive Summery & objective of the research. The third chapter deals with analysis of automobile Industry which entails fundamental and technical analysis of Indian Automobile Industry. The fourth chapter deals with Conclusion & Recommendations and the last chapter includes Bibliography.

NEW DELHI INSTITUTE OF MANAGEMENT- PGDM(2008-10)

GROUP-15, FINANCE-II

AN ALYSIS OF INDIAN AUTOMOBILE INDUSTRY

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TABLE OF CONTENTS.NO. PARTICULARS PAGE NO. Chapter 1. Executive Summary of the Project Chapter 2. Objective of the Project Chapter 3. Analysis of Indian Automobile Industry Fundamental Analysisa. Economy b. Industry c. Company- Financial & Non-Financial

Technical Analysisa. b. c. d. Share Price Analysis Moving Average Moving Average Crossover Bollinger Band e. M.A.C.D

Chapter 4 Chapter 5

Conclusion & Recommendations Bibliography Annexure

NEW DELHI INSTITUTE OF MANAGEMENT- PGDM(2008-10)

GROUP-15, FINANCE-II

AN ALYSIS OF INDIAN AUTOMOBILE INDUSTRY

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EXECUTIVE SUMMARYThe automobile industry, one of the core sectors, has undergone metamorphosis with the advent of new business and manufacturing practices in the light of liberalization and globalization. The sector seems to be optimistic of posting strong sales in the couple of years in the view of a reasonable surge in demand. The Indian automobile market is gearing towards international standards to meet the needs of the global automobile giants and become a global hub. A detailed analysis of Automobile industry has been covered in respect of past growth and performance. Under this project to better understand the Industry we have used Fundamental and Technical tools to make it more authentic n meaningful. An E.I.C approach has been followed under Fundamental Analysis which covered effect of Recession, the impact of inflation, FDIs, Export, GDP etc. on Automobile Industry. The Industry Analysis has been done with the help of five forces model, BCG Matrix, SWOT analysis, industry life cycle and the industry specific index. For Company Analysis as a part of Fundamental tool we have undergone with the comparative analysis of TATA Motors as our leading company with Maruti Suzuki Indias largest Car manufacturer. The fundamental aspect consists financial and Non-Financial analysis of both the company. In the Technical aspect we have considered Share price analysis, moving average, moving average crossover, Bollinger bands and M.A.C.D. of both the company by keeping TATA Motors as our leading company. At the end conclusion and recommendations have been specified so as to make the research work more meaningful and purposeful.

NEW DELHI INSTITUTE OF MANAGEMENT- PGDM(2008-10)

GROUP-15, FINANCE-II

AN ALYSIS OF INDIAN AUTOMOBILE INDUSTRY

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OBJECTIVE OF THE PROJECTThe objective of this project is deeply analyze our Indian Automobile Industry for investment purpose by monitoring the growth rate and performance on the basis of historical data. The main objectives of the Project study are: Detailed analysis of Automobile industry which is gearing towards international standards

Analyze the impact of qualitative factors on industrys and companys prospects Comparative analysis of two tough competitors TATA Motors and Maruti Suzuki Application of various Technical Tools and Fundamental tools (like Financial and Nonfinancial statements).

NEW DELHI INSTITUTE OF MANAGEMENT- PGDM(2008-10)

GROUP-15, FINANCE-II

AN ALYSIS OF INDIAN AUTOMOBILE INDUSTRY

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ANALYSIS OF AUTOMOBILE INDUSTRYOver a period of more than two decades the Indian Automobile industry has been driving its own growth through phases. With comparatively higher rate of economic growth rate index against that of great global powers, India has become a hub of domestic and exports business. The automobile sector has been contributing its share to the shining economic performance of India in the recent years. To understand this industry for the purpose of investment we need to analyze it by following two approaches: 1). Fundamental Analysis (E.I.C Approach) a. Economy b. Industry c. Company 2).Technical Analysis1)

FUNDAMENTAL ANALYSIS

a). ECONOMYEconomic analysis is the analysis of forces operating the overall economy a country. Economic analysis is a process whereby strengths and weaknesses of an economy are analyzed. Economic analysis is important in order to understand exact condition of an economy.

GDP and Automobile IndustryIn absolute terms, India is 16th in the world in terms of nominal factory output. The service sector is growing rapidly in the past few years. This is the pie- chart showing contributions of different sectors in Indian economy. The per capita Income is near about Rs38,000 reflecting improvement in the living standards of an average Indian. Today, automobile sector in India is one of the key sectors of the economy in terms of the employment. Directly and indirectly it employs more than 10 million people and if we add the number of people employed in the auto-component and auto ancillary industry then the number goes even higher. As the world economy slips into recession hitting the demand hard and the banking sector takes conservative approach towards lending to corporate sector, the GDP growth has downgraded it to 7.1 perGROUP-15, FINANCE-II

NEW DELHI INSTITUTE OF MANAGEMENT- PGDM(2008-10)

AN ALYSIS OF INDIAN AUTOMOBILE INDUSTRY

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cent for 2008-09 and predicted it to be 6.5 per cent for FY 2009-10 Mr. Montek Singh (Planning Commission of India). Following is the graph showing a trend of Indian GDP trend in past 3 years.

Source:India Central Statistical Organization The market value of Automobile Industry is more than US$8 bl. and Contribution in Indian GDP is near about 5% and will be double by 2016. The automotive industry in India grew at a computed annual growth rate (CAGR) of 11.5 percent over the past five years, but growth rate in last FY2008-09 was only 0.7% with passenger car sales shows 1.31% growth while Commercial Vehicles segment slumped 21.7%.

RecessionAll the major auto companies enjoyed the high growth ride till the mid 2008. But at the end of the year, industry had to face the hard truth and witnessed the fall in sales compared to last year. In December 2008, overall production fell by 22 % over the same month last year. Global recession has hit the Indian auto industry, India is strong and growing industry but the impact of recession is evident now on industry as sales & growth of automobile companies have declined. Passenger Vehicles segment registered negative growth. One of its supporting facts is that the sales in December 2008 for passenger vehicles fell by 13.86% over December 2007 Two Wheelers registered minor growth of 1.85 % during April December 2008. However, Two Wheelers sales recorded 15.43 percent fall in December 2008 over the same month last year. Although the sector was hit by economic slowdown, overall production (pa