auto ancillaries
DESCRIPTION
Detailed report on Auto Ancillaries in INDIATRANSCRIPT
STM Assignment Workbook
Faculty: Prof. Anshuman Tripathy
Submitted by-
Bhagyashree Patra- UM14138
Saurabh Wadhwa- UM14163
Shruti- UM14165Contents
1Executive Summary4
2Industry Overview5
2.1Nature and Size of the Industry5
2.2Key Growth drivers for the Industry6
2.3Identification of Critical Success Factors (CSF)7
2.4Market Analysis based on CSFs8
2.5Industry Benchmarks8
2.6PESTEL Analysis13
2.7Porters Five Forces Analysis15
2.8Strategic Group Mapping16
2.9Competitive Landscape17
2.10Market Segmentation19
2.11Buying Criteria Analysis of the Industry20
2.12Key trends and future developments21
3Company Overview24
3.1Company background25
3.2Timeline with key milestones and their strategic impact27
3.3Vision, Mission, Goals, and Strategic Themes29
3.4Key Product and Service Portfolio30
3.5Core Competencies of the firm34
3.6Business Model of the organization37
3.73rd Generation Balanced Scorecard (Amalgamation of 1st Generation BSC and Activity System Map)38
3.8SWOT Analysis42
3.9Competitor Analysis (identify competitors)45
3.9.1Based on Critical Success factors45
3.9.2Based on Financial indicators46
4Future Growth Strategy for the organization47
4.1Portfolio Analysis47
4.1.1Based on BCG Matrix47
4.2Companys Strategic Roadmap for future48
4.3Product Market Investment Strategy50
4.4Re-imagining the Organization with the transformed business model or Use-case based on SMAC and IOE51
Executive Summary
India in last decade has grown into a large automotive market particularly for Japanese OEMs while the European and Americans have also entered for the long haul. India however due to the recent economic slowdown witnessed weak auto sales which impacted consumer as well as OEM sentiment.
We believe henceforth India auto story will now be driven by four factors :
a) pent up demand (low sales last 2-3 years),
b) reducing food and fuel inflation (down 600 bps to 9.4%/ down 400 bps to 4%) from peak)
c) income growth due to improved business climate,
d) lower penetration into households (e.g. 14 per thousand in Passenger vehicles).
We believe the Indian automotive market could witness ~15% CAGR FY14-17E on the back of the demand improvement. From auto component makers perspective besides, the aforementioned reasons would also lead to higher content per car and consumers up-trading to higher quality & safety and increased features.
Auto sector to benefit greatly from Make in India! The governments has laid out a vision statement towards ushering India as a global manufacturing hub via the Make in India campaign. It has been accepted well across the board notably from auto component behemoths like Bosch Ltd. At present auto sectors contribution to GDP remains at ~7%, leads the manufacturing sector, thus we believe it would greatly benefit from this specialized focus. Global auto components market is valued at ~US$800billion; of which India contributes ~ 5% share at ~$38 billion. In this context it is little wonder that large automotive companies like Volvo, VW, GM, Bosch, Magna are investing into the Indian automotive market with not only the view of a large market but as well as a global manufacturing hub.
We believe that auto-component players are well poised to leverage operating benefits from the cyclical turnaround in auto sales. The Indian ancillary industry, as per the Automotive Component Manufacturers Association (ACMA) estimates, stands at ~$38 billion.
Industry OverviewNature and Size of the Industry
History and Evolution of the industry
The Indian auto ancillary industry is very competitive with the presence of a handful of global and Indian auto-companies. The industry had witnessed slower growth in 200809 due to the global recession. Over the years, these companies have enlarged their global reach and the exports have grown at ~17% p.a. in the last six years (from FY 05). Global best practices like 5-S, TQM, Kaizen, 6 Sigma, TPM etc. are followed by a significant number of component manufacturers and these quality certifications are giving them global recognition. The Indian automobile market is estimated to become third largest in the world by 2016 and will account for more than 5% of the global vehicle sales.
Key Consumers of this industry and their changing needs
The industry caters to 3 major segments
OEM Segment (Original Equipment Manufacturer)
Replacement/After Market (AM)
Export
OEM segment, Replacement sector and export constitute 60%, 25% and 15% of total production respectively. With the quality of production improving and with lower manufacturing cost in India exports will be increasing going forward.
Stage in the Industry Life cycle
Growth Stage
Total Available Market Size (National and Global)
USD 38 billion (In FY 13, National)
USD 1.2 trillion (In FY 13, Global)
Total Serviceable Market Size (National and Global)
Not Available
References:
https://www.equitymaster.com/research-it/sector-info/autoc/Auto-Ancillaries-Sector-Analysis-Report.asp
http://www.eresearchglobal.com/pdf/Snapshot_Auto_Ancillary_Aug11_eRPI.pdf
Key Growth drivers for the Industry
Key Growth drivers
Rationale
Automobile Industry
The growth in automobile industry will give a boost to the auto ancillaries industry since more than 50 percent sales are to the OEMs. The current low penetration along with rising income levels and a rapidly growing middle class gives a wide scope for growth.
Rising exports
Exports of automobiles have also emerged as a key component of growth. They will indirectly increase the demand for Indian auto components.
Credit availability
Easy availability of finance and sales promotion offers and declining interest rate cycle directly impacts demand for vehicles and components and is thus a growth driver.
Government initiatives
The Automotive Mission Plan (AMP) 2006-2016,and a sequel of AMP II (2017-27), to put in place a framework for the long-term growth trajectory of the auto and auto ancillary sector.
Technology Innovation
Creation of Technology Up-gradation & Development Scheme (TUDS) for Auto Components and setting up of the Auto Component Technology Development Fund (ATDF), will help the companies in accessing loans at reduced rates of interest for the R&D activities, up gradation of process, and technology acquisition.
Foreign Investment
The government has allowed 100% foreign equity investment in the sector, through the automatic route, without any minimum investment criteria.
Infrastructure development
The Governments Union budget 2014 has allocated an enormous amount of Rs. 37,850. More roads would lead to more vehicle sales, and thus a boost to auto ancillary industry.
Inadequate public transport
The current public transport is inadequate and thus there is a scope of growth in the same, which would lead to higher demand of auto ancillary products.
References:
http://www.big-consultants.com/images/Auto%20Ancillary.pdf
Identification of Critical Success Factors (CSF)
Critical Success Factor identified
Rationale
Diversified Customer Base
Strengthens a company's bargaining position in negotiating supply contracts with OEMs since they carry higher ratings than their less diversified counterparts.
Presence in AM and export markets
AM segment is relatively more profitable and less exposed to pricing pressures than the OEM segment. Export revenues also add diversity and stability to a company's overall revenue streams.
Cost Control Measures
In an industry looking at cost reduction avenues, material costs constitute a strong focus area; operational efficiency therefore translates into ability to sustain market position in a competitive environment. Companies with strong operational efficiencies attract the cost-focused OEMs.
Access to technology
Companies with quick access to technology are in a better position to procure orders from OEMs and be competitive. Products with updated technology greatly influence OEM decisions in finalising auto ancillary vendors.
Degree of product complexity
The extent of research and development efforts, operations define the degree of product complexity. It discourages new entrants, thus ensuring stable market position.
Market Share
A strong market share enables companies to withstand pricing pressure giving it the option of bulk ordering, hence enabling it to offer competitive prices in both the domestic and export markets.
References:
http://www.autolineind.com/presentation/auto_industry_presentation.pps
ftp://ftp.software.ibm.com/software/plm/de/challenges_automotive.pdf
Market Analysis based on CSFs
Region
CSF 1
CSF 2
CSF 3
CSF 4
Global
NA
NA
NA
NA
India
North
NA
NA
NA
NA
South
NA
NA
NA
NA
East
NA
NA
NA
NA
West
NA
NA
NA
NA
North-East
NA
NA
NA
NA
Central
NA
NA
NA
NA
Note: Use data for the year 2013-14
Industry Benchmarks
Size of industry:
Category
Indicator
Industry Average of Top 5 Firms or players serving 75-80% of the market
Market Leader
2011-12
2012-13
2013-14
2014-15 (till Q3)
2011-12
2012-13
2013-14
2014-15 (till Q3)
Industry Level (National)
Market Size
NA
NA
NA
NA
NA
NA
NA
NA
Size as % of GDP
NA
NA
NA
NA
NA
NA
NA
NA
Activity Ratios
Inventory turnover
7.74
9.44
11.83
12.22
9.14
7.76
8.56
7.31
Receivables turnover
NA
NA
NA
NA
NA
NA
NA
NA
Payables turnover
NA
NA
NA
NA
NA
NA
NA
NA
Asset turnover
1.86
2.11
2.12
1.96
1.67
1.71
1.6
1.45
Liquidity Ratios
Current ratio
1.99
2.28
2.18
2.05
2.12
2.09
2.37
2.14
Quick ratio
1.21
1.63
1.67
1.52
1.58
1.46
1.75
1.54
Cash ratio
0.163
0.145
0.121
0.071
0.17
0.184
0.13
0.089
Solvency Ratios
Debt-to-assets ratio
69.45
46.33
65.44
72.45
71.61
46
68.56
69.46
Debt-to-capital ratio
Debt-to-equity ratio
0.15
0.1
0.08
0.06
0.07
0.06
0.03
0.02
Interest coverage ratio
73.07
131.22
1,569.09
748.45
264.27
3298.8
245.76
434.31
Profitability Ratios
Gross profit margin
12.5
14.29
14.14
13.21
12.3
14.19
11.34
10.28
Operating profit margin
16.45
13.34
14.58
17.63
16.09
17.39
15.58
14.63
Net profit margin
17.4
22.5
16.61
13.64
12.4
13.5
10.61
9.64
Return on assets (ROA)
14.16
17.43
18.37
18.8
13.39
16.05
11.82
8.93
Return on equity (ROE)
24.9
29.27
30.45
30.34
22.96
30.62
20.91
18.02
Valuation Ratios or Price Ratios
Price to Earnings (P/E)
25.1
18.93
27.02
37.80
23.1
18.96
31.05
35.80
PEG Ratio = (P/E Ratio) / Projected Annual Growth in Earnings per Share
62.44
58.59
-109.18
-345.13
67.66
61.77
-212.18
-466.13
Price to Cash Flow
115.11
89.81
93.06
107.58
22.4
47.87
34.15
29.90
Price to Book (P/B)
20.95
17.9
20.28
25.49
4.84
4.50
5.34
5.03
Price to Sales
2.97
2.206
3.403
3.231
2.753
2.606
3.436
3.589
Dividend Yield
6.01
5.97
4.66
4.09
0.63
1.99
0.63
0.55
Dividend Pay-out Ratio
26.53
15.01
15.01
15.02
35.45
37.76
19.65
19.52
Enterprise value (EV is market capitalisation plus debt minus cash)/ EBITDA
47875.26
49689.51
63400.4
82388.08
18791.64
20638.99
28496.58
30414.62
Competitive Ratios
Staff Turnover or Industry Attrition Rate
NA
NA
NA
NA
NA
NA
NA
NA
Staff Cost/ Salary as percentage of Sales
0.139
0.201
0.104
0.115
0.119
0.111
0.12
0.135
Operating Expenses as percentage of Sales
0.813
0.752
0.718
0.729
0.8423
0.852
0.838
0.869
Depreciation as percentage of Sales
0.078
0.037
0.052
0.073
0.038
0.032
0.0424
0.0436
Fixed Assets to Sales Revenue
0.446
0.365
0.424
0.588
0.453
0.411
0.455
0.488
Advertising as percentage of Sales
0.025
0.016
0.018
0.021
0.015
0.011
0.014
0.012
In case you come across other benchmark ratios used in particular Industry, then please include them as well.
References:
www.moneycontrol.com
www.acekp.in
PESTEL Analysis
Category
Description
Key factors for analysis
Rationale
Political
Political factors the most important influence on the regulation of any business.
How stable is the political environment influence
Influence of the Government Policy / Law on your business
Immediate laws which affect any business in general are Central Excise, Sales Tax/ VAT, Corporate Income Tax, Personal Income Tax & Service Tax
Any business done in a countrys territory is highly affected by the countrys government stance on the policies.
Economic
Economic factors lead to the buying and changing patterns of industry and consumers.
Government Policies on the Economy.
Inflation
Employment
Disposable income
Business cycles
Bank Financing
Interest Rates
Exchange Rate Mechanism
Business Cycles
Rising GDP consecutively for the last 5 years has led to increased purchasing power and hence the automobiles.
Per capita Income is rising, which is affecting the segments of automobiles being ventured into.
There is cut Throat competition among many players in market.
Increasing urbanization of rural India also has given rise to increase in sales.
Social
The demand of cars has been fuelled by social factors, which in turn are a boost to auto ancillary industry.
Lifestyle changes
Demographics & Distribution of Income
Availability of various media tools
Reach of the media to the population
Indian families are becoming increasingly nuclear Increasing Propensity to spend
Increasing distances between work-place and residence
Increase in percentage of working women has increased number of earning members in a family.
Technological
With the technological innovations happening, companies are betting high on Research and Development costs.
New discoveries and innovations
Speed of technology transfer
Internet
Advantage of Technology
Economies of Scale
Alternate Fuel: increasing use of CNG and LPG instead of conventional fuel has made the entry of new kinds of vehicle in the market.
Advent of Internet: The customer can now use the Internet to place the order and expect the manufacturer to fulfil his customized demand in the minimum time.
Electric Car: With technological advancements electrical car may emerge as a preferred option.
Environmental
Environmental factors like global warming have created the need of new type of technologies and companies are adopting the same.
Changing global climate
Pollution on roads
The growing desire to protect the environment is having an impact on many industries such as the travel and transportation industries (for example, more taxes being placed on air travel and the success of hybrid cars).
The general move towards more environmentally friendly products and processes is affecting demand patterns and creating business opportunities.
Legal
Legal matters are the most serious in corporate and companies are utmost careful while following these
Consumer law
Antitrust law
Employment law
Health and safety law
The health and safety of employees is a major concern for the manufacturer. The amount of money spent on the safety is thus an additional cost which reduces the profit.
References:
http://xtra.strategypal.com/audit/strategy-questions/pestel-analysis/
www.sciencepub.net/american/am0805/018_8561am0805_135_138.pdf
Porters Five Forces Analysis
Porters Five Forces
Description
Key factors for analysis
Rationale
Buyer Power
Small number of buyers, purchases of large volumes, prevalence of alternative options, and price sensitive customers influence of the buyers in any industry.
Extreme price sensitivity, small size of orders
Technologically superior product, improved life of components curtail the replacement demand for components
The high price differential between non-genuine and branded genuine parts is likely to entice vehicle owners to purchase non-genuine parts
Supplier Power
The automobile raw material and ancillary supply business is quite fragmented.Many suppliers rely on one or two automakers to buy a majority of their products.
Low cost of substitutes, small size of suppliers, fragmented suppliers.
If an automaker decided to switch suppliers, it could be devastating to the previous suppliers business. As a result, suppliers are extremely susceptible to the demands and requirements of the automobile manufacturer and hold very little power.
Existing Competition
The presence of many players of, little differentiation between competitors, are the features of a highly competitive industry. These generally earn low returns because pricing power is low and the cost of managing competition is high.
Low switching cost, market highly concentrated, low customer loyalty
To remain ahead in competition, automakers were tempted to offer value added services to the customers incurring more costs. Easy finance options and long term warranties were offered to lure the customers. But these measures cut into the profit margins.
Threat to new entrants
Globalization is a huge factor affecting the auto market. For the Indian automobile market it is becoming easier for foreign auto part makers to enter and take away market share from established players.
Capital required, technologies available, economies of scale, no cost advantages
There is a great threat for existing players from the big foreign manufacturers who have already created a base in the Indian market.
Threat to substitutes
If substitutes were available offering similar services, the likelihood of buyers switching over to another competitor depended mainly on the cost. The cost of the automobiles along with their operating costs was driving customers to look for alternative transportation options.
Low cost of substitution, availability of many product options
When determining the availability of substitutes you should also consider time, money, personal preference and convenience in the auto travel industry.
References:
www.outsource2india.com/kpo/pdf/automobile-industry-report.pdf
www.wenku.baidu.com/view/c10d677c27284b73f2425020.html
Strategic Group Mapping
References:
http://www.moneycontrol.com/stocks/marketinfo/marketcap/bse/auto-ancillaries.html
Competitive Landscape
Value propositions
The profitability of companies in auto ancillary industry depends on streamlined operations, effective marketing, and a sturdy sales force. Large companies have advantages in manufacturing efficiencies, raw material purchase, and product distribution.
Market Share Concentration
The industry is highly concentrated. Market Capitalization of the top five firms accounted for 80% of total market during 2014. The market is highly fragmented with a large number of small and medium enterprises operating in the industry.
The majority of the manufacturers lack substantial technologies and capital, and only produce single products and spare parts.
Large firms manufacture a wide variety of auto ancillaries whereas small firms stick to a single product form.
Extensive distribution network
Having effective sales channels can help manufacturers increase market share and revenue growth.
Research and development
Product innovation and expenditure on research and development can be a competitive advantage for industry firms.
Technology, techniques and technical expertise
The degree of investment in technology and product development can improve the products and revenue of firms. Technology advances, usage of state-of-the-art facilities have helped firms to maintain their competitive advantages.
Establishment of export markets
The development of export markets is important for some firms in this industry.
Product quality and control
Firms that have the ability to manufacture products according to specifications can have an advantage in the market. Customers generally find a balance between quality and price when choosing equipment suppliers. Successful companies in this industry adopt quality assurance techniques and policies to improve their products and processes.
Investment scale
The high investment cost in large and efficient manufacturing facilities can discourage competitors from entering the industry. In addition, the cost of developing large-scale production is very high.
Competitive Strength Assessment
Key Success Factors
Weight
Bosch
Exide Ind.
Motherson Sumi
Amara Raja Batt.
Amtek Auto
Rating
Score
Rating
Score
Rating
Score
Rating
Score
Rating
Score
Market Share
0.20
9
1.8
7
1.4
8
1.6
6.5
1.3
6
1.2
Degree of product complexity
0.20
8
1.6
7
1.4
8
1.6
6.5
1.3
6
1.2
Access to technology
0.10
9
0.9
7
0.7
9
0.9
6
0.6
7
0.7
Presence in AM and export markets
0.15
9
1.35
6
0.9
8
1.2
6
0.9
6
0.9
Cost Control Measures
0.20
9
1.8
8
1.6
8
1.6
7
1.4
7
1.4
Diversified Customer Base
0.15
7
1.05
6
0.9
7
1.05
7
1.05
6.5
0.98
Sum of weights
1.00
Overall strength rating
8.50
6.90
7.95
6.55
6.38
Rating Scale:
1 = Very weak
5 = Average
10 = Very strong
References:
https://www.ibisworld.com/gosample.aspx?cid=86&rtid=1
Market Segmentation
Key Products and/or Services
Regions
Engine components (31 percent): Engine components fall into three broad categories- core engine components, fuel delivery system and others. This also includes products such as pistons, piston rings, engine valves, carburettors, and diesel-based fuel delivery systems. This is the most critical component and requires high involvement from the supplier.
Drive transmission and steering components (19 percent): Gears, wheels, steering systems, axles and clutches are the important components in this category.
Body and chassis (12 percent)
Suspension and braking components (12 percent) - These include brakes, leaf springs, shock absorbers
Equipment (10 percent) - This includes headlights, dashboard instruments
Electrical components (9 percent) - The main products in this category include starter motors, generators, spark plugs and distributors.
Others (7 percent) - Sheet metal components and plastic moulded components are two of the major components in this category.
The geographical spread of medium and large companies as per records of ACMA
North region
40%
Western region
31%
Southern region
23%
Eastern region
7%
References:
www.dsir.gov.in/reports/ittp_sme/AutoCompReport.pdf
Buying Criteria Analysis of the Industry
Parameter
Details
End-user Segments
Significance Attached (Low, Medium, High)
Stability
Business stability and a strong balance sheet of the vendors operating in the country are important factors for any client
OEMs
High
Export Markets
High
Aftermarket
Medium
Warranty Period
Refers to the warranty period provided by the OEMs to the end-user
OEMs
High
Export Markets
High
Aftermarket
Low
Cost
Refers to the overall cost charged by service providers to the end-user
OEMs
High
Export Markets
Medium
Aftermarket
Medium
Quality and Time
Refers to the quality and timeliness of the service provided by the service providers to the end-users
OEMs
High
Export Markets
High
Aftermarket
Low
Flexibility
Refers to the ability to upgrade or repair the component
OEMs
Medium
Export Markets
Medium
Aftermarket
Low
The impact of the buying criteria is graded on the basis of the intensity and duration of their impact on the current market landscape. The magnitude of the impact has been categorized as described below:
Low - Negligible or no impact on the market landscape
Medium - Medium-level impact on the market
High - Very high impact with radical influence on the growth of the market
References:
https://www.equitymaster.com/research-it/sector-info/autoc/Auto-Ancillaries-Sector-Analysis-Report.asp
http://business.gov.in/Industry_services/automobile_industry.php
Key trends and future developments
Key Trend
Impact on Industry (Low, Medium, High)
Certainty of Impact (Low probability, medium probability, high probability)
Diversification
Low
Low probability
Increasing emphasis on Quality
High
High Probability
Adoption of green strategy
Medium
Low Probability
Declining integration levels of Vehicle Manufacturers
High
Medium Probability
Declining Pricing Flexibility
High
High Probability
Increasing emphasis on Quality
The entry of global vehicle manufacturers in the domestic market is leasing to the adoption of global quality control practices in the domestic industry. Effective quality control leads to improved export competitiveness, better quality perception in the retail market and increased acceptance by global passenger car manufacturers operating in India. Self- certification in as an emerging concept in the industry, which obviates the need for a quality check to be undertaken by the vehicle manufacturer as the components are delivered directly to the OE clients in a ready - to - use quality certified form. However, enforcement of quality control calls for increased investments in technology and automation of facilities.
The demanding requirement from the new VMs, the need for investments in the new capacity, quality improvement systems and technology upgradation are expected to lead to the emergence of tier-isation in the industry. The Tier 1 manufacturer outsources sub-assemblies from various Tier II players, (who buy sub-components from Tier III players), and assemble entire system modules to be used as inputs by the VM. The Tier I supplier would be made responsible for the quality of the sub-assembly including the sub-components and would be required to make significant investments in quality control and inventory management. Players engaged in the manufacture of complete assemblies and having superior inventory and production management systems, quality certification for their products and processes and financial strength are well positioned to emerge as Tier I players.
Declining Pricing Flexibility
As the auto ancillary industry is characterised by derived demand, pricing flexibility in the industry is constrained by the pricing pressures on the end-user auto sector In the scenario of price-based competition among VMs, the component manufacturers are faced with considerable pressure on their realisation and are frequently required to absorb increases in the cost of production with consequent pressure on profitability. The impact of tier-isation in the domestic industry is expected to increasingly relegate a number of small and medium - sized units to servicing the replacement market over the long term. This is expected to increase the pressure on profitability in the replacement market. Moreover, the emerging trend of single - supplier sourcing is expected to find increased acceptance resulting in lower pricing flexibility for component manufacturers unless significant volume from the replacement market is implied. Further, the large number of variants and models is expected to result in lower capacity utilisation levels and a consequent decline in operating profitability. Moreover, the reduction in the number of vehicle platforms would also translate into significant volumes for the component manufacturer and result in lower developmental cost of components.
References:
www.crisil.com/Ratings/Commentary/CommentaryDocs/insitanc.pdf
Company OverviewName of Company - BOSCH
Bosch India (Bosch) with its strong technology leadership and market share (>70%), is one of the few ancillary companies with significant bargaining power with original equipment manufacturers (OEMs).
In India, Bosch is a leading supplier of technology and services in the areas of automotive and industrial technology, consumer goods and building technology. Additionally, Bosch also has in India, the largest development centre, outside Germany, for end to end engineering and technology solutions.
The Bosch Group operates in India through six companies, viz. Bosch Limited, Bosch Chassis Systems India Limited, Bosch Rexroth India Limited, Robert Bosch Engineering and Business Solutions Limited, Bosch Automotive Electronics India Pvt Ltd, Bosch Electrical Drives India Pvt Ltd. In India, Bosch set up its manufacturing operation in 1953, which has grown over the years to include 10 manufacturing sites and 7 development and application centres Bosch Group in India employs over 26,000 associates.
Name of Company - AMTEK AUTO
In 1985, Amtek Group was established with the incorporation of Amtek Auto (headquartered in Delhi), the flagship company. Ever since, it is growing rapidly and has emerged as a leader in the automotive component industry having a worldwide presence across India, North America, and Europe. Its manufacturing capabilities comprise of Forgings, Iron and Aluminium Castings, Complex Machining and Ring Gears Flywheel Assembly. It also manufactures components for non-auto sectors such as the railways, specialty vehicles, and aerospace, agricultural, and heavy earth moving equipment.
Name of Company - AMARA RAJA BATTERIES
Amara Raja believes in influencing and improving the quality of life by building institutions that provide better access to better opportunities, goods and services to people all the time. With innovative engineering, research and design, Amara Raja has grown with partnerships and information sharing with world leaders.
Amara Raja is committed towards latest generation technologies by developing and manufacturing globally competitive, customer focused products of world class quality and responsibly introducing these products into relevant markets.
References:
Respective Companys website
Company background
Name of Company - BOSCH
From the very beginning, the company's history has been characterized by innovative drive and social commitment.
The company was set up in Stuttgart in 1886 by Robert Bosch (1861-1942) as a Workshop for Precision Mechanics and Electrical Engineering. This was the birth of today's globally active Robert Bosch GmbH. The special ownership structure of Robert Bosch GmbH guarantees the entrepreneurial freedom of the Bosch Group, making it possible for the company to plan over the long term and to undertake significant up-front investments in the safeguarding of its future.
Ninety-two percent of the share capital of Robert Bosch GmbH is held by Robert Bosch Stiftung GmbH, a charitable foundation. The majority of voting rights are held by Robert Bosch Industrie treuhand KG, an industrial trust. The entrepreneurial ownership functions are carried out by the trust. The remaining shares are held by the Bosch family and by Robert Bosch GmbH.
Its operations are divided into four business sectors: Mobility Solutions, Industrial Technology, Consumer Goods, and Energy and Building Technology. The Bosch Group comprises Robert Bosch GmbH and its roughly 360 subsidiaries and regional companies in some 50 countries. This worldwide development, manufacturing, and sales network is the foundation for further growth. The Bosch Groups products and services are designed to fascinate, and to improve the quality of life by providing solutions which are both innovative and beneficial. In this way, the company offers technology worldwide that is Invented for life.
Name of Company - AMTEK AUTO
Amtek Auto envisions providing world class products to their customers, suppliers and stakeholders by capitalizing their superior technology base. In India, it is a leading supplier of iron cast automotive components. Incorporated in 1985, it is one of the largest integrated automotive component manufacturers in India having a strong global presence. The revenue of the company on 2013-14 was Rs 3999.7 Cr and PAT was Rs 323.36 Cr. In India, it is a leading supplier of iron cast automotive components. Its product portfolio comprises of a range of components for 2/3/4 wheelers, tractors, light and heavy commercial vehicles (LCV & HCV) and stationary engines. The major components manufactured are connecting rod assemblies, flywheel ring gears and assemblies, cylinder blocks, steering knuckles, suspension and steering arms, CV joints and turbo charger housing. The Amtek group has its forging, iron casting (in Jharkhand and Rajasthan), aluminium casting (only in Maharashtra), and automotive machining division in India. The company has 7 different divisions, viz. Amtek Centre of Excellence (ACE), Amtek Forging Division (AFD), Amtek Iron Casting Division (AICD), Amtek Aluminium Casting Division (AACD), Amtek Automotive Machining Division (AAMD), Amtek Ring Gear Division (ARGD), and Amtek JVS.
Name of Company - AMARA RAJA BATTERIES
Amara Raja Batteries Ltd., incorporated in the year 1985, is a Large Cap company (having a market cap of Rs 14810.3 Cr.) operating in Auto Ancillaries sector.
Amara Raja Batteries Ltd. key Products/Revenue Segments include Batteries (Storage) which contributed Rs 3732.77 Cr to Sales Value (97.27% of Total Sales), Uninterruptible Power Systems which contributed Rs 71.36 Cr to Sales Value (1.85% of Total Sales), Sale of services which contributed Rs 30.93 Cr to Sales Value (0.80% of Total Sales), Scrap which contributed Rs 2.12 Cr to Sales Value (0.05% of Total Sales), for the year ending 31-Mar-2014.
References:
Respective Companys website
Timeline with key milestones and their strategic impactName of Company - BOSCH
2012
Bosch entry in Bangladesh
Bosch Packaging Technology plant in Goa
Thermo technology plant in Bangalore
2011
MoU with IISc
2010
Launch of A4000 Pump
2009
Bosch components in low price car
Start of ECU Production
2008
Brand name change
Electrical Drives
2001
Establishment of Bosch Rexroth
1999
Establishment of Jaipur Plant
1998
Software development center is born
1993
Electric Power Tools
1969
Nashik Plant
1965
Special purpose machine
1954
Start of Production
1951
A name that became a brand: Mico
1922
Entrance of Bosch in India
Name of Company - AMTEK AUTO
2012 Started machining facility
2011 Joint venture with South Korean automaker Autech Corporation to manufacture specialized vehicles.
Amtek Autos group companyAmtek Defence Technologieshas entered into a Joint Venture Agreement with Enertec Management.
2010 Joint venture with Sumitomo, Japan.
2009 Established to machining facility, Dharuhera.
2008 Joint venture with American Rail Car, USA.
2007 Established a new manufacturing facility at Sanaswadi, Pune (India) for Forging, Casting and Machining
2006 Set up a new machining facility at Dharuhera (India)
MPT Magna India Ltd (India) (JV with Magna Powertrain for manufacturing Fractured Connecting Rod Modules)
Large scale Aluminium High Pressure Die Casting facility at Ranjangaon, Pune (India)
2005 Acquisition of Hallberg Guss Aluminum, an Aluminium Casting facility at UK
Took over Zelter GmbH (Germany), one of the largest manufacturers of Turbo Charger Housing in the world
Amtek Tekfor Automotive Ltd (India) (JV with Neumayer Tekfor for manufacturing one and two piece flex plates)
2004 Acquired UK based Sigmacast Iron LtdSet up a Ring Gears facility at Amtek Gears Inc (USA)
2003 Took over Letchworth (UK) based GWK Group Ltd., known for complex machining and high level module assembly
Acquired UKs largest manufacturer of Ring Gears and Flywheels at Lloyds Brierly Hill Ltd.
Name of Company - AMARA RAJA BATTERIES
May-11
Launch of PowerZone 18 months warranty products
Dec-10
Launch of Amaron Volt, Amaron Sleek for Industrial applications
Jul-10
HR Excellence Award from CII
Apr-10
Among the Top 100 Franchising Opportunties in India for Year 2010 by 'The Franchising World' magazine
Mar-09
Tie-up with TATA Intl. for distribution of Amaron in African Markets
Feb-09
Co-branding Amaron-MGB (Maruti Genuine Battery)
Amity Corporate Excellence Award for 0utstanding marketing
Jun-05
OE agreement with Hyundai Motors
Oct-04
OE agreement with Maruti Udyog Ltd.
Sep-04
Received Ford World Excellence Award
References:
Respective Companys website and annual reports
Vision, Mission, Goals, and Strategic ThemesName of Company - BOSCH
Our Vision: Enabling Lives and Livelihood through Education and Technology
Our Mission- How we intend to achieve the mission: Like a spark that ignites an engine, the foundation aims to empower individuals to create an impact that will help communities stand on their own feet, through employability training and techno-solutions.
BeQIK Quality is our most valued asset Innovation today ensures business tomorrow Customer orientation inspires customers and associates
BeBetter We want continuous improvement We want to be better than our competitors
BeBosch We offer outstanding products and services worldwide We keep our promises Profit secures our growth
Strategic Goals and Objectives:
Provide Employability Training and Techno-Solutions through Partners: Vocational training aims at connecting individuals and societies to the economic engines, while technological solutions aim at robust affordable solutions that work in the community context; e.g.: telemedicine or Solar Power for remote villages.
The foundation works through partners who may provide resources to enable this work. Eg: by funding providers of marketable vocational trainings and entrepreneurs who create machines that could provide improvement in the quality of life for disadvantaged communities.
Name of Company - AMTEK AUTO
Vision & Mission
To become a world class engineering company in the Automotive and Non-Automotive sector. This is to be achieved by capitalizing on our superior technology base for the benefit of our customers, suppliers and stakeholders.
Name of Company - AMARA RAJA BATTERIES
Vision-
Through the Amara Raja way and through enduring progressive partnerships we will be a Global Leader in Batteries and Battery Technologies and a dominant player in Indian Ocean Rim.
Mission and Philosophy-
"To transform our spheres of influence and to improve the quality of life by building institutions that provide better access to better opportunities, goods and services to more peopleall the time."
Introduce latest generation technologies
Adapt these technologies to suit the operating environment
Develop and manufacture globally competitive, customer-focused products of world-class quality
Responsibly introduce these products into relevant markets
Provide world-class customer support
References:
Respective Companys website and annual reports
Key Product and Service PortfolioName of Company - BOSCH
Product Portfolio
Product Specification
Automotive
Parts & Accessories
Batteries
Belts
Filters
Horns
Lighting
Relays
Machining
Braking systems
Diesel fuel injection systems & components
Gasoline systems
Rotating machines & power spares
Spark plugs
Fuel injection calibration test benches (from inline pumps for common rail testing)
Auto electrical test bench (for starter motors and alternators)
Diagnostics scan tools
Engine analyser
Technical
Tyre service equipment, tyre changer, wheel balancer and wheel aligner and nitrogen tyre inflator
Battery service equipment (battery tester, battery charger, battery load tester)
Air conditioning service equipment (for automotive and HVAC applications)
Wide range of service tools for vehicle repairs and diesel equipment repair
Vehicle lifts
Electric vehicle solutions
End of line solutions
Diagnostic consultancy services
Technical IT and information systems
Connected vehicles (remote diagnostics, fleet management systems, fuel and CO2 management, mileage reporting, vehicle tracking) Augmented reality (user manuals, brochures, diagnostics, repair procedures)
Name of Company - AMTEK AUTO
Product Portfolio
Product Specification
Flywheel Ring Gears
Starter Ring Gear
Flex plate Assemblies (2 Piece)
Flywheel Assemblies
Conrod Piston Sub Assembly
Machining
Steering Knuckles
Ladder frames
Engine bearing ladders
Exhaust manifolds
Aluminium Case Housings
Bridge Fork Assemblies
Hubs
Spindles
Connecting Rods
Crankshaft
Housings
Gear Shifter Forks
Front Axle Beam Assembly
Crankshaft Assembly
Conrod Piston Sub Assembly
Flywheel Assembly
Pivot Arms
Flywheel Housing & Assembly
Front Axle Beams
Front & Rear Axle
Forging
Connecting rods & Caps
Crankshafts & Camshafts
Steering Levers
Gear shifter forks
Sector gears & shafts
Front Impact Beams Drive Shafts
Spindlers
Hubs & Flanges
Transmission Components
Steering Parts
Pistons
Propeller Fork Shafts
Stub - Axle
Front Axle Beam
Front & Rear Axle Shaft
Casting Aluminium
( HPDC & GDC )
Clutch Cases
Transmission cases
Timing Chain Covers
Mounting Brackets
Camshaft Covers / Carriers
Bearing Ladders / Sumps
Structural Covers
Differential Flange
Name of Company - AMARA RAJA BATTERIES
The Companys ability to grow in the rapidly evolving and adverse external environment was due to its customercentric approach, balanced nature of the business portfolio and entrenched presence across India and strengthening footprint in international markets which resulted in a positive divergence high sales growth and an even higher profit growth.
Segment
Products
Industrial
battery
division
Product portfolio offers capacities ranging from 4.5 Ah to 5,000 Ah under multiple brands
Amaron VoltTM (Telecom networks, data center, power station, oil and gas)
Power Stack (Telecom networks, data center, power stations, oil and gas, Indian Railways)
Quanta (UPS applications)
Power SleekTM (Wireless telecom network, UPS applications)
Automotive
battery
division
Passenger cars: Amaron Pro, Amaron Flo, Amaron Go, Amaron Black and Amaron Fresh
Commercial vehicles: Amaron Hiway
Tractors: Amaron Harvest
Two-wheelers: Amaron Pro Bike RiderTM
References:
Respective Companys website and annual reports
Core Competencies of the firmName of Company - BOSCH
Strategic far-sightedness
Our many years of experience allow us to recognize technical and business trends in a timely way, to set clear and compelling objectives, and to ensure that they are attained systematically. Our objectives and actions always follow a clear long-term strategy, both for our business field portfolio and for the global distribution of our business activities. This rigorous pursuit of long-term objectives is based on a systematic business policy intended to preserve our entrepreneurial freedom and financial independence at all times.
Innovative strength
The germ cell of our company and driving force behind our development is our determination to use our own creative ideas to generate new technological solutions that deliver a high level of customer utility. The ability to do this stems from the high qualifications and motivation of our associates and our close cooperation with customers who are at the cutting edge of technology. This includes the readiness to invest significant resources in our own basic research, as well as in projects whose market success will only be attained in the long term.
Efficient processes
As a mature industrial company, we have extensive experience of processes on all levels of value creation, from development and production to sales. Our strengths also include our deep-rooted drive and capacity for continuous improvement (CIP), which we use to continuously increase our efficiency in achieving the best return on investment. In global competition, this allows us to perform a balancing act between functional differentiations of our products on the one hand and cost leadership in commodity products on the other.
Quality and reliability
Since its inception, our company has earned a reputation for providing products and services of the highest quality and reliability. Robert Boschs statement that quality is our most valued asset has remained an unwavering guideline for our business policies. Its successful implementation is the reason for the excellent image of the Bosch brand. Our customers put their trust in our ability to deliver high quality, even as products and systems become more complex. This trust is based on our strength in implementing necessary improvements in a fundamental and lasting way.
Global presence
The company has its roots in Germany, but has also always had a strong international orientation. In the areas in which we do business, hardly any other companies have such a broad global presence. Our global production and development sites work together as a very closely-knit network. This network and our global experience put us in an excellent position to exploit opportunities in current and future growth regions of the world.
Name of Company - AMTEK AUTO
The core competence of this unit is the precision machining of a very wide variety of iron castings and forging components.
The Group has developed core capabilities and know-how in the areas of progressive precision metal stamping; progressive precision cold forging; precision machining; laser welding and bonding as well as plastics and rubber moulding, providing: automotive components; casing and enclosures for enterprise servers and networking equipment; electrical and electronics products for the power and energy sectors; consumer electronic products; imaging and printing products as well as other life science and industrial equipment products.
Company has the ability to provide customers with an integrated range of casting, machining and sub-assembly capabilities. Moving down the value chain into casting has enabled the company to increase the product range, provide a bundled service to its customers and control more effectively raw material prices, processes and wastages.
Name of Company - AMARA RAJA BATTERIES
The Company recognizes innovation as its core competence and strives to develop it as an organizational competence, organizing focused training programs and interventions on innovation for all employees in the management grade.
References:
Respective Companys website and annual reports
Business Model of the organization
Key Partners
Vendors
Inventory intelligence agency
Customers (MSMEs and Standalone)
Motivations for partnerships
Optimization and economy
Reduction of risk and uncertainty
Acquisition of particular resources and activities
Key Activities
Vendor Base development
Customer Base development
Quality check
Marketing (Digital and Social Media)
Categories
Production
Problem Solving
Platform/Network
Value Propositions
Single stop point or portal for all MRO needs.
Quality checked products which helps maintain continuity of service or manufacturing process.
Less hassle acquiring items, less paperwork, cost saving (Streamlined process)
Characteristics
Newness
Performance
Customization
Getting the Job Done
Design
Brand/Status
Price
Cost Reduction
Risk Reduction
Accessibility
Convenience/Usability
Customer Relationships
Face- to- face interaction
Customer complaint redressal team
Online
Customer Segments
1. MSMEs
a. Manufacturing
b. Ancillary
2. Standalone customers
Mass Market
Niche Market
Segmented
Diversified
Multi-sided Platform
Key Resources
Sales Team
Warehouse
Vendors
Website
Variety of products offered
Procurement team
Types of resources
Physical
Intellectual (brand patents, copyrights, data)
Human
Financial
Channels
Website
Sales Team
Suppliers
Channel phases
1. Awareness
2. Evaluation
3. Purchase
4. Delivery
5. After sales
Cost Structure
Web hosting costs
Marketing and sales costs
Quality check costs
Vendor development costs
Administrative costs
Delivery Costs
Cost Driven (leanest cost structure, low price value proposition, maximum automation, extensive outsourcing)
Fixed Costs (salaries, rents, utilities)
Variable costs
Economies of scale
Economies of scope
Revenue Streams
Offline sales(Mainly bulk)
Online sales (Bulk and single)
References:
Companys annual reports
3rd Generation Balanced Scorecard (Amalgamation of 1st Generation BSC and Activity System Map)
In the automotive industry, customers are always willing to pay a premium for innovation. Both process innovation and product innovation are required to compete and earn a profit. Companies that can bring better quality in the form of new products and new technology to market faster and cheaper become the winners in the automotive industry. It is necessary to measure the speed at which innovation can be converted from ideas to profit.
Name of Company - BOSCH
Name of Company - AMTEK AUTO
Name of Company - AMARA RAJA BATTERIES
Perspective
Objectives
Measures
Financial
Increase Return on Capital Employed
ROCE (12%)
Reduce Unit Costs
% Productivity Improvement
Gross Margin
Increase Asset Utilization
Sales/Assets
% Capacity Utilization (90%)
Grow Revenue/Increase Market Share
% Revenue Growth (12%/yr.)
Market Share (#1 or #2)
Customer
Deliver On-Time, On-Spec
OTD %
Customer Defects/Returns
Achieve Image of Trusted Supplier
Customer Retention
Customer Ranking
Enhance Customer Relationships
Key Customer Account Share
Become Innovative Supplier
($/%) Sales New Products
($/%) Sales New Technology Products
Process
Improve Maintenance Effectiveness
$ Hours Unscheduled Downtime
# Breakdowns/Incidents
Improve Manufacturing Efficiency
PPM Defect Rates
Cycle Time
Changeover Time
Cost/Unit
Upgrade Equipment
% Gross Assets < 3 years old
Improve Supplier Relationships
% Certified Suppliers
Supplier OTD
Supplier PPM Defect Rate
Supplier Cost Reduction
Understand Customer Needs
# Hours with Key Customers
# Plans Jointly Developed with Customers
# Customers Profiled
Build Distribution Network
# New Distributors
Units Sold Through Distributors
Excel at Product Development
NPV of Product Pipeline
Customer Rating of Pipeline
Time-To-Market
Learning & Growth
Enhance Workforce Capabilities
Strategic Job Coverage
# Cross-Trained Employees
Leverage Information Technology
Customer Databases
CRM Availability
Process Improvement (JIT) Tools
Build a Culture for Change
Employee Survey
# Best Practices Shared
References:
Respective Companys website and annual reports
SWOT AnalysisName of Company - BOSCH
Strength
Continuous improvement of products and quality.
Streamlined Procedures for every function of the company.
Leadership through innovation.
World class infrastructure facility.
Continuous improvement of products.
Bosch is cash rich, so dependency for external funds is minimal.
Increased demand for Trade Goods.
Sharing of advanced technology with Bosch.
Specialized distribution network.
Increase in Market share through sale of Bosch products range.
Opportunities
Excellent distribution network throughout the country.
Very good market share.
O.E to many vehicles.
Monopoly in a wide range of products like Spark plugs, Fuel injection pumps, Nozzles, Filters etc.
Access to advanced Technology through the German company, BOSCH.
Large number of competent AND WILLING Work Force, consulting the backbone of Bosch.
Bosch can foray into other line of business as it has a good brand image.
It can produce eco-friendly to replace existing products as the market for eco-friendly products are growing and the economic forums have cited the need for these products.
Weakness
Adaptability towards change is low.
Unionized work environment.
Performance appraisal of the employees is not satisfactory.
Havent diversified into other lines of business.
Increase of competition.
Too many substitute products available in the market.
Growing bargaining power of suppliers and customers.
Traditional method of working of the business.
Threats
Lack of Promotions and Advertisements.
Improper Customer complaint feedback mechanisms.
Dissatisfaction among the retailers on account of smaller margins.
Poor communication vis--vis Authorized distributors compared to the other players in the market.
New and stronger competitors entering the Market.
Brand image being slowly diluted due to venturing into too many products.
Brand awareness declining on account of lack of promotional and advertising support.
OE products of other Brands posing a threat to the Trade Goods.
Existence of spurious products.
Name of Company - AMTEK AUTO
Strength
Use of high end world class technology
Weak Distribution channel
Weakness
Excellent customer relation
Company has grown significantly through acquisitions over last 3 years.
Low market share
Opportunity
Growing automotive industry
Exposed to cyclical downturn of auto mobile industry
Threat
Healthy economic outlook
Rising labour cost and price of raw materials
Auto after market demand
Cheaper Imports
Growing Investments
Intense Competition
Opportunity from new US IT compliance law
Technical inefficiency
Depreciating currency
Name of Company - AMARA RAJA BATTERIES
Strengths
Extensive distribution network helps enhance presence
Strong Technological tie up (with Johnson Controls Inc).
Strong Industrial and Automotive Client base (supplies to BSNL, MTNL, BHEL, Indian Railways, Maruti, Hyundai, Ford, Mahindra & Mahindra, Ashok Leyland)
Weakness
Not present in all automotive OE sub segments (not present in high growing two wheeler OE segment)
Has Manufacturing presence in only one location
No captive smelting for key raw material Lead
Opportunities
Buoyant automobile market with strong underlying demand coupled with MNCs targeting India as manufacturing base
Continued Power deficits and strong telecom demand underlies huge potential demand
Threats
Intense competition with players (Exide Industries, Tata GS-Yuasa) expanding capacities
Cheaper imports from low cost countries (China,
Thailand)
References:
Respective Companys website and annual reports
Competitor Analysis (identify competitors)Based on Critical Success factors
Critical Success factors in this industry are:
Positive Image: One critical factor that often defines an automotive company is its public image. Because buyers entrust their safety, along with a sizable portion of their income, to a car company, the perception of the company figures greatly in the buying decision. Factors influencing an automotive company's image include advertising, word of mouth and expert reviews and opinions.
Distribution Network: A more practical critical success factor for any automotive company is a strong network for distribution. Because cars and trucks are not sold directly to customers, auto manufacturers rely on franchised dealerships to provide local showrooms. These dealers must be knowledgeable and reputable to sell cars, which is essential for the automaker. Like auto corporations, dealers are reliant on a positive image that may be influenced by, or influence in turn, the image of the automaker.
Cash Flow: A healthy cash flow is another practical critical success factor. When an automaker provides incentives or lowers prices, it almost always sells more cars, but the profit margin may not be a healthy one. At the same time, an automaker needs to keep costs under control, including line items that are prone to fluctuation such as the price of raw materials and outsourced components. Achieving a sustainable cash flow is central to the frequent discussions between automakers and employee unions.
Compliance: Automakers must also ensure that the vehicles they sell are in compliance with various federal and local regulations. These include emissions standards, fuel efficiency and safety standards. While it may cost less to produce vehicles that perform marginally in these areas, the cost of a safety recall or government-mandated repairs are often much higher and difficult to anticipate.
Flexibility: An elusive critical success factor for the automotive industry is the ability to be flexible. American car buyers may change their buying habits quickly in response to factors like the state of the economy, the price of fuel and new automotive technologies. It is essential that automakers remain attentive to these trends and keep in place a system that can adapt quickly to create new products that meet the current and near-future needs of customers.
References:
Essentials of Strategic Management by Hill & Jones
Based on Financial indicators
Name
Last Price
Market Cap.(Rs. cr.)
SalesTurnover
Net Profit
Total Assets
Bosch
26,069.10
81,854.11
9,858.77
1,050.21
6,425.90
Motherson Sumi
508.80
44,872.06
4,550.78
535.13
2,523.40
Exide Ind
188.85
16,052.25
5,972.66
487.08
3,731.46
Amara Raja Batt
870.10
14,862.40
3,451.75
367.44
1,447.04
WABCO India
5,722.10
10,853.44
1,110.70
117.48
755.17
Sundaram-Clayto
1,811.35
3,664.74
1,196.76
53.66
643.04
Amtek Auto
163.60
3,604.40
3,999.70
323.37
11,503.13
Horizon Infra
126.05
2,729.88
377.58
-171.54
5,424.97
Federal-Mogul
430.40
2,394.41
1,217.13
33.70
621.86
Amtek India
75.00
2,084.68
3,015.03
247.87
7,666.98
Minda Corp
88.40
1,850.31
616.76
21.77
390.08
Wheels
1,334.85
1,606.13
1,823.15
28.41
621.04
References:
http://www.moneycontrol.com/stocks/marketinfo/marketcap/bse/auto-ancillaries.html
Future Growth Strategy for the organizationPortfolio Analysis Based on BCG Matrix
Market Growth Rate
STAR
Question Marks
Exide Ind
Minda Corp
Amara Raja Batt
Amtek India
Bosch
Horizon Infra
COW
Motherson Sumi
Federal-Mogul
Dogs
Market Share
References:
http://www.moneycontrol.com/stocks/marketinfo/marketcap/bse/auto-ancillaries.html
Companys Strategic Roadmap for future
Near Term (