Post on 19-Dec-2015
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AUTOMOBILE INDUSTRY
SameerShashank G
[Course Title]
[Teacher’s Name]
By
Sameer Shashank G 2012A4PS275P
Varun Jampala 2012A4PS142P
Adithya S Bhat 2012B3A1533P
Vivek Bhargav 2012ABPS586P
Group 12
1
CONTENTS
Introduction ........................................................................................................................ 3
Market definition ................................................................................................................ 3
Five Force analysis of automobile industry ........................................................................ 4
Rivalry among existing firms ......................................................................................... 4
Threat of new entrants .................................................................................................... 4
Threat of substitute ......................................................................................................... 5
Bargaining power of buyers............................................................................................ 5
Bargaining power of suppliers ........................................................................................ 5
Strategy analysis of selected companies ............................................................................. 7
Bayerische motoren worke (BMW) ................................................................................ 7
Introduction ................................................................................................................ 7
Strategy number one ................................................................................................... 7
Analysis of strategic choice ........................................................................................ 8
General Motors (GM) ..................................................................................................... 9
Introduction ................................................................................................................ 9
Strategy 2013 .............................................................................................................. 9
Strategy analysis ......................................................................................................... 9
TATA motors ............................................................................................................... 10
introduction............................................................................................................... 10
strategy ..................................................................................................................... 10
Strategy analysis ....................................................................................................... 10
Corporate level strategy .................................................................................................... 11
TATA Group ................................................................................................................ 11
growth strategy ......................................................................................................... 11
Internal transactions .................................................................................................. 11
Divestment strategy .................................................................................................. 12
2
Financial analysis of selected companies ......................................................................... 13
General Motors (GM) ................................................................................................... 13
Financial Data ........................................................................................................... 13
Cash flow analysis .................................................................................................... 15
Bayerische motoren worke (BMW) .............................................................................. 16
Financial Data ........................................................................................................... 16
Cash Flow Analysis .................................................................................................. 18
TATA Motors ............................................................................................................... 19
Financial Data ........................................................................................................... 19
Cash Flow Analysis .................................................................................................. 21
3
INTRODUCTION
The firms and businesses that produce and sell self-powered vehicles including
passenger cars, trucks, farm equipment and other commercial vehicles are called
automobile industry. We could mark that the automobile industry has been
globalized and accelerated during the last half of 1990's because there were several
constructions of facilities and of course several mergers between giant multinational
automakers were joint during that period. Due to the auto industry, it followed the
development of road systems, a fact that led the growth of suburbs, shopping center
around major cities, and the growth of other industries like ancillary such as the oil
and travel businesses.
MARKET DEFINITION
In this assignment, we are focusing on the passenger car segment of the automobile
industry. It is further segmented based on either style or cost such as sedans, SUVs,
sports cars being different styles and luxury and premium vehicles based on cost.
Europe is the largest producer of automobiles in the world. Competitive and leading worldwide
manufacturers are many-General Motors, Ford Toyota Volkswagen, Chrysler, Peugeot, Honda
Mazda, Hyundai and many others, while the most competitive are Ford, General Motors,
Chrysler, Toyota and Porsche. Meaningful geographic submarkets exist in which companies
compete each other. For example, prior to liberalization Tata Motors and Maruti Motors had
bulk of the market share in India.
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FIVE FORCE ANALYSIS OF AUTOMOBILE INDUSTRY
RIVALRY AMONG EXISTING FIRMS
Industry growth- The automobile industry has been growing very rapidly. The
auto industry is a leading driver of global economic growth, says the
International Organization of Motor Vehicle Manufacturers, and it has expanded
over 30% in the ten-year period ending 2005.
Concentration and Balance of Competitors- The auto industry is very
concentrated with the top 8 global auto companies having more than 90% of
global revenues and the top 50 global auto parts companies having 80% of global
revenues (the top 4 US tire producers have 75% of the US market). Globalization
has also led to an increase in concentration resulting in the industry becoming
top-heavy.
Degree of differentiation- In each segment, there are many competing firms.
For example, Audi and BMW both compete in the premium luxury cars segment.
Scale of economy- High fixed costs for regular manufacturing, so the industries
have to be large scale.
Exit barriers- The assets involved in manufacturing are highly specific to the
auto industry so the exit barriers are high since firms cannot convert their assets.
THREAT OF NEW ENTRANTS
Economies of scale- New entrants have to invest heavily in terms of both
capital and other resources to furbish the complex final product. Large number
of factors such as safety, design, comfort and numerous electronic functions
have to be taken care of. Also, for optimal functioning large number of units
have to be manufactured leading to the requirement of higher capital investment.
In fact, General Motors over the previous ten years has had R&D costs annually
over $400 million.
First mover advantage- Car firms are benefited from lower marketing cost
greater brand value, reduce consumer sensitivity to price and improve financial
results compare with a new firm who don't have any reputation into the auto
industry and tries to survive. For example, Toyota Honda and Mercedes vehicles
successfully gained a significant market share of the global automobile industry,
simply because of the efforts put in to make their brands customer friendly,
economically viable and safe.
Access to distribution channels and relationships- Auto manufacturers have
long tried to protect their exclusive sales organization through contractual
arrangements, pricing strategies, and technical features. Existing auto firms are
benefited from exerting close control over the sales and distribution channels in
order to be able to execute their marketing strategies, including price policy.
5
THREAT OF SUBSTITUTE
There are numerous amounts of substitutes in the automotive market and if the price
of one vehicle increases the demand for a substitute will increase
Fuel type and efficiency – The increasing price of gasoline causes the substitution of less
fuel efficient automobiles such as Hummer by fuel efficient cars. This is exemplified by
the decline in sales of SUVs by Ford and General Motors, and the increase in interest for
hybrid vehicles such as the Toyota Prius.
Pollution- The threat of alternative automobiles is mostly being seen in the development
of hybrid-electric vehicles. Since their entrance into the market, this type of vehicle has
given way to new innovation and alternative forms of driving transportation. The need for
this type of automobile was due to the overwhelming outcry over pollution from natural
gas/diesel emissions. As a result, hybrid technology helps automakers meet stricter
environmental standards in Europe and in North America
Other substitutes to the automobile industry include bus, metro, motorcycle, and train.
In Europe and the US, the increase in gasoline prices has increased the use of these other
forms of transportation. As the relative costs of automobiles increases, they are
substituted more easily with other forms of transportation.
BARGAINING POWER OF BUYERS
Majority of automobiles are sold directly to franchised dealerships. However, the end
customers who control demand are private consumers and leasers (for use in governments,
large companies, etc.).
Price sensitivity- Private consumers are highly sensitive to prices, because a car
costs a significant amount to them. They can employ many strategies to cope
with it such as buying pre-owned cars, looking for alternative brands, buying
earlier models at steep discounts, etc. For example, in 1992 the federal government
in U.S., in order to revive auto industry offered a 15 percent income tax credit to new
car buyers, so buyers had the power to control their sales.
Relative bargaining power- The consumer is separated from the manufacturer
by the franchised dealers over whom the auto manufacturers exhibit control.
Hence, the relative bargaining power of the consumer is low since they cannot
easily influence prices.
BARGAINING POWER OF SUPPLIERS
There are different kinds of suppliers in auto industry. There are suppliers for braking system,
classics and frame, cooling system, electrical system and engine, exhaust and fuel supply
system. However, the most important suppliers are steel suppliers and the biggest suppliers
come from China where labor and production cost is very low. Auto firms buy much less these
days (purchase volume is lower relative to other customers of suppliers), and they can make car
components by their own. This results to cut jobs (workforce reduction) and decline profit for
6
suppliers as car sales plummeted worldwide. There's no credible threat from supplier to a
product toward a maker. Most makers have many interchangeable suppliers and the ability to
tool up quickly for in-house production
Force Threat level
Rivalry among existent firms Medium
Entry Very Low
Threat of substitutes High
Buyer power Medium
Supplier power Very Low
7
STRATEGY ANALYSIS OF SELECTED COMPANIES
BAYERISCHE MOTOREN WORKE (BMW)
INTRODUCTION
The Bayerische Motoren Worke (BMW) group was established in 1916 as an aero-engine
manufacturing company. It later diversified into automobiles and motorcycles. After a
financial crisis in the 1950s, it was restructured and became the premium car
manufacturer it now is.
BMW group primarily manufactures under its 3 brands- BMW, MINI and Rolls-Royce.
Revenues in 2013 totaled € 68,821 million, 13.8 % higher than in the previous year.
Earnings were also strong, with profit before financial result (EBIT) up by 56.9 % to €
8,018 million and profit before tax up by 52.1% to € 7,383 million. It has 24 production
facilities in 13 countries and a global sales network spanning 140 countries.
STRATEGY NUMBER ONE
In 2007, BMW implemented a fundamental strategic realignment called Strategy
Number One. This was viewed with a target oriented approach and long term focus. The
strategy is described by this diagram.
Growth- Customer service=growth driver
Shaping the future- Concept cars, etc
Access to technologies and customers- Developing and maintaining
collaborations and networks in industry.
Profitability-Consistently achieve profitability and increase value over time.
8
ANALYSIS OF STRATEGIC CHOICE
Cost Leadership-
BMW has never been focused on a cost leadership strategy due to its history of being a
premium provider of products and services, which is reflected on its 3 premium brands-
BMW, Mini and Rolls-Royce. This is further reflected in the high market price of it’s
vehicles. BMW spends approximately €3 billion on labor and R&D.
Differentiation-
BMW has a business strategy that focuses on creating and sustaining competitive
advantages through innovation, technology and customer focus. BMW has accomplished
to build a brand name in the premium segment through this strategy. BMW has
accomplished this through implementation of programs like Efficient Dynamics,
Individual Mobility, etc. Hence BMW follows a differentiation strategy primarily.
9
GENERAL MOTORS (GM)
INTRODUCTION
General Motors (GM) is one of the big three auto makers of the world. They have built
some of the most famous and classic vehicles on the road which have portrayed messages
of both modesty and display of class for a market of consumers who range from working
class to music superstar; as Alfred P. Sloan, CEO of the 1920s put it, GM makes “a car
for every purse and purpose.”
After 2007 however, when GM lost 38 billion dollars, GM has taken a hit after the
economic crisis. As financial institutions implemented tighter control, GM struggled to
maintain its complicated value chain and larger portfolio of brands. GM was faced with
mass downsizing to more efficiently designate funds to help bring the company up from
what was a major failure. In 2009, it went public and became partly owned by Treasury.
However, with the completion of financial year 2013, GM has been going strong again
under new leadership with most financial institutions restoring their status and allowing
more investors.
STRATEGY 2013
Since the restructuring of 2009, GM has been consistently selling its assets, creating
sustainable value chains, downsizing, retiring brands, etc. to pay back the pre-
restructuring creditors and regain financial credibility.
Simultaneously, GM is also transforming to a customer focused approach. Primarily,
addressing safety concerns of the customer as well as transforming product design,
quality and customer care.
STRATEGY ANALYSIS
Cost Leadership- Ever since 2010, after going public, GM has had a cost
leadership focused approach under which the company withdrew
Differentiation- After reviewing the flaws of their prior strategies, GM decided
to withdraw auxiliary brands and focus on core brands because the earlier “stop-
start” product development caused inefficiency, resulted in poor product and
also did not allow the company to fully realize the potential of emerging trends
like hybrids and fuel-efficient cars. Also, customer relations caused losses to
competing Hence, the company now follows a moderate differentiation route as
it attempts to build the brand values of core, high potential brands.
10
TATA MOTORS
INTRODUCTION
Tata Motors Limited is India’s largest automobile company, with consolidated revenues
of INR 2,32,834 crores (USD 38.9 billion) in 2013-14. It is the leader in commercial
vehicles in each segment.Established in 1945, Tata Motors’ presence cuts across the
length and breadth of India. Over 8 million Tata vehicles ply on Indian roads, since the
first rolled out in 1954. The company’s manufacturing base in India is spread across
Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar
(Uttarakhand), Sanand (Gujarat) and Dharwad (Karnataka). Following a strategic alliance
with Fiat in 2005, it has set up an industrial joint venture with Fiat Group Automobiles at
Ranjangaon (Maharashtra) to produce both Fiat and Tata cars and Fiat powertrains. The
company’s dealership, sales, services and spare parts network comprises over 6,600 touch
points, across the world.
Through subsidiaries and associate companies, Tata Motors has operations in the UK,
South Korea, Thailand, South Africa and Indonesia. Among them is Jaguar Land Rover,
acquired in 2008. In 2004, it acquired the Daewoo Commercial Vehicles Company,
South Korea’s second largest truck maker.
STRATEGY
As a part of the company's new internationalization strategy, the company has decided to
focus on a narrow base of 14-15 countries where market conditions are similar to that of
India. In these countries, Tata Motors now has dedicated manufacturing facilities,
marketing teams and sales teams. The idea is to have self sustained operations in this
narrow band of countries. The company evaluates locations on the basis of market
opportunities and labour skills.
In the framework pertaining to international expansion strategies, Tata Motors can be
identified as an Extender, and is focusing on expanding into markets similar to those of
the home base, using competencies developed at home.
Tata Motors follows Value Innovation, which is a simultaneous pursuit of cost leadership
as well as differentiation strategy.
STRATEGY ANALYSIS
Cost Leadership- Tata Motors aims to create sustainable, efficient value chains.
This strategy actually also contributes partly to its goal of differentiation. It
introduces new product designs to further enhance the savings in manufacturing.
For example, High performance rail steel that saved around £150,000 over five
years for Tata EU.
Differentiation – Tata motors relies heavily on product differentiation. For
example, they ventured into SUV and MUV markets as well as Tata Nano. Tata
spends around Rs.12,500 on R&D alone.
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CORPORATE LEVEL STRATEGY
TATA GROUP
Founded by in 1868 Jamsetji Tata, tte Tata group is a global enterprise headquartered in
India. Itcomprises over 100 operating companies, with operations in more than 100
countries across six continents. It exports products and services to over 150 countries.
The revenue of Tata companies, taken together, was $103.27 billion (around Rs624,757
crore) in 2013-14, with 67.2 percent of this coming from businesses outside India. Tata
companies employ over 581,470 people worldwide.
Each Tata enterprise operates independently and has its own board of directors and
shareholders. There are 32 publicly-listed Tata enterprises and they have a combined
market capitalisation of about $133.56 billion. Tata companies with significant scale
include Tata Steel, Tata Motors, Tata Consultancy Services , Tata Power, Tata Chemicals,
Tata Global Beverages, Tata Teleservices, Titan, Tata Communications and Indian
Hotels.
GROWTH STRATEGY
Tata group has been following a diversification strategy by pursuing specific and new
product areas and entry into new distribution channels. Tata group intends to enter new
potential businesses both abroad and in India to increase value. Tata’s growth is primarily
inorganic.
Strategic Alliances- Tata entered into a strategic alliance with DOCOMO, a
Japanese telecom major.
Acquisitions/ Horizontal Integration- Since 2011, Tata group has acquired
various companies including Corus (taken over by Steel), BT Mosaic
communication (Telecom),etc.
Joint Ventures- Tata and Fiat have been a JV since 2006. Also, Tata Motors
have a JV with Tata Africa Holdings.
Value Innovation- A balanced approach between cost leadership and
differentiation strategies.
Developing core businesses- Tata has been investing in the core businesses of
Steel, Motors, Chemical and Power.
INTERNAL TRANSACTIONS
When Ratan Tata took over as chairman, the Tata Group seemed on its way to
disintegration, with powerful CEOs running some of the Group companies like their
personal fiefdoms and challenging the core structure of the group. Over a period of four
years, Ratan Tata managed to replace most of these CEOs and to bring in fresh talent to
replace the senior executives in the Group companies.
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Hence, Internal transactions cost lesser now leading to chances for developing value.
DIVESTMENT STRATEGY
Recently, Tata Group has been exiting marginal businesses by selling off businesses
such as Cosmetics, Paints, Oil, Soaps, Pharma and Cement. This results in overall
increment of value.
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FINANCIAL ANALYSIS OF SELECTED COMPANIES
GENERAL MOTORS (GM)
FINANCIAL DATA
Consider the financial data collected for GM for the last financial year.
All figures are in USD Millions
Column 2012-2013
Revenue USD Mil 155,427
Gross Margin % 11.6
Operating Income USD Mil 5,131
Operating Margin % 3.3
Net Income USD Mil 5,346
Earnings Per Share USD 2.38
Dividends USD —
Payout Ratio % —
Shares Mil 1,676
Book Value Per Share USD 26.33
Operating Cash Flow USD Mil 12,630
Cap Spending USD Mil -7,565
Free Cash Flow USD Mil 5,065
Free Cash Flow Per Share USD 3.02
Working Capital USD Mil 19,089
ASSETS
Current Assets
Cash And Cash Equivalents 21,268
Short Term Investments 8,972
Net Receivables 33,162
Inventory 14,039
Other Current Assets 4,060
Total Current Assets 81,501
Long Term Investments 22,448
Property Plant and Equipment 29,250
Goodwill 1,560
Intangible Assets 5,668
Accumulated Amortization -
Other Assets 3,181
Deferred Long Term Asset
Charges
22,736
Total Assets 166,344
14
LIABILITIES
Current Liabilities
Accounts Payable 48,254
Short/Current Long Term Debt 564
Other Current Liabilities 13,594
Total Current Liabilities 62,412
Long Term Debt 6,573
Other Liabilities 54,185
Deferred Long Term Liability
Charges
-
Minority Interest 567
Negative Goodwill -
Total Liabilities 123,737
STOCKHOLDER'S EQUITY
Misc Stocks Options Warrants -
Redeemable Preferred Stock -
Preferred Stock 3,109
Common Stock 15
Retained Earnings 13,816
Treasury Stock -
Capital Surplus 28,780
Other Stockholder Equity -3,113
Total Stockholder Equity 42,607
Net Tangible Assets 35,379
After calculations from the above data, the following ratios have been arrived at using the
formulae.
1. Return On Equity- ROE= 11.54%
2. Return On Assets- ROA= 2.39%
3. Return On Sales/ Net Profit Margin- ROS=2.43%
4. Asset Turnover: 0.98
5. EBITDA Margin: 4.80%
6. Current Ratio: 1.305
7. Quick Ratio: 1.015
8. Cash Ratio: 0.34
9. Dividend Payout Ratio: 58.2%
10. Sustainable Growth Rate: 4.84%
11. Operating Cash Flow Ratio: 0.13
15
12. Liabilities-to-equity ratio: 2.99
13. Debt to Equity Ratio: 0.167
14. Debt to capital Ratio: 0.143
CASH FLOW ANALYSIS
Following is the table detailing cash flow for GM in the year 2013
All figures are in USD thousands
Operating Activities, Cash Flows Provided By or Used In
Depreciation 7,587,000
Adjustments To Net Income -5,252,000
Changes In Accounts Receivables -
Changes In Liabilities -
Changes In Inventories -
Changes In Other Operating Activities -3,456,000
Total Cash Flow From Operating Activities 8,166,000
Investing Activities, Cash Flows Provided By or Used In
Capital Expenditures -6,249,000
Investments -12,704,000
Other Cash flows from Investing Activities 6,213,000
Total Cash Flows From Investing Activities -12,740,000
Financing Activities, Cash Flows Provided By or Used In
Dividends Paid -916,000
Sale Purchase of Stock -
Net Borrowings 697,000
Other Cash Flows from Financing Activities -139,000
Total Cash Flows From Financing Activities -358,000
Effect Of Exchange Rate Changes -253,000
Change In Cash and Cash Equivalents -5,185,000
16
BAYERISCHE MOTOREN WORKE (BMW)
FINANCIAL DATA
Following is the financial data for BMW for the financial year 2012-13
All figures in EUR Millions
Column 2012-13
Revenue EUR Mil 76,058
Gross Margin % 20.1
Operating Income EUR Mil 7,515
Operating Margin % 9.9
Net Income EUR Mil 5,314
Earnings Per Share EUR 2.7
Dividends EUR 0.58
Payout Ratio % 21.5
Shares Mil 1,808
Book Value Per Share USD 27.23
Operating Cash Flow EUR Mil 3,614
Cap Spending EUR Mil -6,759
Free Cash Flow EUR Mil -3,145
Free Cash Flow Per Share USD -2.4
Working Capital EUR Mil 2,131
All figures in EUR thousands
ASSETS
Current Assets
Cash And Cash Equivalents 6,205,000
Short Term Investments 3,262,000
Net Receivables 3,464,000
Inventory 7,766,000
Other Current Assets 2,957,000
Total Current Assets 43,151,000
Long Term Investments 2,256,000
Property Plant and Equipment -
Goodwill 111,000
Intangible Assets -
Accumulated Amortization -
Other Assets -
Deferred Long Term Asset Charges 1,393,000
Total Assets 110,164,000
17
LIABILITIES
Current Liabilities
Accounts Payable 3,918,000
Short/Current Long Term Debt 60,343,000
Other Current Liabilities 7,312,000
Total Current Liabilities 40,134,000
Long Term Debt 34,609,000
Other Liabilities -
Deferred Long Term Liability Charges 4,625,000
Minority Interest -
Negative Goodwill -
Total Liabilities 86,234,000
STOCKHOLDER'S EQUITY
Misc Stocks Options Warrants -
Redeemable Preferred Stock -
Preferred Stock -
Common Stock 2,594,000
Retained Earnings 22,492,000
Treasury Stock -1,182,000
Capital Surplus 158,000
Other Stockholder Equity -
Total Stockholder Equity 24,059,000
Net Tangible Assets -
After calculations from the above data, the following ratios have been arrived at using
the formulae.
1. Return On Equity- ROE= 14.77%
2. Return On Assets- ROA= 3.61%
3. Return On Sales/ Net Profit Margin- ROS=6.41%
4. Asset Turnover: 0.56
5. EBITDA Margin: 10.4%
6. Current Ratio: 1.07
7. Quick Ratio: 0.807
8. Cash Ratio: 0.154
9. Dividend Payout Ratio: 21.5 %
10. Sustainable Growth Rate: 11.742%
11. Operating Cash Flow Ratio: 0.107
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12. Liabilities-to-equity ratio: 3.58
13. Debt to Equity Ratio: 3.01
14. Debt to capital Ratio: 0.81
CASH FLOW ANALYSIS
All figures in EUR thousands
Operating Activities, Cash Flows Provided By or Used In
Depreciation 2,422,000
Adjustments To Net Income -
Changes In Accounts Receivables -427,000
Changes In Liabilities -
Changes In Inventories -
1,170,000
Changes In Other Operating Activities 572,000
Total Cash Flow From Operating Activities 4,319,000
Investing Activities, Cash Flows Provided By or Used In
Capital Expenditures -
3,263,000
Investments -
Other Cash flows from Investing Activities -
Total Cash Flows From Investing Activities -
5,190,000
Financing Activities, Cash Flows Provided By or Used In
Dividends Paid -
Sale Purchase of Stock -
Net Borrowings -
Other Cash Flows from Financing Activities -
1,982,000
Total Cash Flows From Financing Activities 510,000
Effect Of Exchange Rate Changes 22,000
Change In Cash and Cash Equivalents -335,000
19
TATA MOTORS
FINANCIAL DATA
All figures in INR Million
Column 2014
Revenue INR Mil 2,350,900
Gross Margin % 38.3
Operating Income INR Mil 74,000
Operating Margin % 3.1
Net Income INR Mil 131,200
Earnings Per Share INR 400.08
Dividends INR 9
Payout Ratio % 4.3
Shares Mil 643
Book Value Per Share INR 977.4
Operating Cash Flow INR Mil 372,900
Cap Spending INR Mil -259,800
Free Cash Flow INR Mil 113,100
Free Cash Flow Per Share INR 175.8
Working Capital INR Mil 43,300
All figures in INR million
ASSETS
Current Assets
Cash And Cash Equivalents 114,096
Short Term Investments 12,077
Net Receivables 135,710
Inventory 140,705
Other Current Assets 14,241
Total Current Assets 420,888
Long Term Investments 13,366
Property Plant and Equipment -
Goodwill 35,848
Intangible Assets -
Accumulated Amortization -
Other Assets -
Deferred Long Term Asset Charges 6,323
Total Assets 1,010,142
20
LIABILITIES
Current Liabilities
Accounts Payable 279,031
Short/Current Long Term Debt 336,784
Other Current Liabilities 74,169
Total Current Liabilities 551,256
Long Term Debt 172,436
Other Liabilities -
Deferred Long Term Liability Charges 51,482
Minority Interest -
Negative Goodwill -
Total Liabilities 815,961
STOCKHOLDER'S EQUITY
Misc Stocks Options Warrants -
Redeemable Preferred Stock -
Preferred Stock -
Common Stock 119,853
Retained Earnings 114,470
Treasury Stock -42,608
Capital Surplus 124
Other Stockholder Equity -
Total Stockholder Equity 191,839
Net Tangible Assets -
After calculations from the above data, the following ratios have been arrived at using
the formulae.
1. Return On Equity- ROE= 24.35%
2. Return On Assets- ROA= 6.23%
3. Return On Sales/ Net Profit Margin- ROS=5.58%
4. Asset Turnover: 1.12
5. EBITDA Margin: 7.66%
6. Current Ratio: 0.76
7. Quick Ratio: 0.48
8. Cash Ratio: 0.206
9. Dividend Payout Ratio: 4.3 %
10. Sustainable Growth Rate: 23.3%
11. Operating Cash Flow Ratio: 0.472
12. Liabilities-to-equity ratio: 4.25
21
13. Debt to Equity Ratio: 2.65
14. Debt to capital Ratio: 0.72
CASH FLOW ANALYSIS
All figures in INR million
Operating Activities, Cash Flows Provided By or Used In
Depreciation 66,450
Adjustments To Net Income 75,366
Changes In Accounts Receivables -54,138
Changes In Liabilities 88,512
Changes In Inventories -34,824
Changes In Other Operating Activities -16,242
Total Cash Flow From Operating Activities 260,352
Investing Activities, Cash Flows Provided By or Used In
Capital Expenditures -78,894
Investments -63,828
Other Cash flows from Investing Activities -98,520
Total Cash Flows From Investing Activities -241,242
Financing Activities, Cash Flows Provided By or Used
In
Dividends Paid -17,544
Sale Purchase of Stock -1,956
Net Borrowings 99,714
Other Cash Flows from Financing Activities -42,876
Total Cash Flows From Financing Activities 32,592
Effect Of Exchange Rate Changes 13,446
Change In Cash and Cash Equivalents 51,702