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Economic Position of India

Despite the slowdown in growth, investment remained relatively buoyant, growing at a rate

higher than that of GDP. The ratio of fixed investment to GDP consequently increased to 32.2

per cent of GDP in 2008-09 from 31.6 per cent in 2007-08. This reflects the resilience of Indian

enterprise, in the face of a massive increase in global uncertainty and risk aversion and freezing

of highly developed financial markets. A decline in all major elements of private demand,

including exports and consumption, necessitated a compensating widening of the fiscal deficit

above the Fiscal Responsibility and Budget Management Act (FRBMA) target. The new, higher

expenditures announced during the 2008-09 budget, which would have been offset by greater

revenue mobilization, had to be supplemented by an additional fiscal expansion. This got

reflected in an increase of 20.2 per cent in government final consumption expenditure during2008-09. The effect of this and subsequent fiscal stimuli (e.g. excise and service tax reduction)

on private demand would be expected to appear gradually with a lag. Needless to say it is an

imperative to return to the FRBM targets for the fiscal deficit at the earliest, possibly by 2010-11.

GDP of India

The Indian economy is the 12th largest in USD exchange rate terms. India is the second fastest

growing economy in the world. Indias GDP has touched US$1.25 trillion. The crossing of

Indian GDP over a trillion dollar mark in 2007 puts India in the elite group of 12 countries with

trillion dollar economy. The tremendous growth rate has coincided with better macroeconomic

stability. India has made remarkable progress in information technology, high end services and

knowledge process services.

However cause for concern would be this rapid growth has not been an inclusive in nature, in the

sense it has not been accompanied by a just and equitable distribution of wealth among all

sections of the population. This economic growth has been location specific and sector specific.

For e.g. it has not percolated to sectors were labor is intensive (agriculture) and in states were

poverty is acute (Bihar, Orissa, Madhya Pradesh and Uttar Pradesh).

Though India has the second highest growth rate in the world, its rank in terms of human

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Result: Unfavorable

5. The amount of rivalry among competitors

High. The industry is not yet in its shake-out phase and is still struggling to find the up-and-coming stars and possibly topple the leaders.

Result: Unfavorable

India's auto industry is much like China's, as far as Porter's Five Forces is concerned. Like

China's, the P5F analysis ignores the massive future prospects which could indeed render this

analysis irrelevant.

Role of Automobile Industry in India GDP

The Role of Automobile Industry in India GDP has been phenomenon. The Automobile Industry

is one of the fastest growing sectors in India.

The increase in the demand for cars, and other vehicles, powered by the increase in the income is

the primary growth driver of the automobile industry in India. The introduction of tailor made

finance schemes, easy repayment schemes has also helped the growth of the automobile sector.

Some Facts

India has become one of the international players in the automobile market

In the year 2006-07, the Indian Automobile Industry produced 2.06 million four wheelers

and 9 million two and three wheelers

The four wheelers include passenger cars, multi-utility vehicles, sports utility vehicles,

light, medium and heavy commercial vehicles, etc

The three wheelers include mopeds, motor-cycles, scooters, and three wheelers

India ranks 2nd in the global two-wheeler market

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Industry Background

In 2008, Hyundai Motors alone exported 240,000 cars made in India. Nissan Motors plans to

export 250,000 vehicles manufactured in its India plant by 2011. Similar plans are for GeneralMotors.

Turnover of Automobile Manufacturers (In USD Million)

Year In USD Million

2002-03 14,880

2003-04 16,544

2004-05 20,896

2005-06 27,011

2006-07 34,285

The figures show that the automobile sector in India has been growing robustly. The market

shares of the different types of vehicles will clearly depict the demand pattern in this sector.

Domestic Market Share for 2008-09

Passenger Vehicles 15.96%

Commercial Vehicles 3.95%

Three Wheelers 3.6%

Two Wheelers 76.49%

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COMPANY

Bajaj Auto Ltd.

The Bajaj Group is amongst the top 10 business houses in India. Its footprint stretches over a

wide range of industries, spanning automobiles (two-wheelers and three-wheelers), home

appliances, lighting, iron and steel, insurance, travel and finance.

The group's flagship company, Bajaj Auto , is ranked as the world's fourth largest two- and

three- wheeler manufacturer and the Bajaj brand is well-known in over a dozen countries in

Europe, Latin America, the US and Asia.

Activities

Bajaj Auto Ltd. is the largest exporter of two and three wheelers. With Kawasaki Heavy

Industries of Japan, Bajaj manufactures state-of-the-art range of two-wheelers. The brand, Pulsar

is continually dominating the Indian motorcycle market in the premium segment. Its Discover

DTSi is also a successful bike on Indian roads .

Since 1986, there is a technical tie-up of Bajaj Auto Ltd. with Kawasaki Heavy Industries of

Japan to manufacture state-of-art range of latest two-wheelers in India. The JV has already given

the Indian market the KB series, 4S and 4S Champion, Boxer, the Caliber series, and Wind125.

Bajaj Auto & Allianz have signed their third joint venture partnership, ' Bajaj Allianz Financial

Distributors Ltd. ', encouraged by the tremendous performance of the Bajaj Allianz Life

Insurance & Bajaj Allianz General Insurance and by the strong trust of consumers in the Bajaj

Allianz brand.

Bajaj Auto's two and three wheelers are manufactured in three modern mass production facilities

at Pune, Aurangabad and at a state of the art plant at Chakan. The combined installed capacity at

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Equity share capita, Preference shares other than redeemable, Reserves and surplus, Losses and

Fictitious assets increased by Rs.282.1 cr. in 2009 tear.

(iii) Inventory Turnover Ratio.

Inventory turnover ratio = Sales

Inventory

Year Sales Turnover Inventory Inventory Turnover

Ratio

2008 9856.66 349.61 28492009 9310.24 338.84 27.47

Analysis:-

The inventory' turnover ratio in the year 2008 was 28.19 which indicate that 28.19 times in a

year the inventory of the firm is converted into receivables or cash. However, in 2009, the

inventory turnover ratio slightly decreased to 27.47. This was due to the fact that the Bajaj Auto

Ltd. in 2009 invested more then 0.72 times the inventory in 2008.

(v) Fixed assets Turnover

Fixed asset Turnover = Sales

Fixed Assets

Year Sales

(Rs.

in cr.

Fixed

Assets (Rs.

in cr.)

Fixed Assets Turnover

2008 8827.15 4906.42 1.79 %20O9 8700.17 5752.26 1.51 %

Analysis:-

According to the calculations above the productivity of fixed assets in year 2009 is not better

than it was in previous years. In 2008, it was 1.79% and now it has been slightly decreased to

1.51%. This change was brought about by decreased in total sales by Rs.126.98 cr. where as

the fixed assets increased only by Rs.845.84 cr.

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Bibliography

http://www.bajajauto.com/

http://www.economywatch.com/indianeconomy/indian-economy-

overview.html

http://www.ibef.org/economy/economyoverview.aspx

http://business.mapsofindia.com/automobile/

http://www.bajajauto.com/http://www.economywatch.com/indianeconomy/indian-economy-overview.htmlhttp://www.economywatch.com/indianeconomy/indian-economy-overview.htmlhttp://www.ibef.org/economy/economyoverview.aspxhttp://business.mapsofindia.com/automobile/http://www.bajajauto.com/http://www.economywatch.com/indianeconomy/indian-economy-overview.htmlhttp://www.economywatch.com/indianeconomy/indian-economy-overview.htmlhttp://www.ibef.org/economy/economyoverview.aspxhttp://business.mapsofindia.com/automobile/