Summer projct

Genesis of the report

I have done my summer training at SHAREKHANLtd. It is one of the reputed company& brand name

in the share broking companies in India.

During my interns I have got the practical knowledge of Stock market. Working in share khan I

have got to know that research team of Share Khan makes analysis of the companies & prepares

research report which contains information & news about different companies. Through this research

report researcher recommends investors about what stock should be buy, sale or hold etc. it contains the

performance of the companies. So investor can invest in stock market by reading this report. This

report appears daily on the Share Khan website. After getting this I have decided to do my summer

project on Equity research.

There is a lot of scope and growth opportunities in the Automobile sector. Development of

Automobile sector is the key for the economic growth of developing countries like India and so I have

selected this sector. During the training session I had observed the price rise and decline inthese sectors

every day. Even I have earned some money by trading in this sector companies.

This report constitutes the detailed analysis of automobile sector& Analysis of two companies.

EQUITY RESEARCH ON AUTOMOBILE SECTOR

OBJECTIVE OF STUDY

To acquire a deep knowledge of the Automobile Sector which I am studying.

To predict expected share price with the projected company’s financial performance (2009-

20010)

Fundamental analysis of the company.

Comparative analysis of Tata Motors & Mahindra & Mahindra.

To study the demand of Automobile sector.

Projection about improving performance of the company.

To evaluate management & internal business decisions.

Application of various fundamental & technical tools.


Share Khan ltd.

Name of the company- Share Khan ltd.

Year of establishment - 1925

Headquarter - Share Khan SSKI

A 206 phoenix house

Phoenix Mills Compound

Lower Parel Mumbai.

Nature of business - Service Provider

Services - Depository services, online services & technical research.

Website - www.sharekhan.com

Slogan - Your guide to financial jungle.

Vision - TO be the best broking brand in the retail broking business.

Mission - to educate & empower individual investor to make better investment decision through

quality advice & superior services.

Share Khan is the one of the leading retail brokerage company of SSKI group which is running

successfullysince 1022 in the country. It is the leading retail firm of Mumbai based SSKI group. Which

has over 8 decades of experience in retail broking? Sharekhan offers its customers wide range of equity

related services including trade execution on BSE, NSE, DERIVATIVES, DEPOSITORY SERVICES,

ONLINE TRADING & DMAT ACCOUNT.

The firms online site “ www.sharekahn.com” Was launched in 8 Feb 2000. the site give access to

superior content & transaction facility to retail customers across the country. The site has registered

base of over 100000 lakh client & number is increasing day by day. Share Khan stands for 32 % of the


http://www.sharekahn.com/

http://www.sharekhan.com/

volume traded online. The site is very user friendly. It gives superior market information. Share Khan

daily provides research report on its site. It involves recommendation to its clients regarding different

deferent stocks. Investor can get an idea about investment from this research report.

Share Khan Networks include over 588 centers in 148 cities in India of which 32 are fully owed

branches.

Share Khanalways believein investment in technology to build its business. The company has used

some of the best names in IT Industry. Like Sun Microsystem, Oracle, Microsoft, Cambridge

Technologies, Nexgenix, Spider Software pvt.ltd. To build its online trading terminal.

The Morakhiya family holds a majority stakes in company. HSBC, Intel & Carlyle are the other

investors.

With a legacy of more than 80 years in stock market, the SSKI group ventured in to institutional

broking & corporate finance 18 years ago. Presently SSKI is one of the leading players in institutional

broking & corporate finance activity. SSKI holds a Sizable portion of the market in each of this

segment. SSKI's institutional broking arm accounts for a 7 % of the market for foreign institutional

portfolio investment & 5 % of all the domestic institutional portfolio investment in the country. It has

60 institutional client spread over India, far East UK, & U.S. Foreign institutional investors generate

about 65 % of the organizations revenue, with a daily turnover of over US$ 2 million. The corporate

finance section has a list of very prestigious clients & has many first to its credit in terms of the size of

deal, sector tapped etc. The group has placed over US$ 1 million in private equity deals. Some of the

client includes BPL, Cellular holding, GujaratPipavav, Assar, Hutchison, Planet Asia, &Shoppers Stop.

Products offered by Share Khan-

BOLT for online trading

NEAT for online trading

Port Folio management services

Online trade & commodities

Mutual Fund Advisory

Insurance


Three types of online terminal

trade Tiger

classic

fast trade

1- Trade Tiger-

A single platform for multiple exchange BSE & NSE (Cash & F&O), MCX, NCDEX,

Mutual Funds, IPOs

Multiple Market Watch available on Single Screen

Multiple Charts with Tick by Tick Intraday and End of Day Charting powered with various

Studies

Graph Studies include Average, Band- Bollinger, Know SureThing, MACD, RSI, etc

Apply studies such as Vertical, Horizontal, Trend, Retracement & Free lines

User can save his own defined screen as well as graph template, that is, saving the layout for

future use

User-defined alert settings on an input Stock Price trigger

Tools available to guage market such as Tick Query, Ticker, Market Summary, Action Watch,

Option Premium Calculator, Span Calculator

Shortcut key for FAST access to order placements & reports Online fund transfer activated

with 12 Banks

2- classic account-

Online trading account for investing in Equities and Derivatives via sharekhan.com

Integration of: Online trading + Bank + Demat account

Instant cash transfer facility against purchase & sale of shares

Make IPO bookings

You get Instant order and trade confirmations by e-mail

Streaming Quotes


Personalized Market Scan with your own customized stock ticker!

Single screen interface for cash and derivatives

Your very own Portfolio Tracker!

Reasons to choose Share Kahn ltd.

Experience-

SSKI has more than 8 years of trust & credibility in the Indian Stock Market. SSKI has won the

“ best broking house award” in the year 2004. Share Khan has been providing Institutional research &

broking services to individual investors.

Technology-

with online trading account anyone who is having demat account in Share Khan can buy & sell

stocks instantly from any PC with an internet connections. The online trading terminal is technically

very strong & user friendly. You get all details regarding your demat account. Anyone can transfer his

fund online from bank account to demat account or from demat account to his bank account.

Knowledge-

Access to the wide range of information on content rich portal, also get a knowledge based tools

that will empower you to take right decisions.

Convenience-

You can call our “DIAL & TRADE” number to get investment advice & execute yor

transaction. Share Khan is having a dedicated call centre to provide this service via a toll free number

1800-22-7500 & 1800-22-7050.

Customer Service-

Share Khan Customer service team will assist you for any help that you need relating to

transactions, billing, demat & other queries. Customer service can be contracted via a toll free no, email

or online chat on “harekhan.com”.

Investment Advice-

Share Khan has a dedicated research team of more than 30 people for fundamental & technical

research. Analyst constantly tracks the pulse of the market & provides timely investment advice to you

in the form of daily research emails, online chats, printed reports & SMS on your mobile phone.


Sharekhan Demat Account

A Demat Account is an account which you need in India in order to buy and sell shares. Earlier

shares or stocks or a company were bought and sold in paper format. Now they are stored

electronically. Just like money is saved in your bank account, Shares are stored in your Demat Account

(sometimes also called DMAT account). You can open a Demat Account with sharekhan. This is

especially recommended if you have an online trading account with Share khan. You can then link you

Share khan trading account with your Share khan Demat Account so that any shares bought with the

trading account can be directly transferred to your Demat. Here is all information you need about Share

khan Demat Account.

Documents Needed to Open a Sharekhan Demat Account.

1. PAN Card. Pan card is now mandatory in order to open a Demat Account.

2. Address Proof. Example- your ration card, driver's licence, electricity bill, voters id or election

card, etc.

3. Your recent photographs. Two or three.

4. A cancelled check. This may or may not be required. But carry your bank passbook and check

book when you go to open a Sharekhan Demat Account.

Sharekhan Demat Account Charges

1. Share khan Demat Account Opening Charges: NIL

2. Share khan Demat Account Maintenance Charges: Rs. 75 per quarter, i.e. Rs. 300 per anum.

3. Share khan Demat Account Closing Charges: Rs. 100.

4. Brokerage -

for trading in Equity-

Intraday- 0.10%

Delivery- 0.50%

for trading in derivatives-


100 RS per lot.( per lot includes 50 shares)

5. Share khan Dematerialization Charges: RS.3 per certificate or RS.15 per request, whichever is

higher.

6. Share khan Demat Account Custody Fee: NIL

Minimum amount requires to open demat account- 5000 Rs. You can do trading from this

amount & 750 advance brokerage for 6 months validity. There are different plans for reducing the

amount of brokerage.

Scheme

Name

Period in

Months

Brokerage slab

Cash F&O

Trading Delivery Futures Options

%Min

(paisa)%

Min

(paisa)%

Min

(paisa)%

AMC

200012 0.07 5 0.40 10 0.07 1

2% of premium

or Rs. 90,

whichever is

higher

AMC

600012 0.05 5 0.25 5 0.05 1

1.5% of premium

or Rs. 75,

whichever is

higher

AMC

1800012 0.04 4 0.20 4 0.04 1

1% of premium

or Rs. 50,

whichever is

higher

Table 1: Brokerage slab


Indian Stock Market

Indian Stock market contains more than 20 stock exchanges, some of which are popular nationally as

well as regionally. The first stock market started in country was Bombay Stock Exchange(BSE ) stock

market. It’s the oldest stock market in Asia. It has around 5000 listings & a volume of more than US$

1 Trillion. The other most popular stock exchange is National Stock Exchange(NSE). Its also largest

stock exchange in the country & third in the world. These two Exchanges constitutes major part of

Indian Capital Market.

Purpose of stock market?

Stock markets basic role to provide platform for the people of the country to invest their

savings & also a source of funds for the various institutions & organizations. It provides an opportunity

for any person to become a part owner of the company by buying the companies share. One can deal in

variety of financial instruments such as Equity, futures & options, currency future, commodities etc.

Impact on the economy

Provides source of funding for the organization

An investment avenue

A source of income for investors

A source of revenue for government in the form of taxes.

A source of employment

Present scenario-

Current condition of Stock Market has drastically improved. SENSEX has already crossed 17000 Mark & Nifty has crossed 5000 mark. We have seen that in the recession SENSEX has come down to 8000 point from 21000. But now market is gearing up & crossed 17000 points. Lot of people invest in stock market. Indian Stock Market has been giving average 19% return on investment much more than returns which we get from bank or any other sources. Though the Indian Stock Market can be very rewarding avenue of investment but the constant changes & the inherent dynamic changes in


the market can wipe your funds or savings. Because market is very volatile. So every investor has to very alert & observant. People from across the country & globe get in touch with minute wise reading on the stock market & gain a lot of trading aptitude after daily seeing BSE Stop Gainers or BSE top losers list which does a world of good to their investment portfolio.

Stock AnalysisIndian Securities markets are touching new heights as it has surpassed 17,000 marks. More and

more investors are attracting towards equity investment and trading. But this is not always the case that

no one can assure you certain returns there is always uncertainty and risk in investment and that push

investors on back seats. Sometimes it becomes very difficult for investors to predict the share price of

the particular company in this very volatile market. It raises questions in investor’s mind that

At what price I should buy? When to sell it... hold?

As trading and investments are increasing on the markets as SEBI made it compulsory for all

the companies to disclose important information to its Shareholder and investor. So they can get as

possible as information about the companies of which they are holding the shares or going to buy.

now-a-days brokers and some analyst providing some future predictions of stocks price movements. So

now investment has become somewhat easy for investors.

This is done with a Stock Analysis getting the information about company and its price

movements on stock markets and tries to predict the value of shares. So, there is great importance of

stock analysis among investors. Stock analysis is usually done by Broking Firms. They recommends

there investors regarding buying & selling of shares.

Types of Stock Analysis-

1. Technical Analysis

2. Fundamental Analysis

Here we have selected a Fundamental analysis as subject of our project so we would do it in detail

with practical analysis. We would get only some flavor of technical analysis and then we would

understand about fundamental analysis.

TECHNICAL ANALYSIS1

1 http://en.wikipedia.org/wiki/Technical_analysis


“Technical analysis is a method of evaluating securities by analyzing the statistics generated by market

activity, such as past prices and volume. Technical analysts do not attempt to measure a security's

intrinsic value, but instead use charts and other tools to identify patterns that can suggest future

activity.”

Just as there are many investment styles on the fundamental side, there are also many different types of

technical traders. Some rely on chart patterns; others use technical indicators and oscillators, and most

use some combination of the two. In any case, technical analysts' exclusive use of historical price and

volume data is what separates them from their fundamental counterparts. Unlike fundamental analysts,

technical analysts don't care whether a stock is undervalued - the only thing that matters is a security's

past trading data and what information this data can provide about where the security might move in

the future. Technical analysis is very useful for short term investors.

The field of technical analysis is based on three assumptions: 2

1. The Market discounts everything.

2. Price moves in trends.

3. History tends to repeat itself.

1. The Market Discounts Everything

A major criticism of technical analysis is that it only considers price movement, ignoring

the fundamental factors of the company. However, technical analysis assumes that, at any given time, a

stock's price reflects everything that has or could affect the company - including fundamental factors.

Technical analysts believe that the company's fundamentals, along with broader economic factors and

market psychology , are all priced into the stock, removing the need to actually consider these factors

separately. This only leaves the analysis of price movement, which technical theory views as a product

of the supply and demand for a particular stock in the market.

2. Price Moves in Trends

In technical analysis, price movements are believed to follow trends. This means that after a trend has 2 ttp://www.tradegreeks.com/articles/Article-Technical-Analysis-Indepth1.htm


http://www.investopedia.com/terms/m/marketpsychology.asp

http://www.investopedia.com/terms/m/marketpsychology.asp

http://www.investopedia.com/terms/f/fundamentals.asp

been established, the future price movement is more likely to be in the same direction as the trend than

to be against it. Most technical trading strategies are based on this assumption.

3. History Tends To Repeat Itself

Another important idea in technical analysis is that history tends to repeat itself, mainly in terms of

price movement. The repetitive nature of price movements is attributed to market psychology; in other

words, market participants tend to provide a consistent reaction to similar market stimuli over time.

Technical analysis uses chart patterns to analyze market movements and understand trends. Although

many of these charts have been used for more than 100 years, they are still believed to be relevant

because they illustrate patterns in price movements that often repeat themselves.

Other Usage

Technical analysis can be used on any security with historical trading data. This includes stocks, futures

and commodities, fixed-income securities, forex, etc. these concepts can be applied to any type of

security. In fact, technical analysis is more frequently associated with commodities and forex, where

the participants are predominantly traders.

Strengths of Technical Analysis3

Focus on Price

If the objective is to predict the future price, then it makes sense to focus on price movements. Price

movements usually precede fundamental developments. By focusing on price action, technicians are

automatically focusing on the future. The market is thought of as a leading indicator and generally

leads the economy by 6 to 9 months. To keep pace with the market, it makes sense to look directly at

the price movements. More often than not, change is a subtle beast. Even though the market is prone to

sudden knee-jerk reactions, hints usually develop before significant moves. A technician will refer to

periods of accumulation as evidence of an impending advance and periods of distribution as evidence

of an impending decline.

3 ttp://www.tradegreeks.com/articles/Article-Technical-Analysis-Indepth1.htm


http://stockcharts.com/school/doku.php?id=chart_school:glossary_d#distribution

http://stockcharts.com/school/doku.php?id=chart_school:glossary_a#accumulation

http://www.investopedia.com/terms/d/daytrader.asp

http://www.investopedia.com/terms/f/forex.asp

http://www.investopedia.com/terms/c/commodity.asp

http://www.investopedia.com/terms/f/futures.asp

Supply, Demand, and Price Action

Many technicians use the open, high, low and close when analyzing the price action of a security.

Separately, these will not be able to tell much. However, taken together, the open, high, low and close

reflect forces of supply and demand.

Before the open, the number of buy orders exceeded the number of sell orders and the price was

raised to attract more sellers. Demand was brisk from the start. The intraday high reflects the strength

of demand (buyers). The intraday low reflects the availability of supply (sellers). The close represents

the final price agreed upon by the buyers and the sellers. Even after this selling pressure, the close

remained above the open. higher prices reflect increased demand and lower prices reflect increased

supply.

Support/Resistance

Simple chart analysis can help identify support and resistance levels. These are usually marked by

periods of congestion (trading range) where the prices move within a confined range for an extended

period, telling us that the forces of supply and demand are deadlocked. When prices move out of the

trading range, it signals that either supply or demand has started to get the upper hand. If prices move

above the upper band of the trading range, then demand is winning. If prices move below the lower

band, then supply is winning.

Pictorial Price History

A price chart can offer plenty of valuable information. The price chart is an easy to read historical

account of a security's price movement over a period of time. Charts are much easier to read than a

table of numbers. On most stock charts, volume bars are displayed at the bottom. With this historical

picture, it is easy to identify the following:

Reactions prior to and after important events.

Past and present volatility.

Historical volume or trading levels.

Relative strength of a stock versus the overall market.

Assist with Entry Point

Technical analysis can help with timing a proper entry point. Someanalysts use fundamental


analysis to decide what to buy and technical analysis to decide when to buy. It is no secret that timing

can play an important role in performance. Technical analysis can help spot demand (support) and

supply (resistance) levels as well as breakouts. Simply waiting for a breakout above resistance or

buying near support levels can improve returns.

Weaknesses of Technical Analysis

Analyst Bias

Just as with fundamental analysis, technical analysis is subjective and our personal biases can be

reflected in the analysis. It is important to be aware of these biases when analyzing a chart. If the

analyst is a perpetual bull, then a bullish bias will overshadow the analysis. On the other hand, if the

analyst is a disgruntled eternal bear, then the analysis will probably have a bearish tilt.

Open to Interpretation

Furthering the bias argument is the fact that technical analysis is open to interpretation. Even though

there are standards, many times two technicians will look at the same chart and paint two different

scenarios or see different patterns. Both will be able to come up with logical support and resistance

levels as well as key breaks to justify their position. While this can be frustrating, it should be pointed

out that technical analysis is more like an art than a science, somewhat like economics. Is the cup half-

empty or half-full? It is in the eye of the beholder.

Too Late

Technical analysis has been criticized for being too late. By the time the trend is identified, a

substantial portion of the move has already taken place. After such a large move, the reward to risk

ratio is not great. Lateness is a particular criticism of Dow theory.

Predictions may go wrong-

Sometimes predictions may go wrong. Analysis is done only by charts & past trends. Generally if a

particular stock going up it is predicted that this stock will go up in future also. If a stock of a particular

company increasing from last 1 year it is not sure that it will increase in future also. It may go down if

the company fails to perform well or any other economic reason.


Fundamental Analysis

Meaning: -Fundamental analysis is the examination of the underlying forces that affect the

wellbeing of the economy, industry groups, and companies. As with most analysis, the goal is to

derive a forecast and profit from future price movements.

At the company level, fundamental analysis may involve examination of financial data, man-

agement, business concept and competition.

At the industry level, there might be an examination of supply and demand forces for the

products offered.

For the national economy, fundamental analysis might focus on economic data to assess the

present and future growth of the economy.

Strengths of Fundamental Analysis

Useful for Long-term-

Fundamental analysis is good for long-term investments based on long-term. It is very

important for those who wants to invest in market for long term.

Value prediction-

Sound fundamental analysis help to identify companies that represent a good value. Some of

the most legendary investors think long-term and value. Graham and Dodd, Warren Buffett and

John Neff are seen as the champions of value investing.

Business Accuracy-

Fundamental analysis is the development of a thorough understanding of the business. After

research and analysis, an investor will be familiar with the key revenue and profit drivers

behind a company. Earnings and earnings expectations can be main drivers of equity prices. A

good understanding can help investors avoid companies that are to be going to shortfalls and


identify those that continue to deliver.

Weaknesses of Fundamental Analysis4

Time Constraints

Fundamental analysis may offer excellent insights, but it can be extraordinarily time-

consuming. It requires lot of research.

Industry/Company Specific

Valuation techniques vary depending on the industry group and specifics of each company. For

this reason, a different technique and model is required for different industries and different

companies. This can get quite time-consuming, which can limit the amount of research that can

be performed. A subscription-based model may work great for an Internet Service Provider

(ISP), but is not likely to be the best model to value an oil company.

Subjectivity

Fair value is based on assumptions. Any changes to growth or assumptions can greatly alter the

ultimate valuation. & i will cause loss to the investors.

Economic Analysis-

The purpose of analyze economic condition of the country in fundamental analysis to asses the

general economic situation both within the country and inter nationally.

The economy is like the tide and the various industry groups and individual companies are like

boats. When economy expands most industry groups and companies benefits and grows. When the

4 http://www.tradegreeks.com/articles/Article-Fundamental-Analysis-Indepth1.htm


economy declines, most sectors and companies usually suffer. The stock market does not operate in a

vacuum it is an integral part of ht whole economy of a country, more so in a free economy that of

United States and to some extent in mixed economy like ours.

To gain an insight into the complexities of stock market. One needs to develop a sound

economic understanding and be able to interpret the impact of important economic indicators on stock

markets.

The following are some important factors which should be taken into account while doing

fundamental analysis:

Economic Growth

Per capita income

Industrial Production

Inflation

Interest Rates

Foreign Exchange Reserves

Budgetary Deficit

Domestic Savings and Investment

Tax Rates

Infrastructure

Political Situation

In absolute terms, India is 16th in the world in terms of nominal factory output. The service

sector is growing rapidly in the past few years. This is the pie- chart showing contributions of different

sectors in Indian economy. The per capita Income is near about Rs38,000 reflecting improvement in the

living standards of an average Indian.

Today, automobile sector in India is one of the key sectors of the economy in terms of the

employment. Directly and indirectly it employs more than 10 million people and if we add the number

of people employed in the auto-component and auto ancillary industry then the number goes even

higher.


Figure 1: Composition of GDP by industries(08-09)

India GDP Growth Rate-

India Gross Domestic Product (GDP) expanded 8.5% over the last quarter. The India Gross Domestic Product is worth 1217 billion dollars or 1.96% of the world economy, according to the World Bank


Figure 2: Quarterly GDP growth

Contribution of automobile sector in GDP is about 5% & will be doubled by 2016.

FDI(Foreign Direct Investment)

In India FDI has been permitted up to 100% in automobile sector. Which has led to a turnover

of USD 12 billion in Indian Auto industry & USD 3 billion in auto parts industry. Manufacturing cost

in India is 25% to 30% lower than there foreign counterparts. Investment commission has set a target of

US $ 5 billion in next 7 years to increase the share of India in global Auto market. From existing .9 %

to 2.5 % by 2015.

Highlights of 2010-11 budget regarding Automobile Industry-

The correction in Excise duty on Electric Vehicles which will enable the manufacturers take

CENVAT credit and exemption of Customs duty on Electric Vehicles parts.

Payment made to an approved association engaged in research in Social Sciences or Statistical

Research will be allowed as a weighted deduction of 125 per cent. The income of such ap-

proved research association shall be exempted from tax.

increase in weighted deduction for in-house R&D to 200% from 150% and outsourced R&D

from 125% to 175%.


2% hike in Excise duty

The budget did not meet all the expectations as the sector is yet to recover fully from

recession.

Indian automobile industry is expected to grow at 9-11 % in near future.

From the above analysis we have seen that our economic condition is preferable to Automobile

Industry.

Industry Analysis

Brief history of Automobile Industry - In 1898 car had touched the Indian streets for the first time. The Automobile Industry in India

is the seventh largest in the world with an annual production of over 2.6 million units in 2009. In 2009,

India emerged as Asia's fourth largest exporter of automobiles, behind Japan, South Korea and

Thailand. By 2050, the country is expected to top the world in car volumes with approximately 611

million vehicles on the nations road.

Following economic liberalization in India in 1991, allowed foreign companies to enter into

India for the business purpose. The Indian automotive industry has demonstrated sustained growth as

a result of increased competitiveness and relaxed restrictions. Several Indian automobile manufacturers

such as Tata Motors, Maruti Suzuki and Mahindra and Mahindra, expanded their domestic and

international operations. In February 2009, monthly sales of passenger cars in India exceeded 100,000

units.

India’s automobile sector consists of the passenger cars and utility vehicles, commercial

vehicle, two wheelers and tractors segment. The total market size of the auto sector in India is

approximately RS. 540 billion and has been growing at around 8 percent per annum for the last few

years. Since the last four to five years, the two wheelers segment has driven the overall volume growth

on account of the spurt in the sales of motorcycles. However, lately the passenger cars and commercial

vehicles segment has also seen a good growth due to high discounts, lower financing rates and a pickup

in industrial activity respectively.


In the initial years after independence Indian automobile industry was plagued by unfavorable

government policies. All it had to offer in the passenger car segment was a 1940s Morris model called

the Ambassador and a 1960s Suzuki-derived model called the Maruti 800. The automobile sector in

India underwent a metamorphosis as a result of the liberalization policies initiated in the 1991.

Measures such as relaxation of the foreign exchange and equity regulations, reduction of tariffs on

imports, and refining the banking policies played a vital role in turning around the Indian

automobileindustry. Until the mid 1990s, the Indian auto sector consisted of just a handful of local

companies. However, after the sector opened to foreign direct investment in 1996, global majors moved

in. Automobile industry in India also received an unintended boost from stringent government auto

emission regulations over the past few years. This ensured that vehicles produced in India conformed to

the standards of the developed world.

Indian automobile industry has matured in last few years and offers differentiated products for different

segments of the society. It is currently making inroads into the rural middle class market after its

inroads into the urban markets and rural rich. In the recent years Indian automobile sector has

witnessed a slew of investments. India is on every major global automobile player's radar. Indian

automobile industry is also fast becoming an outsourcing hub for automobile companies worldwide, as

indicated by the zooming automobile exports from the country. Today, Hyundai, Honda, Toyota, GM,

Ford and Mitsubishi have set up their manufacturing bases in India. Due to rapid economic growth and

higher disposable income it is believed that the success story of the Indian automobile industry is not

going to end soon..


Figure3: Indian automobile industry


Industry Analysis

Analysis of automobile industry-

this is the pie chart showing segment wise market share in automobile induistry.

Figure 2: Composition of GDP by industries (08-09)

Figure 4: Proportion of different type of vehicles

FIVE FORCES MODEL-

Porter identifies five forces model that influences industry.

degree of rivalry-

Rivalry in the Indian Auto sector is intense due to entry of foreign companies. The rivalry is

too high because any new kind of product manufactured by a particular company is being is being

manufactured by competitors also. This is done because technical capabilities of companies under

the technical collaboration with foreign players.

Threat of Substitutes-

The threat of substitutes to the Automobile Sector is fairly low. Many forms of


transportation are available but none offered utility, convenience, independence & value offered by

automobiles. & the cost associated with other modes of transport may be high in terms of personal

time, convenience & utility.

Barriers to entry-

The barriers to enter automobile sector is substantial. For a new company the initial capital

require to establish new manufacturing setup up achieve minimum efficient scale is prohibitive. But

existing companies entered in to market by alliance with domestic partner acquiring stake. However

the domestic company with potentials & expertise has the potential to compete with foreign

players.

Suppliers Power-

Relationship between the industry & its suppliers the power is in favor of industry.The

industry is powerful buyer who is generally able to dictate their terms to suppliers.

Buyers Power-

In the relationship between industry & its consumers the power axis is in favor of its

consumers. This is because of the competition.

SWOT ANALYSIS

Scanning of internal & external factors of industry is very essential while analyzing the

Automobile industry. Internal factors include strengths, weakness & external factors includes

opportunities, threats.

Strengths-

Large domestic market

Sustainable labor cost advantage

Competitive Auto component vendor base

Government incentives for manufacturing plants

Strong engineering skills in design etc.


Weakness-

Low labor productivity

High interest cost & high overheads

various forms of taxes

low investment in research & developments

infrastructure problem

Opportunities-

Commercial vehicles- SC ban on overloading

Heavy thrust on mining & construction activity

increase in the income level

cut in excise duty

rising rural demand

Threats-

Rising input cost

Rising interest rates

Cut throat competition

Largest three wheeler market in the world.

2nd largest two wheeler market in the world.

4th largest passenger vehicle market in Asia.

4th largest tractor market in the world.


AUTOMOTIVE MISSION PLAN5

A mission for development of automobile industry

VISION

“To emerge as the destination of choice in

The world for design and manufacture of

Automobiles and auto components with

Output reaching a level of US$ 145 billion

Accounting for more than 10% of the GDP

And providing additional employment to

25 million people by 2016.”

The necessity of this Mission Plan arises in the background of a newfound strength and

resurgence in the Indian manufacturing sector. For most of the decade of the 1990s, post economic

deregulation in 1991, growth in the Indian economy has been led by growth in the service sector, a

growth that has overshadowed the growth in the manufacturing sector. In the past few years, several

industries in the Indian manufacturing sector have become internationally competitive and have

acquired a new energy to grow. Several industries, including the automotive industry, genuinely

believe that they can become world-beaters.

4.2 In developing a Mission Plan for India’s automotive sector, answer to the following questions

has been sought:

i) Where is automotive sector in India today? What linkages does the automotive sector have with

other facets of the India’s economy?

(ii) What do we want the automotive sector of India to look like in 2016? in other words, what is

the potential of 4th largest position in world to grow along other segments of its value chain. &

what can be the maximum impact on its shareholder.

(iii) How do we attain the vision? What policy interventions will facilitate the attainment of

this potential?

Vision for the Future: The opportunity landscape for the Indian auto industry would

encompass manufacture of vehicles and components for domestic sales, manufacture for exports (both

5 ttp://www.dhi.nic.in/draft_automotive_mission_plan.pdf


vehicles and components), and export of services in areas such as design, engineering, and back office

operations. It is estimated that the total turnover of the automotive industry in India would be in the

order of USD 122-159 billion in 2016 (a substantial increase from the size of USD 34 billion in 2006).

4. It is expected that in real terms, India would continue to enjoy its eminent position of being the

largest tractor and three wheeler manufacturers in the world and the world’s second largest two

wheeler manufacturer By 2016, India would emerge as the world’s seventh largest car producer

(as compared to the In eleventh largest currently) and retain the automotive sector to grow along

manufacturing sector. Further, by 2016 and the automotive sector would double its contribution to

the country’s GDP up to10 % the share of industry in GDP is expected to go up to around 35% from

current level of 24% by 2016.

So this Automotive Mission Plan is already helping Automobile sector & this plan contributes

to the growth of the Automobile Sector. & it will boost this sector in future also.

Current status of Indian Automobile Industry-

The time has gone when people just wanted to have vehicles as a means of transportation but

nowadays they are more aware about the vehicle model, their price and various other features. India

opened its gates for the foreign companies in 1991 various automobiles giants entered our country

seeking it as their target market. We Indians also got a wide variety of cars to choose from. Hyundai

entered in India with a view to capture the small market segment earlier captured mostly by two giant

Indian companies- Tata Motors and Maruti Udyog Limited.

Tata is one of the company in which the Indians trust like anything. It has diversified itself in a

number of sectors gaining the trust and proving its competence in every such field. Tata when come up

with a small car segments it was welcomed by people in the same way as it welcomed all its products.

It has a wide choice of four wheelers to satisfy the varied Indian choices. In the other hand MARUTI

also is said to capture the pulse of Indian middle class by giving them their MARUTI 800.To its wing it

added many other cars to competition to TATA motors.

TATA has Launched TATA NANO the world’s cheapest car. This was the remarkable point in

Indian Automobile history. This car is generally made for middle class people. Tata Nano’s launch

could expand the Indian car market by 65%. TATA has launched world’s cheapest car so now other

players will invent the car like TATA NANO. The customers will have the different options in that price


segment. Middle class people can afford Rs.1 lack car. This leads to increase in the number of car

holders. & this automatically leads to growth of car segment.

Indian Automobile Industry

Largest three wheeler market in the world.

2nd largest two wheeler market in the world.

4th largest passenger vehicle market in Asia.

4th largest tractor market in the world.

5th largest commercial vehicle market in the world.

The industry structure spans all segments and is concentrated in regional clusters

The India automotive sector has a presence across all vehicle segments and key components. In

terms of volume, two wheelers dominate the sector, with nearly 80 per cent share, followed by

passenger vehicles with 13 per cent. The industry had few players and was protected from global

competition till the 1990s. After government lifted licensing in 1993, 17 new ventures have come up.

At present, there are 12 manufacturers of passenger cars, 5 manufacturers of multi utility vehicles

(MUVs), 9 manufacturers of commercial vehicles, 12 of two wheelers and 4 of three wheelers, besides

5 manufacturers of engines. With the arrival of global players, the sector has become highly

competitive.

Concentrated in regional clusters


Automobile manufacturing units are located all over India. These are, however, concentrated in

some pockets such as Chennai and Bangalore in the south, Pune in the west, the National Capital

Region (NCR, which includes New Delhi and its suburban districts) in the north, Jamshedpur and

Kolkata in the east and Pithampur in the central region. Following global trends, the Indian automotive

sector also has most auto

Suppliers located close to the manufacturing locations of OEMs, forming regional automotive clusters.

Broadly, the three main clusters are centered around Chennai, Pune and the NCR.

Auto Components sector is highly fragmented

India is emerging as one of the most attractive automotive markets in the world, and is

poised to become a key sourcing base for auto components.

The Indian automotive component industry is highly fragmented. There-are nearly 6,400 players in the

sector, of which only about 6 per cent are organized and the remaining 94 per cent are small-scale,

unorganized players. In terms of value added, however, the organized players account for nearly 77 per

cent of the output in the sector. The sector manufactures components across all key vehicle systems.

The break-up of the output from the organized sector, in value terms, across key vehicle systems, is

shown in the figure.

Exports of automobiles from India are booming

While the domestic sales of automobiles have been increasing at a significant rate,exports have

taken a quantum leap in recent years. The exports of automobiles from India have been growing at a

CAGR of 39 per cent for the past four years.

Exports growth has been spearheaded by the passenger vehicle segment, which has grown at a

rate of 57.4 per cent. Europe is the biggest importer of cars from the country while predominantly

African nations import buses and trucks.The Association of South East Asian Nations (ASEAN) region

is the prime destination for Indian two wheelers.

Most of the key auto component manufacturers in India are very positive about the outlook for

exports, and expect about 15 per cent of their revenue to come from exports over the next 3-5 years. It

has been estimated that exports of auto components from India could be around US$ 20-25 billion by

2015.


Competitive Advantages

India has several competitive advantages in the automobile sector,which have been analyzed

using the following framework. Availability of skilled manpower with engineering and design

capabilities India has a growing workforce that is English-speaking, highly skilled and trained in

designing and machining skills required by

The automotive and engineering industries. In a combined assessment of manpower availability and

capabilities, India ranks much ahead of other competing economies (see figure).

Figure 5: India competitiveness compared to other industries

Many Indian and global players are leveraging this advantage by increasingly outsourcing activities

like design and R&D to their Indian arms. The Society of Indian Automobile manufacturers(SIAM)

estimates that automotive vehicle manufacturers are

Expected to invest US$ 5.7 billion in the Indian market from 2010 to 2012. Of this, about US$ 2.3

billion will be on research and development and the rest probably on capex.


Table 2: Key players in automobile industry

The Indian automobile industry is highly competitive with a large number of players in each

industry segment. Most of the global majors are present in the passenger vehicle and two wheeler

segments. In the components industry too,global players such as VISTEON, Delphi and Bosch are well

established,competing with domestic players. The presence of global competition has led to an overall

increase in capabilities of the Indian auto sector. Increase in competition has led to a pressure on

margins, and players have become increasingly cost efficient. Quality levels have gone up, and there is

an increasing focus on compliance to TPM, TQM and Six Sigma processes. This has led to an

increased confidence among domestic players, who are now focusing on opportunities abroad. Key

players in the components sector like Bharat Forge and Sundaram Fasteners have become key global

suppliers in their categories.


Expected Growth by 2015-16

Figure 6: potential vehicle sales

After this whole analysis of Automobile Industry we can say that though there are some

backlogs like regional clusters, some threats & weaknesses of Automobile Industry there are more

positive sign than the negative. There is a lot of potential in this industry. This is the industry which

will go day by day. Because the population level of India is increasing. Many of the villages in India is


2015-16

0 5 10 15 20 25 30

2.65

0.64

27.8

0.87

Potential Vehicle sales in India in 2015 - 16 ( in mn)

Three Wheelers Two wheelers CVs Cars

developing.

car segment -

today car is not meant for need only it becomes a luxury & income level of people is increasing this can b leads to increase in sale of cars.

TATA NANO RS. 1 lack car.

Petrol prices are increasing but it does not affect the sale of car because people gives more important to

need & luxury than the petrol & diesel prices.

Commercial vehicles-

today transportation facilities are developing.

Business is expanding so it leads to requirement of more & more commercial vehicles.

Two Wheeler-

Even lower middle class people can afford two wheelers. Today almost every company provides two

wheeler at a price of RS. 35000 to 40000.

it is cheaper than the other mode of transport & less time consuming.

So we can say that there is so much potential to invest in Automobile sector. in future also this

sector will grow.


Company Analysis-

i have taken two companies from the Automobile Sector-

1- TATA Motors

2- MAHINDRA & MAHINDRA

TATA MOTORS

TATA Motors Limited is India's largest automobile company, with consolidated revenues of RS. 92,519

crores (USD 20 billion) in 2009-10. It is the leader in commercial vehicles in each segment, and among

the top three in passenger vehicles with winning products in the compact, midsize car and utility

vehicle segments. The company is the world's fourth largest truck manufacturer, and the world's second

largest bus manufacturer.

The company's 24,000 employees are guided by the vision to be "best in the manner in which we

operate, best in the products we deliver, and best in our value system and ethics."

Established in 1945, Tata Motors' presence indeed cuts across the length and breadth of India. Over 5.9

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), Patagar (Uttarakhand) and Dhār wad (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 is establishing a

new plant at Sanand (Gujarat). The company's dealership, sales, services and spare parts network

comprises over 3500 touch points; Tata Motors also distributes and markets Fiat branded cars in India.

Tata Motors, the first company from India's engineering sector to be listed in the New York Stock

Exchange (September 2004), has also emerged as an international automobile company. Through

subsidiaries and associate companies, Tata Motors has operations in the UK, South Korea, Thailand


and Spain. Among them is Jaguar Land Rover, a business comprising the two iconic British brands that

was acquired in 2008. In 2004, it acquired the Daewoo Commercial Vehicles Company, South Korea's

second largest truck maker. The rechristened Tata Daewoo Commercial Vehicles Company has

launched several new products in the Korean market, while also exporting these products to several

international markets. Today two-thirds of heavy commercial vehicle exports out of South Korea are

from Tata Daewoo. In 2005, Tata Motors acquired a 21% stake in Hispano Carrocera, a reputed

Spanish bus and coach manufacturer, and subsequently the remaining stake in 2009. Hispano's presence

is being expanded in other markets. In 2006, Tata Motors formed a joint venture with the Brazil-based

Marco polo, a global leader in body-building for buses and coaches to manufacture fully-built buses

and coaches for India and select international markets. In 2006, Tata Motors entered into joint venture

with Thornburg Automotive Assembly Plant Company of Thailand to manufacture and market the

company's pickup vehicles in Thailand. The new plant of Tata Motors (Thailand) has begun production

of the Xenon pickup truck, with the Xenon having been launched in Thailand in 2008.

Tata Motors is also expanding its international footprint, established through exports since 1961. The

company's commercial and passenger vehicles are already being marketed in several countries in

Europe, Africa, the Middle East, South East Asia, South Asia and South America. It has franchisee/joint

venture assembly operations in Kenya, Bangladesh, Ukraine, Russia, Senegal and South Africa.

The foundation of the company's growth over the last 50 years is a deep understanding of economic

stimuli and customer needs, and the ability to translate them into customer-desired offerings through

leading edge R&D. With over 3,000 engineers and scientists, the company's Engineering Research

Centre, established in 1966, has enabled pioneering technologies and products. The company today has

R&D centers in Pune, Jamshedpur, Lucknow, Dharwad in India, and in South Korea, Spain, and the

UK. It was Tata Motors, which developed the first indigenously developed Light Commercial Vehicle,

India's first Sports Utility Vehicle and, in 1998, the Tata Indica, India's first fully indigenous passenger

car. Within two years of launch, Tata Indica became India's largest selling car in its segment. In 2005,

Tata Motors created a new segment by launching the Tata Ace, India's first indigenously developed

mini-truck.

In January 2008, Tata Motors unveiled its People's Car, the Tata Nano, which India and the world have

been looking forward to. The Tata Nano has been subsequently launched, as planned, in India in March

2009. A development, which signifies a first for the global automobile industry, the Nano brings the


comfort and safety of a car within the reach of thousands of families. The standard version has been

priced at Rs.100, 000 (excluding VAT and transportation cost).

Designed with a family in mind, it has a roomy passenger compartment with generous leg space and

head room. It can comfortably seat four persons. Its mono-volume design will set a new benchmark

among small cars. Its safety performance exceeds regulatory requirements in India. Its tailpipe

emission performance too exceeds regulatory requirements. In terms of overall pollutants, it has a

lower pollution level than two-wheelers being manufactured in India today. The lean design strategy

has helped minimize weight, which helps maximize performance per unit of energy consumed and

delivers high fuel efficiency. The high fuel efficiency also ensures that the car has low carbon dioxide

emissions, thereby providing the twin benefits of an affordable transportation solution with a low

carbon footprint.

In May 2009, Tata Motors introduced ushered in a new era in the Indian automobile industry, in

keeping with its pioneering tradition, by unveiling its new range of world standard trucks called Prima.

In their power, speed, carrying capacity, operating economy and trims, they will introduce new

benchmarks in India and match the best in the world in performance at a lower life-cycle cost.

Tata Motors is equally focused on environment-friendly technologies in emissions and alternative fuels.

. It has developed electric and hybrid vehicles both for personal and public transportation. It has also

been implementing several environment-friendly technologies in manufacturing processes,

significantly enhancing resource conservation

Through its subsidiaries, the company is engaged in engineering and automotive solutions, construction

equipment manufacturing, automotive vehicle components manufacturing and supply chain activities,

machine tools and factory automation solutions, high-precision tooling and plastic and electronic

components for automotive and computer applications, and automotive retailing and service operations.

Tata Motors is committed to improving the quality of life of communities by working on four thrust

areas – employability, education, health and environment. The activities touch the lives of more than a

million citizens. The company's support on education and employability is focused on youth and

women. They range from schools to technical education institutes to actual facilitation of income

generation. In health, our intervention is in both preventive and curative health care. The goal of

environment protection is achieved through tree plantation, conserving water and creating new water


bodies and, last but not the least, by introducing appropriate technologies in our vehicles and operations

for constantly enhancing environment care.

With the foundation of its rich heritage, Tata Motors today is etching a refulgent future.

Technical Chart

Figure 7: Technical chart


Profit & Loss account of Tata Motors ------------------- in Rs. Cr. -------------------

Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

12 mths 12 mths 12 mths 12 mths 12 mths

Total Income 17,747.15 21,197.95 28,128.31 29,461.60 26,343.92

Operating Profit 2,000.05 2,146.36 2,586.51 3,030.52 1,723.10

PBIT 2,404.03 2,998.77 3,700.89 3,764.69 2,644.39

Interest 234.30 350.24 455.75 471.56 704.92

Profit Before Tax 1,652.45 2,053.81 2,573.83 2,576.47 1,013.76

Reported Net Profit 1,236.95 1,528.88 1,913.46 2,028.92 1,001.26

Preference Dividend 0.00 0.00 0.00 0.00 0.00

Equity Dividend 452.19 497.94 578.07 578.43 311.61

Per share data (annualised)

Shares in issue (lakhs) 3,617.52 3,828.34 3,853.74 3,855.04 5,140.08

Earning Per Share (Rs) 34.19 39.94 49.65 52.63 19.48

Equity Dividend (%) 125.00 130.00 150.00 150.00 60.00

Book Value (Rs) 113.65 143.94 177.59 202.70 240.64


Table 3: P & L account of TATA motors

Quarterly Results of Tata Motors ------------------- in Rs. Cr. -------------------

Mar '09 Jun '09 Sep '09 Dec '09 Mar '10

Total Income 6,976.45 6,723.99 8,399.75 8,980.11 13,342.65Operating Profit 535.91 716.79 1,050.27 1,129.29 1,137.90Net Profit 591.42 513.76 729.14 400.14 597.04Dividend -- -- -- -- --Earnings Per Share 11.51 9.99 14.18 7.36 10.46Equity 514.05 514.05 514.05 543.96 570.60Face Value 10.00 10.00 10.00 10.00 10.00

Table 3:Quarterly P & L account of TATA motors

Analysis of profit & loss

Total income of the company in the year 2009-10 has increased drastically as compare to previous

year but in previous year income had gone down as compare to the year 2008. After a Sharp decline

in sales volume auto industry recovered with the sales growth in the year 2009-10. This is because

improved economic activity reflected by improvement in industry production, favorable impact ogf

government packages & overall improvement in financial environment.Because of increase in the

total income net profit of the company has also increased. Company didn’t pay any dividend in the

year 2009-10. Earning per share doubled as compare to previous year.


Balance sheet

(Rs. In crore) Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05

Sources of funds

Owner's fund

Equity share capital 514.05 385.54 385.41 382.87 361.79

Share application money - - - - -

Preference share capital - - - - -

Reserves & surplus 11,855.15 7,428.45 6,458.39 5,127.81 3,749.60

Loan funds

Secured loans 5,251.65 2,461.99 2,022.04 822.76 489.81

Unsecured loans 7,913.91 3,818.53 1,987.10 2,114.08 2,005.61

Total 25,534.76 14,094.51 10,852.94 8,447.52 6,606.81

Uses of funds

Fixed assets

Gross block 13,905.17 10,830.83 8,775.80 7,971.55 6,611.95

Less : revaluation reserve 25.07 25.51 25.95 26.39 -

Less : accumulated depreciation 6,259.90 5,443.52 4,894.54 4,401.51 3,454.28

Net block 7,620.20 5,361.80 3,855.31 3,543.65 3,157.67

Capital work-in-progress 6,954.04 5,064.96 2,513.32 951.19 538.84


Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05

Investments 12,968.13 4,910.27 2,477.00 2,015.15 2,912.06

Net current assets

Current assets, loans & advances 10,836.58 10,781.23 10,318.42 9,812.06 7,248.88

Less : current liabilities & provisions 12,846.21 12,029.80 8,321.20 7,888.65 7,268.80

Total net current assets -2,009.63 -1,248.57 1,997.22 1,923.41 -19.92

Miscellaneous expenses not written 2.02 6.05 10.09 14.12

18.12

Total 25,534.76 14,094.51 10,852.94 8,447.52 6,606.81

Notes:

Book value of unquoted investments 12,358.84 4,145.82 2,117.86 1,648.57 2,480.15

Market value of quoted investments 558.32 2,530.55 1,323.08 1,550.00 1,260.05

Contingent liabilities 5,433.07 5,590.83 5,196.07 2,185.63 1,450.32

Number of equity sharesoutstanding

(Lacs)5140.08 3855.04 3853.74 3828.34 3617.52

Table 4: Balance sheet of TATA motors

Analysis of Balance Sheet

Share capital of a company is continuously increasing. It means no. of shares also increasing.

Company is trying to raise more & more funds. Current liabilities of the company is more than the

current assets it means company’s liquidity position is so poor. Company is blocking more & more

funds in the form of fixed assets. Investment of the company has increased substantially in the year

2009 which may help the company in long run. But this investment increase the risk of the

company because there is a chances of losses on this investment. & if company earns profit through

this investment it will boost the company in long run.


Key Financial Ratios of Tata Motors

------------------- in Rs. Cr. -------------------

Mar '05

Mar '06 Mar '07 Mar '08 Mar '09

Dividend Per Share 12.50 13.00 15.00 15.00 6.00Profitability RatiosNet Profit Margin(%) 7.02 7.35 6.94 6.96 3.77Return On Net Worth(%) 30.09 27.74 27.96 25.98 8.09Return on Long Term Funds(%) 28.72 28.65 31.18 22.85 8.89Debt Equity Ratio 0.61 0.53 0.59 0.80 1.06Long Term Debt Equity Ratio 0.59 0.42 0.31 0.50 0.49Debt Coverage RatiosTotal Debt to Owners Fund 0.61 0.53 0.59 0.80 1.06

Earnings Per Share 34.19 39.94 49.65 52.63 19.48

Book Value113.6

5143.94 177.59 202.70 240.64

Table 5: Key financial ratios of TATA motors


Ratio Analysis

Dividend per share has decreased by 100 % from the year 2005 to 2009. Net profit margin also

decreased more than 100 %. In the year 2009 the company’s debt is more than its own fund. It is a

negative sign. Because higher the debt higher the risk.Earnings per share in the year 2009-10 were

approx. 39 RS. Doubled than the previous year. This leads to the growth prospects in future. Return

on long term funds are quite better.


-


Report Card-

PE ratio - 20.64 (15/7/2010)

EPS 39.26 Rs.

Sales 12,229.70 Rs.

Face Value 10 Rs

Net profit margin 3.77 % (Mar, 09)

Last bonus3:5 ( 28/09/95)

Last dividend 150 (27/05/10)

Return on avg. 8.09 (march 2009)

Equity

Table 6:Report card

Dividend paid by TATA MOTORS

Year Month Dividend (%)

2010 May 150

2009 May 60

2008 May 150

Table 7- Dividend paid by Tata Motors.

Share holding pattern as on : 30/06/2010 31/03/2010 31/12/2009

Face value 10.00 10.00 10.00

No. Of

Shares% Holding

No. Of

Shares% Holding

No. Of

Shares% Holding

Promoter's holding

Indian Promoters 23213396 36.17 187376876 37.00 182666241 38.08

Sub total 23213396 36.17 187376876 37.00 182666241 38.08

Non promoter's holding

Institutional investors

Banks Fin. Inst. and

Insurance649461 1.01 79506752 15.70 72352755 15.08

FII's 17141913 26.71 90736036 17.92 79801995 16.63

Sub total 32196708 50.17 181123079 35.77 162862945 33.95

Other investors

Private Corporate

Bodies2807249 4.37 2978660 0.59 2988981 0.62

NRI's/OCB's/Foreign

Others489478 0.76 27471578 5.43 28637088 5.97

Direcctors/

Employees46671 0.07 239972 0.05 238172 0.05

Govt - - 407181 0.08 407181 0.08

Others 221562 0.35 62719713 12.39 59565497 12.42

Sub total 3564960 5.55 93817104 18.53 91835419 19.14


Share holding pattern as on : 30/06/2010 31/03/2010 31/12/2009

General public 5201496 8.10 44064111 8.70 42371799 8.83

Grand total 64176560 100.00 506381170 100.00 479736404 100.00

Table 8: Share holding patterns

Share Market watch of TATA MOTORS

Month Price

August 449.45

September 489.35

October 580.10

November 551.85

December 629.50

January 792.60

February 707.95

March 668.70

April 739.65

May 844.60

June 673.70

July 798.05

Table 9: Share Market watch of TATA MOTORS


From the above table we can see that the share price of TATA MOTORS has almost doubled in the last

12 months. In the month of May it goes up to 872.85. it is very good performance. This trend shows

that the in future also market price of share will increase.

News related to TATA MOTORS TATA MOTORS raised US $ 750 through issue of global depository shares & convertible notes.

15-7-2010 Tata Motors global sales grew by 46 %.

07-7-2010 Tata Motors to invest RS. 10000 crore in 2 to 3

IndusInd Bank ties-up with Tata Motors for dealer financing.

Raising of long term capital funds

Tata Motors launches the all-new Tata Indigo e-CS, the most fuel efficient sedan in the country.

Tata Nano bags the Gold Prize in the 2010 Edison Awards

Tata Motors ties up with Indian Overseas Bank for financing its range of commercial vehicles

From above whole analysis we can say that there is a lot of potential to invest in this company.

on 17-7-2019 also the share price of TATA MOTRS was up by 30 Rs. TATA has launched TATA

NANO & acquired land rover & they are planning to invest more & more money. & TATA is brand on

which people blindly trust. So that’s why this company definitely gives maximum returns in the future.

Investment in long term is beneficial. Hike in fuel prices may affect the industry in short run. Then too

small investor can go for short term investment because fluctuation in share price is more.

.


http://www.tatamotors.com/our_world/press_releases.php?ID=573&action=Pull

Mahindra & Mahindra ltd.

Mahindra & Mahindra Limited. The Group's principal activities are to manufacture and distribute

automobiles and farm equipment. The Group also provides IT, Financial, trading and management

services. The Group operates in nine segments: Automotive, Farm equipment, IT services, Financial

services, Steel Processing and Trading, Infrastructure, Hospitality, Systech. The Automotive sector

manufactures multi utility vehicles and light commercial vehicles. The Farm equipment sector

manufactures and markets tractors. The IT segment comprises of services rendered to IT and Telecom.

The Financial services segment includes services like financing, leasing and hire purchase of

automobiles and tractors. Infrastructure comprise of operating of complex, Project management and

development. Hospitality comprise of sale of time share. SYSTECH comprise of automotive

components and other segment includes steel trading, project management, Investment and power plant


Mahindra & Mahindra Limited was set up in 1945 as Mahindra & Mohammed. Later in 1948 it’s name

changed to present Mahindra & Mahindra. Initially it manufactured light commercial vehicles (LCVs)

and agricultural tractors and later it grown rapidly into manufacturing of utility vehicles.

Mahindra & Mahindra Limited is part of the US $6.7 billion Mahindra Group. M&M has entered into

partnership with international companies like Renault SA, France, and International Truck and Engine

Corporation, USA. Its UV models include Scorpio, Bolero, Legend, Major, Commander and Logan.


Automotive Sector: Mahindra Group is the market leader in utility vehicles in India since inception.

Mahindra also manufactures and markets utility vehicles and light commercial vehicles, including

three-wheelers. Some of the famous automobile brands of Mahindra are: Scorpio and Bolero. Recently,

Mahindra joined hands with French automobile major Renault to enter passenger car segment. It has

launched a car called Mahindra Renault Logan.

Farm Equipment Sector: Mahindra is the largest producer of tractors in India and is among the top

five tractor brands in the world. It has its own state-of-the-art plants in India, USA, China and

Australia, and a capacity to produce 1,50,000 tractors a year.

Trade & Financial Services: Mahindra Limited and its subsidiaries have specialized domain

knowledge in imports and exports of commodities, domestic trading, marketing and distribution

services. Mahindra Finance is one of the largest Non-Banking Finance Companies in India with an

asset base of about RS. 5000 crores. Mahindra Insurance Brokers offer Life and Non-life Insurance

plans to retail and corporate customers. Mahindra Steel Service Centre is the first steel service center in

the organized sector in India.

Infrastructure Development: Mahindra Group has interests in real estate, special economic zones,

hospitality industry, infrastructure development, project engineering consultancy and design. Mahindra

Holidays & Resorts is the leader in the lifetime holiday market in India. Mahindra Gesco is fastest

growing Construction Company in India. Mahindra World City is developing and promoting India's

first Integrated Business City. Mahindra Acres Consulting Engineers is a multidisciplinary engineering

consultancy organization.

Information Technology: Mahindra Group entered into IT sector in 1986 when it formed a joint

venture with British Telecommunications plc. The company was called Mahindra-British Telecom. The

Company has recently changed its name to Tech Mahindra. Tech Mahindra is a leading provider of

telecommunication solution and service industry world-wide. It is India's 8th largest software exporter.

Specialty Businesses: Mahindra Group companies such as Mahindra AshTech, Mahindra Defense,

Spares Business Unit and Mahindra Logistics are into Specialty Businesses. Mahindra AshTech

undertakes turnkey contract execution for Ash Slurry System and Travelling Water Screens. Mahindra


Defense Systems looks after the requirements of India's defense and security forces. Mahindra

Logistics provide complete logistics solutions to complex transportation needs of clients across the

world.

While the world-class Scorpio (declared to be the ‘Car of the Year’ by CNBC Auto car, BBC Wheels

and Business Standard Motoring) is the Automotive Sector’s current flagship, it has many more

products that have made it popular with individuals and institutions in India and the world. The

Automotive Sector of the Mahindra Group is currently present in the multi-utility vehicle, light

commercial vehicle and three-wheeler segments. Now, with its joint ventures, it will have a presence in

the passenger car and the medium and heavy commercial vehicle segments too.

Mahindra Group is one of the largest corporate groups of India. It is a US $4.5 billion conglomerate

with employee strength of over 40,000. The group has diverse business interests such as automotive,

farm equipment’s, infrastructure, information technology, hospitality, and financial services. Mahindra

Group has global presence and it is ranked amongst Forbes Top 200 list of the World's Most Reputable

Companies and in the Top 10 list of Most Reputable Indian companies.

Technical Analysis chart


Figure 8: Technical analysis

Profit & Loss account of Mahindra and Mahindra

------------------- in Rs. Cr. -------------------


Net Sales 8,136.5 9,921.34 11,310.37 13,125.98 18,588.82Total Income 8,694.9 10,458.92 12,035.44 13,339.54 18,902.61

Operating Profit 871.55 1,136.23 1,157.65 1,092.25 2,955.24Reported Net Profit 857.10 1,068.39 1,103.37 836.78 2,087.75Preference Dividend 0.00 0.00 0.00 0.00 0.00Equity Dividend 243.97 282.23 282.61 278.83 549.52Per share data (annualized)Shares in issue (lakhs) 2,334.0 2,380.33 2,390.73 2,726.16 5,659.08Earnings Per Share (Rs) 36.72 44.88 46.15 30.69 36.89Equity Dividend (%) 100.00 115.00 115.00 100.00 190.00

Quarterly Results of Mahindra and Mahindra

------------------- in Rs. Cr. -------------------

Mar '09 Jun '09 Sep '09 Dec '09 Mar '10

Total Income 3,715.88 4,266.16 4,691.08 4,521.47 5,322.75Net Profit 418.07 400.85 702.94 413.70 570.26Dividend -- -- -- -- --Dividend (%) -- -- -- -- --Earnings Per Share 15.34 14.68 25.71 15.12 10.08Book Value -- -- -- -- --


Equity 272.62 272.98 273.36 273.56 282.95Face Value 10.00 10.00 10.00 10.00 5.00

Table 10: Quarterly results of Mahindra & Mahindra

Analysis of profit or loss accountSales of the company in the year 2019-2010get doubled as compare to year 2005-06. Sale increased by

more than 100 % in the span of 4 years. In March 2009 profit was down because of economic

slowdown. Shareholders get on an average 30 to 35 RS. As EPS. This is a positive sign for future

growth.

Dividend

Year Month Dividend (%)

2010 May 1902009 May 1002008 May 1152007 May 402007 Mar 752006 May 100Table 11: Dividend

Balance Sheet of Mahin-dra and Mahindra

------------------- in Rs. Cr. -------------------


Sources Of FundsTotal Share Capital 233.40 238.03 239.07 272.62 282.95Equity Share Capital 233.40 238.03 239.07 272.62 282.95Share Application Money 0.00 0.00 0.00 0.00 8.01Preference Share Capital 0.00 0.00 0.00 0.00 0.00

Reserves2,662.1

43,302.01 4,098.53 4,959.26 7,539.27

Revaluation Reserves 13.33 12.86 12.47 12.09 0.00

Networth2,908.8

73,552.90 4,350.07 5,243.97 7,830.23

Secured Loans 216.68 106.65 617.26 981.00 602.45


Unsecured Loans 666.71 1,529.35 1,969.80 3,071.76 2,277.70Total Debt 883.39 1,636.00 2,587.06 4,052.76 2,880.15Total Liabilities 3,792.2 5,188.90 6,937.13 9,296.73 10,710.38

Application Of Funds

Gross Block2,859.2

53,180.57 3,552.64 4,893.89 5,276.29

Less: Accumulated. Depreciation1,510.2

71,639.12 1,841.68 2,326.29 2,537.77

Net Block1,348.9

81,541.45 1,710.96 2,567.60 2,738.52

Capital Work in Progress 205.46 329.72 649.94 646.73 964.20

Investments1,669.0

92,237.46 4,215.06 5,786.41 6,398.02

Inventories 878.74 878.48 1,084.11 1,060.67 1,188.78Sundry Debtors 637.97 700.89 1,004.88 1,043.65 1,258.08Cash and Bank Balance 258.39 415.89 310.58 635.61 1,743.23

Total Current Assets1,775.1

01,995.26 2,399.57 2,739.93 4,190.09

Loans and Advances 558.02 1,011.50 866.19 1,402.45 1,852.30Fixed Deposits 471.92 910.18 550.65 938.82 0.00

Total CA, Loans & Advances2,805.0

43,916.94 3,816.41 5,081.20 6,042.39

Deferred Credit 0.00 0.00 0.00 0.00 0.00

Current Liabilities1,711.2

32,138.77 2,525.31 3,520.20 3,640.33

Provisions 543.14 715.43 943.46 1,277.56 1,796.54

Total CL & Provisions2,254.3

72,854.20 3,468.77 4,797.76 5,436.87

Net Current Assets 550.67 1,062.74 347.64 283.44 605.52Miscellaneous Expenses 18.05 17.55 13.53 12.55 4.12

Total Assets3,792.2

55,188.92 6,937.13 9,296.73 10,710.38

Table 12: Balance sheet of Mahindra & Mahindra

Analysis of balance sheetCompany has raised good amount of equity share capital in the year 2008 & 2009. Investment of the

company is also increasing. In the year 2009 company’s debt decreased by more than 100 %. Company

has paid their debt so the amount of risk of the company also decreased.


Key Financial Ratios of Mahindra and Mahindra

------------------- in Rs. Cr. -------------------

Mar '06

Mar '07 Mar '08 Mar '09 Mar '10

Dividend Per Share 10.00 11.50 11.50 10.00 19.00Profitability RatiosOperating Profit Margin(%) 10.71 11.45 10.23 8.32 15.89Net Profit Margin(%) 10.28 10.34 9.45 6.22 11.11Return On Net Worth(%) 29.60 30.18 25.51 16.03 26.70Return on Long Term Funds(%) 23.17 26.09 19.64 12.36 26.01Liquidity And Solvency RatiosCurrent Ratio 1.21 1.31 0.86 0.90 1.11Debt Equity Ratio 0.31 0.46 0.60 0.77 0.37Long Term Debt Equity Ratio 0.40 0.53 0.63 0.83 0.37Total Debt to Owners Fund 0.31 0.46 0.60 0.77 0.37Dividend Payout Ratio Net Profit 32.45 30.39 29.10 37.29 29.87Cash Earning Retention Ratio 65.14 72.28 71.61 70.69 73.66

Earnings Per Share 36.72 44.88 46.15 30.69 36.89Book Value 124.06 148.72 181.43 191.91 138.22

Table 13: Key financial ratios of Mahindra & Mahindra

Analysis of Ratio.

Company has paid 19 RS.Dividend per share in the year 2010. Means 9 RS. More than the

previous year. It states that company was able to earn more profit. Good amount of dividend holds the

interest of Share Holders. It is a positive sign so Company can raise more amount of share capital in

near future.Company is giving sufficient amount of return on its total net worth.

We can see that from the above ratios, every ratio shows downward trend in the year 2008-0

but company bounce back in the year 2009-10. In the year 2009-10 every ratio has increased compare

to previous year.


Report Card

Attribute Value DatePE ratio 16.37 16/07/10EPS (Rs) 36.89 Mar, 10Sales (Rscrore) 5,304.63 Mar, 10Face Value (Rs) 5 Net profit margin (%) 11.11 Mar, 10Last bonus 1:1 14/06/05Last dividend (%) 190 24/05/10Return on average equity 26.7 Mar, 10Table 14: Report card

Share market watch of Mahindra & Mahindra ltd.Month PRICEAugust 920.00September 847.30October 896.45November 921.95December 1028.25January 1062.40February 1019.40March 958.85April 549.55May 526.10June 519.45July 627.65

Table 15: Share market watch of Mahindra & Mahindra ltd.


Abovechart shows the share market prices of per month of Mahindra & Mahindra in last year share price has gone down from 920 to 627.


Share holding

Share holding pattern as on : 30/06/2010 31/03/2010 31/12/2009Face value 5.00 5.00 10.00

No. Of Shares

% Hold-ing

No. Of Shares

% Hold-ing

No. Of Shares

% Hold-ing

Promoter's holdingIndian Promoters 138114984 23.88 138114984 23.88 69063784 24.68Foreign Promoters 14070507 2.43 14254608 2.46 7127304 2.55Sub total 152185491 26.31 152369592 26.34 76191088 27.23

Non promoter's holdingInstitutional investors

Banks Fin. Inst. and Insur-ance

117220102 20.27 119657640 20.69 59592156 21.30

FII's 133190960 23.03 135337813 23.40 64064714 22.89Sub total 277852033 48.04 279081526 48.25 139908653 50.00

Other investorsPrivate Corporate Bodies 45672952 7.90 44223273 7.65 21273737 7.60NRI's/OCB's/Foreign Oth-ers

22274297 3.85 22122061 3.82 1645395 0.59

Govt 448442 0.08 445132 0.08 221416 0.08Others 30495372 5.27 30600421 5.29 16060852 5.74Sub total 98890069 17.10 97389943 16.84 39201200 14.01General public 49505891 8.56 49592473 8.57 24520124 8.76Grand total 578433484 100.00 578433534 100.00 279821065 100.00

Table 16: Share Holding pattern of Mahindra& Mahindra ltd.

News related to Mahindra & Mahindra


30-06-2010:M&M to acquire Boeing's Australian facility.

26-06-2010: Mahindra to invest RS. 250 crore in Aerospace.

Mahindra scores high on ET 500 list.

01-07-2010: Shortage of components constrained sales in June

M & M to acquire boings Australian facility.

Mahindra to invest re. 250 crore in Aerospace

From the whole company Analysis of Mahindra & Mahindra we have seen that the financial

result of a company for the year 2009-10 is quite good as compare to previous year but then too the

company’s share decreased by more than 300 RS.In last 12 months. At this moment long term

investment in Mahindra is much preferable. Because hike in fuel prices will affect the Automobile

Industry in short run.


Learning’s-

Whilemaking this project I have got the in-depth knowledge &learning’s

mentioned below.

Got the knowledge of equity market, equity analysis,

Fundamental & technical analysis of the company

Ratio analysis

Knowledge about trading.

Got deep knowledge of Automobile Industry

Got deep knowledge of Indian stock market, Economy.

There are different kinds of perceptions in the mind of investor while investing and it changes

from investor to investor

This study helps me to analyze the stock as per the objective of investment

Every investor needs to analyze the fundamental and technical aspects

Limitation of study

Study focused only on equity market. Have not taken derivatives & commodity market.

Analysis has been done on some parameters. Have not taken all the parameters which is required to

analyze the equity.


REFERENCES-

Web Sites-

www.moneycontrol.com

www.rediff.money.com

www.bseindia.com

www.ir.tatamotors.com

www.sharekhan.com

www.netequityresearch

Bibliography

Khan & Jain “Financial Management” 5th Edition, New Delhi, Tata Mc Hill,2003


http://www.netequityresearch/

http://www.sharekhan.com/

http://www.ir.tatamotors.com/

http://www.bseindia.com/

http://www.rediff.money.com/

http://www.moneycontrol.com/

Summer projct

Economy & Finance

Transcript of Summer projct