ANALYSIS OF AUTOMOBILE INDUSTRY

Over a period of more than two decades the Indian Automobile industry has been driving its own growth through phases. With comparatively higher rate of economic growth rate index against that of great global powers, India has become a hub of domestic and exports business. The automobile sector has been contributing its share to the shining economic performance of India in the recent years. To understand this industry for the purpose of investment we need to analyze it by the following approach:

Fundamental Analysis (E.I.C Approach)

a. Economy analysis b. Industry analysis c. Company analysis

Fundamental Analysis
Fundamental analysis is the study of economic, industry and company conditions in an effort to determine the value of a company s stock. Fundamental analysis typically focuses on key statistics in company s financial statements to determine if the stock price is correctly valued. Most fundamental information focuses on economic, industry and company statistics. The typical approach to analyzing a company involves three basic steps: 1. Determine the condition of the general economy. 2. Determine the condition of the industry. 3. Determine the condition of the company.

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

GDP and Automobile Industry

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.

Today, automobile sector in India is one of the key sectors of the economy in terms of the employment. Directly and indirectly it employs more than 10 million people and if we add the number of people employed in the auto-component and auto ancillary industry then the number goes even higher. As the world economy slipped into recession hitting the demand hard and the banking sector takes conservative approach towards lending to corporate sector. The Gross Domestic Product (GDP) in India expanded 6.9 percent in the third quarter of 2011 over the previous quarter. Historically, from 2000 until 2011, India's average quarterly GDP Growth was 7.45 percent reaching an historical high of 11.80 percent in December of

2003 and a record low of 1.60 percent in December of 2002. India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Services are the major source of economic growth, accounting for more than half of India's output with less than one third of its labor force. The economy has posted an average growth rate of more than 7% in the decade since 1997, reducing poverty by about 10 percentage points. The market value of Automobile Industry is more than US$8 bl. and Contribution in Indian GDP is near about 5% and will be double by 2016. The automotive industry in India grew at a computed annual growth rate (CAGR) of 11.5 percent over the past five years, but growth rate in last FY2008-09 was only 0.7% with passenger car sales shows 1.31% growth while Commercial Vehicles segment slumped 21.7%.

Recession
Auto industry in India had been hit hard by ongoing global financial recession. But it is in a good shape now. Much of this optimism resulted from renewed interest being shown in India auto industry by reputed overseas car makers. Nissan Motors which is a well known Japanese car making company regarded India automobile market as a global car manufacturing hub for future and invested huge amount in our market. There are some other automobile companies of world who have shown interest in India auto market. Major names among these are General Motors, Skoda Auto and Mercedes-Benz. These companies have major plans lined up for India auto industry. These are few signs of the revolutionized auto industry after recession. All the major auto companies enjoyed the high growth ride till the mid 2008. But at the end of the year, industry had to face the hard truth and witnessed the fall in sales compared to last year. In December 2008, overall production fell by 22 % over the same month last year. Global recession has hit the Indian auto industry, India is strong and growing industry but the impact of recession is evident now on industry as sales & growth of automobile companies have declined. Passenger Vehicles segment registered negative growth. One of its supporting facts is that the sales in December 2008 for passenger vehicles fell by 13.86% over December 2007 Two Wheelers registered minor growth of 1.85 % during April
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 December 2008. However, Two Wheelers sales recorded 15.43 percent fall in December 2008 over the same month last year. Although the sector was hit by economic slowdown, overall production (passenger vehicles, commercial vehicles, two wheelers and three wheelers) increased from 10.85 million vehicles in 2007-08 to 11.17 million vehicles in 2008-09. Passenger vehicles increased marginally from 1.77 million to 1.83 million while two-wheelers increased from 8.02 million to 8.41 million. Total number of vehicles sold including passenger vehicles, commercial vehicles, two-wheelers and three-wheelers in 200809 was 9.72 million as compared to 9.65 million in 2007-08.

Inflation
The rise in inflation will have adverse impact on the industry that will not only see interest rates getting further hardened but also a drop in demand due to the squeeze in purchasing power. The effect of inflation has affected every sector which is related to car manufacturing and production. The increase in the price of fuel and the steel due to inflation has led to a slower growth rate of the car industry in India. Despite of negative inflation these days (-.21% on 22-Aug-09) we saw an increasing trend of sales in auto sector. A moderate amount of inflation is important for the proper growth of an economy like India because it attracts more private investment. The fall in wholesale prices from a year earlier is mainly due to a statistical base effect and doesnt suggest contraction in demand, the Reserve Bank of India said few week back, while revising its inflation forecast for the FY through March to around 5% from 4%. In last FY despite of skyrocketing oil prices (crude oil price has already up to $130 compared to $20 per barrel five years back), Indian automobile Industry was not as much affected and experts think that Indian automobile industry will continue to grow this year despite all obstacles- oil price hike, higher interest rates. The effect of inflation has taken the rise in the price rate of the cars by 3-4% which in turn suffices the need to meet the rise in price of the raw materials to build a car. The car market and the car industry witnessed a fall of 8-9%.

Foreign Direct Investment

The automobile sector in the Indian industry is one of the high performing sectors of the Indian economy. This has contributed largely in making India a prime destination for many international players in the automobile industry who wish to set up their businesses in India. Automatic approval for foreign equity investment up to 100 per cent of manufacture of automobiles and component is permitted.

Exports
Despite recession, the Indian automobile market continues to perform better than most of the other industries in the economy in coming future; more and more MNCs coming in India to setup their ventures which clearly shows the scope of expansion. During April-January 2010, overall automobile exports registered a growth rate of 13.24 percent.

2. INDUSTRY ANALYSIS (AUTOMOBILE)

The automobile industry in India is the ninth largest in the world with an annual production of over 2.3 million units in 2008. In 2009, India emerged as Asia's fourth largest exporter of automobiles, behind Japan, South Korea and Thailand. 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. In 2009, estimated rate of growth of India Auto industry is going to be 9% .The Indian automobile sector is far from being saturated, leaving ample opportunity for volume growth.

Segmentation of Automobile Industry

The automobile industry comprises of Heavy vehicles (trucks, buses, tempos, tractors); passenger cars; Two-wheelers; Commercial Vehicles; and Three-wheelers. Following is the segmentation that how much each sector comprises of whole Indian Automobile Industry.

Industry life cycle

The industrial life cycle is a term used for classifying industry life over time. Industry life cycle classification generally groups industries into one of four stages: pioneer, growth, maturity and decline. In the pioneer phase, the product has not been widely accepted or adopted. Business strategies are developing, and there is high risk of failure. However, successful companies can grow at extraordinary rates. The Indian automobile sector has passed this stage quite successfully. The industry is growing rapidly, often at an accelerating rate of sales and earnings growth. Indian Automotive Industry is booming with a growth rate of around 15 % annually. The growth rate of the automobile industry in India is greater than the GDP growth rate of the economy, so the automobile sector can be very well be said to be in the growth phase.

Swot analysis:
A scan of the internal and external environment is an important part of the strategic planning process. Environmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats (T). Such an analysis of the strategic environment is referred to as a SWOT analysis. SWOT analysis of the Indian automobile sector gives the following points: 1. Strengths Large domestic market Sustainable labor cost advantage Competitive auto component vendor base Government incentives for 2. Weaknesses Low labor productivity High interest costs and high overheads make the production uncompetitive Various forms of taxes push up the cost of production Low investment in Research and Development Infrastructure bottleneck

manufacturing plants Strong engineering skills in design etc

3. Opportunities Increasing challenges in

4. Threats Ignorance of Research & development Rising interest rates Cut throat competition

consumer

demands,

technology

development, and globalization. Heavy thrust on mining and

construction activity Increase in the income level Cut in excise duties

3. COMPANY ANALYSIS
The company analysis shows the long-term strenght of the company that what is the financial position of the company in the market, where it stands among its competitors and who are the key drivers of the company, what are the future plans of the company, what are the policies of government towards the company and how the stake of the company divested among different groups of people. Here, I have taken three companies namely TATA Motors, Maruti Suzuki and Mahindra and Mahindra for the purpose of fundamental analysis.

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. Tata Motors Limited is Indias largest automobile company, reported gross revenue (standalone) of Rs.28599.27 crores (2007-08: Rs.33093.93 crores) in 2008-09, a year marked by severe demand contraction in the automobile industry. Revenues (net of excise) for the year were Rs. 25660.79 crores compared to Rs.28739.41 crores in 2007-08, a decline of 10.7%.
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The Profit before Tax was Rs.1013.76 crores compared to Rs.2576.47 crores in 2007-08, a decline of 60.7%. The Profit after Tax for the year was Rs.1001.26 crores compared to Rs.2028.92 crores, a decline of 50.7%. 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 worlds fourth largest truck manufacturer, and the worlds second largest bus manufacturer.

Maruti Suzuki is a subsidiary of Suzuki Motor Corporation Japan. More than half the numbers of cars sold in India wear Maruti Suzuki badge. They offer a full range of cars from entry level Maruti 800 & Alto to stylish hatchback Ritz, A star, Swift, Wagon R, Estillo and sedans Dzire, SX4 and Sports Utility Vehicle Grand Vitara. Since inception, it has produced and sold over 7.5 million vehicles in India and exported over 500,000 units to Europe and other countries. Its turnover for the fiscal 2008-09 stood at Rs. 203,583 Million & Profit after Tax at Rs. 12,187 Million. Maruti Suzuki is one of India's leading automobile manufacturers and the market leader in the car segment, both in terms of volume of vehicles sold and revenue earned. Until recently, 18.28% of the company was owned by the Indian government, and 54.2% by Suzuki of Japan. As of May 10, 2007, Govt. of India sold its complete share to Indian financial institutions. With this, Govt. of India no longer has stake in Maruti Udyog. Maruti Suzuki India Ltd. has sold a total of 84,808 vehicles in August 2009, an increase of 41.6%, compared to 59,908 vehicles in the same period of 2008. The company's domestic sales in August 2009 increased 29.3% to 69,961 vehicles, compared to 54,113 vehicles in August 2008. Total passenger car sales in August 2009 increased 30.5% to 69,629 units, compared to 53,351 units in August 2008 The company's exports increased 156.2% to 14,847 units, compared to 5,795 units in August 2008.

The Mahindra Groups Automotive Sector is in the business of manufacturing and marketing utility vehicles and light commercial vehicles, including three-wheelers. It is the market leader in utility vehicles in India since inception, and currently accounts for about half of Indias market for utility vehicles. The Automotive Sector continues to be a leader in the utility vehicle segment with a diverse portfolio that includes mass transport as well as new generation vehicles like Scorpio, Bolero and the recently launched Xylo. The Company operates in nine segments: automotive segment comprises of sales of automobiles, spare parts and related services; farm equipment segment comprises of sales of tractors, spare parts and related services; information technology (IT) services comprises of services rendered for IT and telecom; financial services comprise of services relating to financing, leasing and hire purchase of automobiles and tractors; steel trading and processing comprises of trading and processing of steel; infrastructure comprise of operating of commercial complexes, project management and development; hospitality segment comprises of sale of timeshare; Systech segment comprises of automotive components and other related products and services, and its others segment comprise of logistics, after-market, two wheelers and investment. During the fiscal year ended March 31, 2011, the Company acquired a 70% stake in Ssangyong Motor Company Limited.

TATA MOTORS
Balance Sheet of Tata Motors ------------------- in Rs. Cr. ------------------Mar '11 Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities 634.65 634.65 3.06 0.00 570.60 570.60 0.00 0.00 514.05 514.05 0.00 0.00 11,855.15 25.07 12,394.27 5,251.65 7,913.91 13,165.56 25,559.83 385.54 385.54 0.00 0.00 7,428.45 25.51 7,839.50 2,461.99 3,818.53 6,280.52 14,120.02 385.41 385.41 0.00 0.00 6,458.39 25.95 6,869.75 2,022.04 1,987.10 4,009.14 10,878.89 Mar '10 Mar '09 Mar '08 Mar '07

19,351.40 14,208.55 24.19 24.63

20,013.30 14,803.78 7,766.05 7,742.60 8,132.70 8,883.31 15,898.75 16,625.91 35,912.05 31,429.69

Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress 21,883.32 18,416.81 8,466.25 7,212.92 13,417.07 11,203.89 4,058.56 5,232.15 13,905.17 6,259.90 7,645.27 6,954.04 10,830.83 5,443.52 5,387.31 5,064.96 8,775.80 4,894.54 3,881.26 2,513.32

10

Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets

22,624.21 22,336.90 3,891.39 2,935.59 2,602.88 2,391.92 638.79 612.16

12,968.13 2,229.81 1,555.20 638.17 4,423.18 5,909.75 503.65 10,836.58 0.00 10,968.95 1,877.26 12,846.21 -2,009.63 2.02 25,559.83

4,910.27 2,421.83 1,130.73 750.14 4,302.70 4,831.36 1,647.17 10,781.23 0.00 10,040.37 1,989.43 12,029.80 -1,248.57 6.05 14,120.02

2,477.00 2,500.95 782.18 535.78 3,818.91 6,208.53 290.98 10,318.42 0.00 6,956.88 1,364.32 8,321.20 1,997.22 10.09 10,878.89

7,133.06 5,939.67 5,852.42 5,248.71 1,790.13 1,141.10 14,775.61 12,329.48 0.00 0.00

15,740.69 16,909.30 3,222.71 2,763.43 18,963.40 19,672.73 -4,187.79 -7,343.25 0.00 0.00

35,912.05 31,429.69

Contingent Liabilities Book Value (Rs)

4,798.83 3,708.33 314.93 259.03

5,433.07 240.64

5,590.83 202.70

5,196.07 177.59

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Profit & Loss account of Tata Motors

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

Mar '11 Mar '10 Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses 35,047.05 25,366.12 471.28 362.62 52,067.87 38,173.39 4,110.63 2,800.10 47,957.24 35,373.29 341.53 354.22 1,220.86 606.63

Mar '09

Mar '08

Mar '07

28,538.20 2,877.53 25,660.67 921.29 -238.04 26,343.92

33,123.54 4,355.63 28,767.91 734.17 -40.48 29,461.60

31,089.69 4,425.44 26,664.25 1,114.38 349.68 28,128.31

48,652.99 37,200.78

18,801.37 304.94 1,551.39 866.65 1,652.31 1,438.89 -916.02 23,699.53 Mar '09 1,723.10

20,891.33 325.19 1,544.57 904.95 2,197.49 964.78 -1,131.40 25,696.91 Mar '08 3,030.52

19,879.56 327.41 1,367.83 872.95 1,505.23 1,051.49 -577.05 24,427.42 Mar '07 2,586.51

2,294.02 1,836.13 1,753.46 1,289.60 2,790.19 2,126.10 2,067.42 1,707.06 -817.68 -740.54

43,605.74 31,947.09 Mar '11 Mar '10

Operating Profit

4,705.72 4,032.83

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PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs) MARUTI SUZUKI

5,047.25 5,253.69 1,383.79 1,246.25 3,663.46 4,007.44 1,360.77 1,033.87 106.17 144.03

2,644.39 704.92 1,939.47 874.54 51.17 1,013.76 15.29 1,029.05 12.50 1,001.26 4,898.16 0.00 311.61 34.09

3,764.69 471.56 3,293.13 652.31 64.35 2,576.47 0.00 2,576.47 547.55 2,028.92 4,805.58 0.00 578.43 81.25

3,700.89 455.75 3,245.14 586.29 85.02 2,573.83 -0.07 2,573.76 660.37 1,913.46 4,547.86 0.00 578.07 98.25

2,196.52 2,829.54 0.00 0.00

2,196.52 2,829.54 384.70 589.46

1,811.82 2,240.08 8,558.69 6,580.97 0.00 0.00

1,274.23 859.05 192.80 132.89

6,346.14 5,705.58 28.55 200.00 314.93 39.26 150.00 259.03

5,140.08 19.48 60.00 240.64

3,855.04 52.63 150.00 202.70

3,853.74 49.65 150.00 177.59

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Balance Sheet of Maruti Suzuki India

------------------- in Rs. Cr. ------------------Mar '11 Mar '10 Mar '09 Mar '08 Mar '07

Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities 144.50 144.50 0.00 0.00 144.50 144.50 0.00 0.00 144.50 144.50 0.00 0.00 9,200.40 0.00 9,344.90 0.10 698.80 698.90 10,043.80 Mar '09 144.50 144.50 0.00 0.00 8,270.90 0.00 8,415.40 0.10 900.10 900.20 9,315.60 Mar '08 144.50 144.50 0.00 0.00 6,709.40 0.00 6,853.90 63.50 567.30 630.80 7,484.70 Mar '07

13,723.00 11,690.60 0.00 0.00

13,867.50 11,835.10 31.20 278.10 309.30 26.50 794.90 821.40

14,176.80 12,656.50 Mar '11 Mar '10

Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors 11,737.70 10,406.70 6,208.30 5,382.00 5,529.40 5,024.70 1,428.60 387.60 5,106.70 7,176.60 1,415.00 1,208.80 893.30 809.90 8,720.60 4,649.80 4,070.80 861.30 3,173.30 902.30 918.90 7,285.30 3,988.80 3,296.50 736.30 5,180.70 1,038.00 655.50 6,146.80 3,487.10 2,659.70 238.90 3,409.20 713.20 747.40

14

Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets

95.50

98.20

239.00 2,060.20 1,809.80 1,700.00 5,570.00 0.00 3,250.90 380.70 3,631.60 1,938.40 0.00 10,043.80

324.00 2,017.50 1,173.00 0.00 3,190.50 0.00 2,718.90 369.50 3,088.40 102.10 0.00 9,315.60

114.80 1,575.40 1,072.60 1,308.00 3,956.00 0.00 2,288.60 490.50 2,779.10 1,176.90 0.00 7,484.70

2,403.80 2,116.90 1,626.30 1,739.10 2,413.00 0.00 6,443.10 3,856.00 0.00 0.00

3,805.20 3,160.00 525.80 628.40

4,331.00 3,788.40 2,112.10 67.60 0.00 0.00

14,176.80 12,656.50

Contingent Liabilities Book Value (Rs)

5,450.60 3,657.20 479.99 409.65

1,901.70 323.45

2,734.20 291.28

2,094.60 237.23

Profit & Loss account of Maruti

Suzuki India

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

15

Mar '11 Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost 28,880.00 210.20 703.60 40,865.50 4,304.00 36,561.50 784.60 73.20 37,419.30

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

32,174.10 23,381.50 21,200.40 17,358.40 2,856.40 2,652.10 3,133.60 2,552.00 29,317.70 20,729.40 18,066.80 14,806.40 662.00 200.90 491.70 -356.60 494.00 336.30 338.10 -200.70

30,180.60 20,864.50 18,897.10 14,943.80

22,636.30 15,983.20 13,958.30 10,863.00 216.60 545.60 193.60 471.10 147.30 356.20 523.30 521.48 287.62 -19.80 97.40 288.40 392.40 483.26 239.44 -14.30

Other Manufacturing Expenses 1,949.40 Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses Operating Profit PBDIT Interest 1,153.87 289.73 -25.70 33,161.10 3,473.60 4,258.20 24.40

1,061.60 716.10 1,032.17 817.66 201.73 0.00 236.84 -22.30

25,694.00 18,396.20 15,774.40 12,349.60 3,824.60 1,976.60 2,628.70 2,256.10 4,486.60 2,468.30 3,122.70 2,594.20 33.50 51.00 59.60 37.60

16

PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)

4,233.80 1,013.50 0.00 3,220.30 18.90 3,239.20 820.20 2,288.60 4,281.10 0.00 216.70 35.10

4,453.10 2,417.30 3,063.10 2,556.60 825.00 0.00 706.50 0.00 568.20 0.00 271.40 0.00

3,628.10 1,710.80 2,494.90 2,285.20 51.10 37.90 76.60 33.40

3,679.20 1,748.70 2,571.50 2,318.60 1,094.90 457.10 763.30 705.30

2,497.60 1,218.70 1,730.80 1,562.00 3,057.70 2,413.00 1,816.10 1,486.60 0.00 173.30 28.80 0.00 101.10 17.20 0.00 144.50 24.80 0.00 130.00 21.90

2,889.10 79.21 150.00 479.99

2,889.10 2,889.10 2,889.10 2,889.10 86.45 120.00 409.65 42.18 70.00 323.45 59.91 100.00 291.28 54.07 90.00 237.23

Mahindra and Mahindra

17

Balance Sheet of Mahindra and Mahindra

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

Mar '11 Mar '10 Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities 293.62 293.62 33.97 0.00 9,974.62 11.18 10,313.39 407.23 1,998.06 2,405.29 12,718.68 Mar '11 Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress 5,849.27 4,866.18 2,841.73 2,537.77 3,007.54 2,328.41 1,364.31 1,374.31 282.95 282.95 8.01 0.00 7,527.60 11.67 7,830.23 602.45 2,277.70 2,880.15 10,710.38 Mar '10

Mar '09

Mar '08

Mar '07

272.62 272.62 0.00 0.00 4,959.26 12.09 5,243.97 981.00 3,071.76 4,052.76 9,296.73 Mar '09

239.07 239.07 0.00 0.00 4,098.53 12.47 4,350.07 617.26 1,969.80 2,587.06 6,937.13 Mar '08

238.03 238.03 0.00 0.00 3,302.01 12.86 3,552.90 106.65 1,529.35 1,636.00 5,188.90 Mar '07

4,653.66 2,326.29 2,327.37 886.96

3,552.64 1,841.68 1,710.96 649.94

3,180.57 1,639.12 1,541.45 329.72

18

Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs)

9,325.29 6,398.02 1,694.21 1,188.78 1,354.72 1,258.08 447.62 475.17

5,786.41 1,060.67 1,043.65 635.61 2,739.93 1,402.45 938.82 5,081.20 0.00 3,520.20 1,277.56 4,797.76 283.44 12.55 9,296.73 1,220.39 191.91

4,215.06 1,084.11 1,004.88 310.58 2,399.57 866.19 550.65 3,816.41 0.00 2,525.31 943.46 3,468.77 347.64 13.53 6,937.13 985.35 181.43

2,237.46 878.48 700.89 415.89 1,995.26 1,011.50 910.18 3,916.94 0.00 2,138.77 715.43 2,854.20 1,062.74 17.55 5,188.92 1,008.27 148.72

3,496.55 2,922.03 2,653.52 2,034.47 167.02 1,268.06

6,317.09 6,224.56 0.00 0.00

5,289.67 3,822.50 2,005.88 1,796.54 7,295.55 5,619.04 -978.46 0.00 605.52 4.12

12,718.68 10,710.38 2,632.10 2,307.70 174.85 138.02

Profit & Loss account of Mahindra and Mahindra Mar

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

Mar '10

Mar '09

Mar '08

Mar '07

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'11 Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses Operating Profit PBDIT Interest 16,604.88 12,461.56 9,208.71 143.93 1,445.56 98.33 1,735.63 261.10 -50.87 120.97 1,199.85 96.92 1,439.26 264.21 -59.55 98.69 1,024.52 75.36 1,109.96 165.83 -42.83 7,963.82 91.33 853.65 73.35 1,108.33 257.84 -46.49 6,937.16 65.19 666.15 68.80 891.29 210.03 -47.10 25,569.55 20,323.63 14,668.13 12,894.94 11,231.99 2,092.02 1,807.30 1,587.05 1,584.57 1,310.65

23,477.53 18,516.33 13,081.08 11,310.37 9,921.34 563.13 202.23 285.09 23.69 132.65 -156.29 575.96 149.11 531.17 6.41

24,242.89 18,825.11 13,057.44 12,035.44 10,458.92

20,238.56 15,523.22 11,640.24 10,301.83 8,791.52 3,441.20 4,004.33 70.86 3,016.80 3,301.89 156.85 1,284.55 1,417.20 134.12 1,157.65 1,733.61 87.59 1,136.23 1,667.40 19.80

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PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)

3,933.47 413.86 0.00 3,519.61 0.00 3,519.61 857.51 2,662.10 3,633.68 0.00 706.08 96.56

3,145.04 370.78 0.00 2,774.26 72.49 2,846.75 759.00 2,087.75 3,061.66 0.00 549.52 74.23

1,283.08 291.51 0.00 991.57 48.97 1,040.54 199.69 836.78 2,431.53 0.00 278.83 33.23

1,646.02 238.66 0.59 1,406.77 0.00 1,406.77 303.40 1,103.37 2,338.01 0.00 282.61 38.48

1,647.60 209.59 0.33 1,437.68 -19.19 1,418.49 350.10 1,068.39 1,854.37 0.00 282.23 42.50

5,872.47 45.33 230.00 174.85

5,659.08 36.89 190.00 138.02

2,726.16 30.69 100.00 191.91

2,390.73 46.15 115.00 181.43

2,380.33 44.88 115.00 148.72

RATIO ANALYSIS OF TATA MOTORS, MARUTI SUZUKI AND MAHINDRA & MAHINDRA

EARNINGS PER SHARE

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Mar '11 Tata Motors Maruti Mahindra 28.55 79.21 45.33

Mar '10 39.26 86.45 36.89

Mar '09 19.48 42.18 30.69

Mar '08 52.63 59.91 46.15

Mar '07 49.65 54.07 44.88

EARNING PER SHARE

100 80 60 40 20 0 Mar '11 Mar '10 Mar '09 Mar '08 Mar '07 Tata Motors Maruti Mahindra

Interpretations
EPS measures the profit available to the equity shareholders per share, that is the amount that they can get on every share held. Till 2010 TATA and Maruti had a rising EPS but in 2011 both of them fall and the effect is more on Tata motors because of the slump in domestic and international markets and sharp fall in sales and net profits which resulted in low EPS. Mahindra is not much affected as its sales have increased from the previous year. But as trend shows Mahindra motors has potential so a shareholder can expect better in future.

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SALES
Mar '11 Tata Motors 52,067.87 Maruti Mahindra 40,865.50 25,569.55 Mar '10 38,173.39 32,174.10 20,323.63 Mar '09 28,538.20 23,381.50 14,668.13 Mar '08 33,123.54 21,200.40 12,894.94 Mar '07 31,089.69 17,358.40 11,231.99

SALES
60,000.00 50,000.00 40,000.00 30,000.00 20,000.00 10,000.00 0.00 Mar '11 Mar '10 Mar '09 Mar '08 Mar '07 Tata Motors Maruti Mahindra

Interpretations
Maruti and Mahindra show a positive trend in sales over the past five years. Though slowdown in the economy brought hurdles but these companies have potential to grow in future as lots of products are still to add in their portfolio. Moreover increased demand in foreign market also seems to be a positive signal for better future. TATA has witnessed a decline in sales of each segment. Maruti and Mahindra are going swiftly.

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DIVIDEND PER SHARE

Mar '11

Mar '10

Mar '09 Mar '08

Mar '07

Tata Motors Maruti Mahindra

20 7.5 11.5

15 6 9.5

6 3.5 10

15 5 11.5

15 4.5 11.5

DIVIDEND PER SHARE

20 18 16 14 12 10 8 6 4 2 0 Mar '11 Mar '10 Mar '09 Mar '08 Mar '07

Tata Motors Maruti Mahindra

Interpretations
Tata motors and Maruti Suzuki both the companies showed a positive trend in paying dividends till 2008, but the scenario changed in 2009 as both the companys dividend per share fell but again raised from 2010 . According to graph Tatas dividend has fallen drastically while Maruti stick to below 5 per share. Mahindra has made a slight reduction from rs.11.5 per share in 2008 to rs.10 per share this year. Therefore Mahindra would be the best option for an investor.

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RETURN ON INVESTMENT (ROI)

Mar '11 Tata Motors Maruti Mahindra 9.06 16.5 25.92

Mar '10 15.15 21.1 26.74

Mar '09 8.09 13.04 16.03

Mar '08 25.98 20.56 25.51

Mar '07 28 22.79 30.18

RETURN ON INVESTMENT (ROI)

40 30 20 10 0 Mar '11 Mar '10 Mar '09 Mar '08 Mar '07 Tata Motors Maruti Mahindra

Interpretations ROI is one of the most important ratios used for measuring the overall efficiency of a firm and determines whether the investments in the firms are attractive or not. According the graph, ROI of TATA has declined to a large extent in 2009, making it a quite risky investment. Marutis ROI has also declined but Mahindras ROI is showing a higher rate compared to TATA and Maruti in 2009. As the investors would like to invest only where the return is higher, Mahindra would be attractive for investment.

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DIVIDEND PAYOUT RATIO

Mar '11 Tata Motors Maruti 80.96 11

Mar '10 44.28 8.09 29.87

Mar '09 34.52 9.7 37.29

Mar '08 32.51 9.78 29.1

Mar '07 35.34 9.72 30.39

Mahindra 30.15

DIVIDEND PAYOUT RATIO

90 80 70 60 50 40 30 20 10 0 Mar '11 Mar '10 Mar '09 Mar '08 Mar '07 Tata Motors Maruti Mahindra

Interpretations
Dividend payout ratio is the percentage of earnings paid to shareholders in dividends. It provides an idea to an investor of how well earnings support the dividend payments. Maruti has maintained a stable payout ratio. Both TATA and Mahindra have increased their payout ratio in which Mahindra shows a higher payout ratio.

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CHAPTER V FINDINGS, SUGGESTIONS & CONCLUSION

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FINDINGS
From the data analysis and interpretations of the ratios of three companies viz. Tata Motors, Maruti Suzuki and Mahindra and Mahindra, the following findings have been given: The three companies were performing well till 2008 with a positive trend in the earnings per share. But there was a downward trend in 2009 but again from 2010 it was upward. Especially, TATA has witnessed a steep fall in the year 2009. The sales trend has been upward and positive in case of all the three companies. The sales growth looks positive but in the year 2009, TATAs sales have declined whereas Maruti and Mahindra have maintained the same upward positive trend. In case of dividend per share, there were fluctuations during the period 2007- 2011. Due to recession, the dividends per share have declined in all the three companies. Tatas dividend has fallen drastically while Maruti stick to below 5 per share. Mahindra has made a slight reduction from rs.11.5 per share in 2008 to rs.10 per share this year. The return on investment has been fluctuating since 2007 and the year 2011 witnessed low returns in case of all the companies amongst which TATA has the least rate of return. Compared to the three companies, Mahindra has the highest ROI in 2009. Maruti had a stable dividend payout ratio since 2007. TATA and Mahindra have increased their payout ratio in which Mahindra shows a higher payout ratio. By analyzing the current trend of Indian Economy and Automobile Industry I have found that being a developing economy there is lot of scope for growth and this industry still has to cross many levels so there are huge opportunities to invest in and this is being proved as more and more foreign companies are setting up there ventures in India. Increase in income level, increase in consumer demand, technology development, globalization, foreign investments are few of the opportunities which the industry has to explore for developing the economy.

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SUGGESTIONS
By analyzing the automobile industry with the help of fundamental analysis, it has been revealed that this industry has a lot of potential to grow. So recommending investing in Automobile industry with no doubt is going to be a good and smart option because this industry is booming like never before not only in India but all over the world. The three giants of Indian Automobile industry viz. TATA Motors, Maruti Suzuki and Mahindra and Mahindra have outperformed in the industry. From the company analysis, we can know that Mahindra would be a better option for an investor compared to TATA and Maruti. In view of the slump in the domestic and international market, TATA has recorded a slowdown in sales and income level. Its Earnings per share has also declined drastically. It has reduced its dividend per share from rs.15 in the previous year to rs.6 in 2009. The return on investment is also very low. In view of all these, TATA is not a better option for an investor. The global turmoil in financial markets has affected Maruti also. The company is maintaining a stable position. Its sales have grown over past five years. Inspite of the general economic slowdown, the sales of Maruti Suzuki increased from Rs 21200 Crore to Rs 23381 Crore. As it is maintaining a stable position, it can be recommended that for now Maruti share price shows that its a time to hold the position or buy more shares as there is scope of further rise in share prices. Despite the challenging business environment, Mahindra has maintained its upward sales level. Its Return on Investment is much higher compared to TATA and Maruti. The dividend per share is rs.10 which is higher amongst the three companies. The company has potential to grow. It would be the best option for the investor. Investing in Maruti Suzuki for long time could be a good option whereas in TATA motors there is a chance of getting correction, as it already went on high side in a very short period of time and is experiencing a downfall from 2008. Holding the shares for long time could be a wrong step and at this point of time those who invested earlier can book their profits. As Mahindras shares are undervalued, the investor can buy these shares. This is because a relatively lower P/E would save investors from paying a very high price that does not justify the value of an investment.

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Few Suggestions for Right Stock Selection

There are three factors which an investor must consider for selecting the right stocks.

Business: An investor must look into what kind of business the company is doing,
visibility of the business, its past track record, capital needs of the company for expansion etc.

Balance Sheet: The investor must focus on its key financial ratios such as earnings per
share, price-earning ratio; debt-equity ratio, dividends per share etc and he must also check whether the company is generating cash flows.

Bargaining: This is the most important factor which shows the true worth of the company.
An investor needs to choose valuation parameters which suit its business.

Investment rules
Invest for long term in equity markets Align your thought process with the business cycle of the company. Set the purpose for investment. Long term goals should be the objective of equity investment. Disciplined investment during market volatility helps attains profits. Planning, Knowledge and Discipline are very crucial for investment.

Recommendation
By analyzing the industry on various parameters Automobile Industry have no doubt is going to be a good and smart option because this industry is booming like never before not only in India but all around the world. The numbers which came out in the end of financial year 2009 prove that even in the period of recession the overall sales went up is sufficient to support to this fact. Investing in Maruti Suzuki for long time could be a good option whereas in TATA motors there is a chance of getting correction, as it already went on high side in a very short period of time so holding the shares for long time could be a wrong step, so at this point of time those who invested earlier can book their profit or new investors can buy now and sell with in short period of time by earning profit in short period of time.

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CONCLUSION
The collapse in market place witnessed unprecedented turbulence in the wake of global financial meltdown. A runaway inflation touching a high point of 12% early in the year, the tight monetary policies followed by the authorities for most of the year to control inflation with the consequent high interest rates and weak consumer demand, have collectively had a devastating effect on the automotive sector. During the financial year 2008-09 the there is downfall in the growth of the company. The main reason behind this downfall is because of the global recession. The downfall of net profit during the financial year 2008-09 is 29.6% over the financial year 2007-2008. TATA Motors, which was trying to consolidate its leadership position in the market, also had to face the impact of global meltdown. Amid the crippling economic crisis, Tata purchased Britains Jaguar Land Rover (JLR) from Ford Motor Company. Acquiring JLR saddled Tata with some tough losses. Dividends and earnings remain low. Inspite of it being a tough year for all the companies across the globe and in India, Mahindra has given a satisfactory performance. At present its shares are undervalued giving it a potential for growth. Global recession had a dampener effect on the growth of automobile industry but it was a short term phenomenon. The industry is bouncing back. One factor favoring this point is that India has become a hot destination for companies of diverse nature to invest in. Cut throat competition among top companies, lots of new car and vehicle model launches at regular intervals keeps the Indian auto sector moving. A continuous effort at cost cutting and improving productivity will help the companies in making reasonable profits despite the impact of higher commodity prices and weaker rupee. The analysis gives an optimistic view about the industry and its growth which recommends the investors to keep a good watch on the major players to benefit in terms of returns on their investments. Indian Automobile Industry is in the growth phase and the expected growth rate is 9-10% for FY2009-10 compare to last year growth rate which was just 0.7% and the above facts and figures in our study also support this truth. Indian Automobile has a lot of scope for both two wheelers and four wheelers due to development in infrastructure of the country and especially the rural sector in which demand of two wheeler has increased even in recession. According to Indian Statistical Organization the per capita income (Rs.38000) is increasing and national
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income at the rate of 14.4% which shows potential to buy vehicle in auto industry. The growth rate of Indian Automobile is so fast that by 2016 Indian Industry will be world 7 largest manufacturer in all sections. The Indian auto market is still untapped the majority of the people in country dont own a four wheeler and all the major auto companies are trying to increase their sales by several moves. Like TATA has launch NANO the peoples car and now TATA motors is also planning to come out with an electric car as well as hybrid car, moreover in two wheeler segment many companies like Mahindra and Mahindra grow even more than expectations. By analyzing the current trend of Indian Economy and Automobile Industry we can say that being a developing economy there is lot of scope for growth and this industry still have to cross many levels so there is huge opportunities to invest in and this is proving as more and more foreign Companies setting up there ventures in India.

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BIBLIOGRAPHY
www.nseindia.com www.bseindia.com www.investopedia.com www.moneycontrol.com www.indiainfoline.com www.sebi.gov.in www.tatamotors.com www.marutisuzuki.com www.mahindra.com www.yahoofinance.com

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