Automobile

Sector

EIC Analysis
Aakash Yadav – 17070
Aastha Mittal – 17066
Megha – 17072
Suraj Chawla – 17065
 Indian Economic Overview
• Overall PFCE growth has decreased in the June quarter to 3.1 per cent compared
to 7.2 per cent in the March quarter, contributing to the recent slowdown.
• There has been an increase in business of ride-sharing firms such as Ola and Uber,
which is resulting in reduced personal expenditure in cars and two-wheelers.
(#BoycottMillenials)
• Non-banking finance companies (NBFCs), or shadow banks, have dramatically
slashed lending following the collapse of one of the biggest, IL&FS, in late 2018. In
India, NBFCs have in recent years helped fund nearly 55-60% of commercial
vehicles both new and used, 30% of passenger cars and nearly 65% of the two-
wheelers in the country, according to rating agency ICRA.
• After the announcement of the imposition of an additional special excise duty of
Re 1 per litre and road and infrastructure cess of Re 1 per litre on both petrol and
diesel in the Union Budget 2019, prices of the two automobile fuels went up by
over ₹2 all over India.
• “The banking sector is certainly one of the factors that has affected the growth of
the industry,” said R.C. Bhargava, chair of Maruti Suzuki, noting interest rates for
car buyers have gone up in the last 12 months despite the RBI cutting the repo
rate. With regards to this, the government announced that banks have now agreed
to make EMIs cheaper for car loans.
 Fiscal Policy Measures
• The increase in the one-time vehicle registration fee, which the government had
earlier mooted, will be deferred until June 2020. The automobile industry had
argued that an increase in the vehicle registration fee would further hurt demand.
• BS4 vehicles purchased till March 2020 to be valid. This move is aimed to increase
consumer spending on BS4 compliant vehicles before March 2020, since their use
shall be valid up to the period of registration.
• A scrappage policy for vehicles older than 15 years is in the works and shall be
announced soon.
• The government will allow an additional 15 per cent depreciation, taking it up to 30
per cent, on all vehicles acquired from now till March 2020. However, this move has
been criticised for having minimal impact on consumer segments such as cars and
two-wheelers, where the automobile industry has been hit the hardest.
• Plans to make Indian vehicles fully electric by 2030 has bruised consumer
confidence in petrol/diesel engines. Fearing obsolescence, consumers are unwilling
to spend on new vehicles.
• No slashes in GST were announced, however, both consumers and the industry are
expecting such a measure to be declared soon. Due to an expectant decrease in
GST rates, consumer purchases have slowed down.
 Automobile Industry – Overview

The automobile sector is one The prolonged demand As of February 2019, inventory Passenger vehicle sales fell for The Indian Automobile Industry
of the largest employers in the slowdown has triggered levels touched a peak 50-60 eight straight months until has to adapt fast and move
country, employing about 37 production as well as job cuts days for passenger vehicles, 80- June, and in May sales dropped according to consumer
million people, directly and in the sector. According to the 90 days for two-wheelers and 20.55% - the sharpest recorded demands, if support is not
indirectly. It contributes more latest figures that are available, 45-50 days for commercial fall in 18 years. implemented from the
than 7% towards India’s GDP original equipment vehicles. The ideal established Government, the staggering
and accounts for 49% of our manufacturers (OEMs) have level is 21 days of inventory. slowdown shall continue.
manufacturing GDP. removed about 15,000 This necessitated production
temporary workers in the past cuts from manufacturers and
two to three months. “A lack of retrenchment of labour to cut
working capital amid tepid costs. - FADA
demand has led to closure of
nearly 300 dealerships across
the country.” – The Hindu,
August 2019
Automobile Production Trends
Category 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Passenger Vehicles 3,087,973 3,221,419 3,465,045 3,801,670 4,020,267 4,026,047
Commercial Vehicles 699,035 698,298 786,692 810,253 895,448 1,112,176
Three Wheelers 830,108 949,019 934,104 783,721 1022,181 1,268,723
Two Wheelers 16,883,049 18,489,311 18,830,227 19,933,739 23,154,838 24,503,086

Automobile Domestic Sales Trends

Category 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Passenger Vehicles 25,03,509 26,01,236 27,89,208 30,47,582 32,88,581 33,77,436
Commercial Vehicles 6,32,851 6,14,948 6,85,704 7,14,082 8,56,916 10,07,319
Three Wheelers 4,80,085 5,32,626 5,38,208 5,11,879 6,35,698 7,01,011
Two Wheelers 1,48,06,778 1,59,75,561 1,64,55,851 1,75,89,738 2,02,00,117 2,11,81,390

- Society of Indian Automobile Manufacturers (SIAM)

Important Highlights
• July 2019 data released by SIAM showed that overall sales (as compared to July 2018) were down by 18%.
Car sales were down by 35%, commercial vehicles were down by 25% and two-wheelers were knocked
back by 16%. The automobile industry had witnessed their worst month in nearly two decades.
• Segment of finished passenger automobiles—has been characterized by very high import tariffs that are
anywhere from 60% to as high as 125% in some cases, making India one of the highest import tariff
jurisdictions in this sector among major economies.
• According to a 2016 research report by the World Bank, labour productivity in India in the automobile
sector is only one-third of that in China. Due to low productivity and an inefficiently low scale of
production, in general, Indian automobiles are uncompetitive in the global market.
• Commercial vehicle sales have also dropped due to the government initiated increase in axle load limit
for all trucks (in August 2018). As per CRISIL estimates, this move resulted in the increase in the freight
capacity of the entire population of trucks operational in India by 20-25 per cent.
• Decisions from the government are also coming at a slow pace due to debate and deliberation over the
higher than average margins expected by automobile manufacturers in India.
Maruti Suzuki India Ltd.
 About Company

Maruti Udyog Limited was Maruti Udyog Limited was In 1982, a license and joint Mission of the company is to Ravindra Chandra Bhargava is
established by government of renamed as Maruti Suzuki India venture agreement (JVA) was meet the fast changing demand the former C.E.O and
India in February 1981, though Limited on 17th September signed between Maruti Udyog of personal mode of transport current chairman of the
the actual production started in 2007. Ltd, and Suzuki of Japan. Suzuki caused by lack of an efficient company.
1983 with the Maruti 800. Motor Corporation is the small public transport system.
car manufacturing segment
market leader in Japan.
 Expansion of the Company
In October 2, 1982, the company
In the year 1983, the company In the year 1990, the company
Incorporated on February 24, 1981 signed the license and joint venture
started their productions and launched India's first three-box car,
with the name Maruti Udyog Ltd. agreement with Suzuki Motor
launched Maruti 800 Sedan
Corporation, Japan

In November 2006, they

In 2002, found one new business In year 2006-07, company
In the year 1997, company started inaugurated a new institute of
segment, Maruti True Value for commenced operations in new
Maruti Service Master Driving Training and Research
sales plant at Manesar, Haryana
(IDTR)

On 15 September 2016, Maruti

Suzuki announced that it has signed
The company changed its name On 9 December 2016, Maruti
In 2012, the global premiere of a Memorandum of Understanding
from Maruti Udyog Ltd to Maruti Suzuki India signed a Memorandum
Ertiga marks the entry of the (MoU) with Uber India to train over
Suzuki India Ltd with effect from of Understanding (MoU) with Ola,
company in the UV segment 30,000 individuals/Uber partner-
September 17, 2007. to train aspiring Ola driver-partners
drivers in safe driving over a period
of 3 years
 Product Range

Hatchback MUVs/SUV
Sedans Vans
s s
Alto
Alto K10 Dezire Ertiga Eeco
Big New
WagonR
Celerio
Celerio X Vitara
Brezza
Swift
 SWOT Analysis

Strength Weakness Threats Opportunities

Strong brand image Inability to penetrate with Substitute mode of Capacity to target
Diversified product range international market transport emerging markets across
Comparatively low Increasing fuel prices the world
Largest network of
dealers and after sales interior quality of cars Introduction of electronic
services in Indian market cars in market
 Key Ratios
45

Performan 40 39.6

ce 35

30

25
23.8

• There is a decrease in EBIT 20

but it is less than the 16.52
15
major decrease in interest 13.51 12.97
expense of the company 10 10.46
during 2018-19, give rise 8.1 8.25
to a major change in 5
Interest coverage ratio
0.42
0 0.35 0.23 0.43
during 2018-19. 2016-17 2017-18 2018-19 Latest

Debt-Equity Ratio Interest Coverage Ratio ROCE (%)

Net Sales
 Sales Volume

•One of the main reasons for

the decline in exports is
Indonesia has imposed
restriction on passenger
vehicle imports to reduce
trade deficit.
Recent Performance
Tata Motors
Company
Analysis
 Company Overview
Tata Motors Limited is an Indian multinational automotive manufacturing company. Formerly known as TELCO (Tata Engineering and
Locomotive Company), it is headquartered in Mumbai and is a subsidiary of the Tata Group – one of the biggest business houses in India.

Its product portfolio covers passenger cars, trucks, vans, coaches, buses, military vehicles and construction equipment. In terms of volume,
it is the world’s 17th largest motor vehicle manufacturing company, 4th largest truck manufacturer and 2nd largest bus manufacturer.

Tata Motors has auto manufacturing and assembly plants in Jamshedpur, Pantnagar, Lucknow, Sanand, Dharwad and Pune in India; and also
in Argentina, South Africa, Thailand, and the United Kingdom. It has R&D centers in multiple locations across India along with those in
South Korea, Spain and the United Kingdom.
Tata Motors is listed on the Bombay Stock Exchange (BSE), where it is a constituent of the BSE SENSEX index, the National Stock Exchange of
India (NSE) and the New York Stock Exchange (NYSE).

Management :
Mr. Guenter Butschek-CEO and Managing Director
Mr. N Chandrasekaran-Non-Executive Director and Chairman
Dr. Ralf Speth-Non-Executive Director
Mr. O P Bhatt-Non-Executive, Independent Director
Ms. Hanne Sorensen
Non-Executive, Independent Director
Ms. Vedika Bhandarkar-Non-Executive, Independent Director
 Notable Product Offerings
Tata Nano
The Nano was launched in 2009 as a city car intended to appeal as an affordable alternative to the section of the Indian populace that is primarily
the owner of motorcycles and has not bought their first car. Initially priced at ₹100,000 (US$1,500), the vehicle attracted a lot of attention for its relatively
low price. In 2018, Cyrus Mistry, Chair of the Tata Group, called the Tata Nano a failed project, with production ending in May 2018.

Tata Ace
Tata Ace, India's first indigenously developed sub-one-ton minitruck, was launched in May 2005. The minitruck was a huge success in India with auto
analysts claiming that Ace had changed the dynamics of the light commercial vehicle (LCV) market in the country by creating a new market segment termed
the small commercial vehicle segment

Tata Prima
Tata Prima is a range of heavy trucks first introduced in 2008 as the company's 'global' truck. Tata Prima was the winner of the 'Commercial Vehicle of the Year'
at the Apollo Commercial Vehicles Awards, 2010 and 2012

Tata Harrier
Tata Harrier is a 5-seater SUV set to rival the Hyundai Creta and Jeep Compass. It is derived from the H5X Concept displayed at the 2018 Auto Expo. It was
launched on 23 January 2019.

Jaguar, Land Rover

Jaguar Land Rover PLC is a British premium automaker headquartered in Whitley, Coventry, United Kingdom, and has been a wholly owned subsidiary of
Tata Motors since June 2008, when it was acquired from Ford Motor Company of USA. Its principal activity is the development, manufacture and sale of
Jaguar luxury and sports cars and Land Rover premium four-wheel-drive vehicles.
 Competitor Analysis
1. Eicher Motors
• Eicher Motors Limited is a leading player in the Indian automotive sector. Its 50:50 joint venture with the Volvo group (VE Commercial Vehicles Limited) designs,
manufactures and markets reliable, fuel-efficient trucks and buses
• Royal Enfield – the oldest motorcycle company in continuous production world-wide – has witnessed a huge surge in demand in the recent past
2. Mahindra & Mahindra
 It is one of the largest vehicle manufacturers by production in India and the largest manufacturer of tractors across the world.
 It was ranked as the 10th most trusted brand in India (by The Brand Trust Report India Study 2014).
 It produces a wide range of vehicles which include Multi Utility Vehicles, Light Commercial Vehicles and three wheelers. It manufactures over 20 models of cars
which include larger, multi-utility vehicles like Scorpio and Bolero.
3. Ashok Leyland
 It is the 2nd largest commercial vehicle manufacturer in India, 4th largest manufacturer of buses in the world and 16th largest manufacturer of trucks globally.
 Its joint ventures include Leyland – Deere Limited (with John Deere – an American corporation), Nissan Ashok Leyland&Ashok Leyland Defence Systems (a
subsidiary).
4. Force Motors
 Force Motors was formerly known as Bajaj Tempo.
 It operates in five segments: SCV – Small Commercial Vehicles, MUV – Multi-Utility Vehicles, LCV – Light Commercial Vehicles, SUV – Sports Utility Vehicles and
Agricultural Tractors.
 Weaknesses
Strengths
• Limited coverage of the rural market
• Market leader in commercial vehicles
• Slow reaction to market sentiment (SUV
segment and among the top in passenger
segment)
vehicles segment
• Perception problem among new car buyers as it is
• Increasing profitability from international
famous in taxi and car rental space
sales since Jaguar and LandRover acquisition
• Fewer upgrades available – fewer models released
• Increased expenditure on R&D(such as
over the last few years as compared to its
Revotron 1.2T engine)
competitors

SWOT
ANALYSIS
Opportunities Threats
• Rising per-capital income of the middle class • Increased cost of fuel
which will boost the demand • Intense competition in the automobile sector
• Customizing product offerings for the rural • Frugal engineering and disruptive innovation in
markets product design by competitors
• Mergers and acquisitions to acquire new • Increase in raw material costs
technology • Increase in interest rates leading to deffered
• Demand for electric cars will increase as purchases
people adopt eco-friendly techniques
TATA MOTORS 2018-19 Analysis
 
TATA MOTORS Balance Sheet Analysis (Rs in Crs.)
• The company's current liabilities during FY19 stood at Rs 169,940.00 as compared to Rs 180,263.30 in FY18, thereby
witnessing an decrease of -5.7%.
• Total debt stood at Rs 186,396.30 during FY19 as compared to Rs 184,638.40 during FY18, a growth of 0.95%.
• Total Current assets fell 5.39% and stood at Rs 117,961.20 in FY19.
• Overall, the total assets and liabilities for FY19 stood at 424,827.80 as against 401,466.70 during FY18, thereby
witnessing a increase of 5.81%.
 
TATA MOTORS Cash Flow Statement Analysis
• Cash flow from operating activities (CFO) during FY19 stood at Rs 188,907.50 on a YoY basis with a decrease of 20.8%.
• Cash flow from investing activities (CFI) during FY19 stood at Rs -208,780.70 on a YoY basis.
• Cash flow from financial activities (CFF) during FY19 stood at Rs 88,303.70, an improvement of 339% on a YoY basis.
• Overall, net cash flows for the company during FY19 stood at Rs 68,430.50 from the Rs 7,299.90 net cash flows seen during
FY18.
Current Valuations for TATA MOTORS
The price to earnings (P/E) ratio, stands at 29.29 times its trailing twelve months
earnings.
The price to book value (P/BV) ratio at current price levels stands at 2.67 times its
trailing twelve months book value.
The sales ratio stands at 17.91 times its trailing twelve months sales.
The company's Market Capitalization/sales rate is 0.86 times its trailing twelve
months Market Capitalization.
Company's net worth stands at 9.87 times its trailing twelve months net worth.
TATA
  MOTORS 2017-18 Analysis
TATA MOTORS Balance Sheet Analysis (Rs in Crs.)
• The company's current liabilities during FY18 stood at Rs 180,263.30 as compared to Rs 153,006.60 in FY17, thereby
witnessing an increase of 17.8%.
• Total debt stood at Rs 184,638.40 during FY18 as compared to Rs 193,569.80 during FY17, a decline of -4.6%.
• Total Current assets fell 20.8% and stood at Rs 124,688.80 in FY18.
• Overall, the total assets and liabilities for FY18 stood at 401,466.70 as against 428,632.40 during FY17, thereby
witnessing a decrease of -6.33%.

TATA MOTORS Cash Flow Statement Analysis

• Cash flow from operating activities (CFO) during FY18 stood at Rs 238,574.20 on a YoY basis , with a decrease of 20.9%.
• Cash flow from investing activities (CFI) during FY18 stood at Rs -251,391.40 on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs 20,117.10 an decrease of 67.5% on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs 7,299.90 from the Rs -31,668.50 net cash flows seen
during FY17.
Current Valuations for TATA MOTORS
The price to earnings (P/E) ratio, stands at 0 times its trailing twelve months earnings.
The price to book value (P/BV) ratio at current price levels stands at 5.51 times its trailing twelve
months book value.
The sales ratio stands at 19.64 times its trailing twelve months sales.
The company's Market Capitalization/sales rate is 1.89 times its trailing twelve months Market
Capitalization.
Company's net worth stands at -4.69 times its trailing twelve months net worth.
 TATA MOTORS 2016-17 Analysis
 
TATA MOTORS Balance Sheet Analysis (Rs in Crs.)
• The company's current liabilities during FY17 stood at Rs 153,006.60 as compared to Rs 128,283.60 in FY16, thereby
witnessing an increase of 19.2%.
• Total debt stood at Rs 193,569.80 during FY17 as compared to Rs 164,733.40 during FY16, a growth of 17.5%.
• Total Current assets increase by 2% and stood at Rs 103,196.60 in FY19.
• Overall, the total assets and liabilities for FY17 stood at 428,632.40 as against 437,762.50 during FY16, thereby witnessing a
  decrease of 2.08%.
TATA MOTORS Cash Flow Statement Analysis
• Cash flow from operating activities (CFO) during FY17 stood at Rs 301,992.50 on a YoY basis with a decrease of 20.3%.
• Cash flow from investing activities (CFI) during FY17 stood at Rs -395,714.00 on a YoY basis.
• Cash flow from financial activities (CFF) during FY17 stood at Rs 62,053.00 an improvement of 263% on a YoY basis.
• Overall, net cash flows for the company during FY17 stood at Rs -31,668.50 from the Rs -25,894.80 net cash flows
seen during FY16.
Current Valuations for TATA MOTORS
The price to earnings (P/E) ratio, stands at 0 times its trailing twelve months earnings.
The price to book value (P/BV) ratio at current price levels stands at 7.48 times its trailing
twelve months book value.
The sales ratio stands at 3.53 times its trailing twelve months sales.
The company's Market Capitalization/sales rate is 3.23 times its trailing twelve months Market
Capitalization.
Company's net worth stands at -9.03 times its trailing twelve months net worth.
 2016-19
3 EV/EBIDTA
2.5 80
2.34
2 70
1.5
60
0.99 0.95
0.92 0.88
1
0.92 0.81
0.58 0.61 0.59 50
0.5 0.6
40
0
-0.5 30
-0.5
-1 20

-1.5 10
-2 0
1 2 3 4
Current Ratio Debt-Equity Ratio Interest Cover Ratio
Conclusion
Tata Motors is one of the undisputed market leaders in the commercial vehicles industry in 
India and is gradually emerging as one of the key players internationally. It has been surging 
ahead on a number of fronts in an attempt to further entrench its position as a market leader. 
However, sustaining and increasing this success is far from easy. Apart from product 
reliability, the most important determinant of future success would be the company’s ability 
to enhance its support framework. The future presents challenges and opportunities for the 
company in equal measure, both domestic as well as overseas. Given its renewed focus, Tata 
Motors looks well positioned to capitalize on these opportunities and take on the world.
HERO
MOTOCORP
ABOUT HERO MOTO CORP

The company is
the largest two-
Hero Motocorp wheeler
Ltd., manufacturer in The company
formerly Hero the world, and currently has a
Honda, is an also in India, market cap of
Indian motorcycle where it has a about Rs. 56000
and scooter market share of Crores.
manufacturer. about 36% in the
two-wheeler
category
 EXPANSION

Started operations in 2010, Hondo decided 2011, name changed

1984 as joint venture to move out, Hero from Hero Honda
between Hero cycles bought shares held by Motors Ltd to Hero
and Honda Honda Moto Corp

2014, Joint venture

2012, merge of Hero
with Nitol Niloy to set
Investment with the
up manufacturing
automaker
plant in Bangladesh
 VISION MISSION STRATEGY

The story of Hero Honda Hero MotoCorp's mission Hero MotoCorp's key
began with a simple vision - is to become a global strategies are to build a
the vision of a mobile and enterprise fulfilling its robust product portfolio
an empowered India, customers' needs and across categories,
powered by its two aspirations for mobility, explore growth
wheelers. Hero MotoCorp setting benchmarks in opportunities globally,
Ltd., company's new technology, styling and continuously improve its
identity, reflects its quality so that it converts operational efficiency,
commitment towards its customers into its aggressively expand its
providing world class brand advocates. The reach to customers,
mobility solutions with company will provide an continue to invest in
renewed focus on expanding engaging environment brand building activities
company's footprint in the for its people to perform and ensure customer and
global arena. to their true potential. It shareholder delight.
will continue its focus on
value creation and
enduring relationships
50.7% 36% 20%

MARKET SHARE
 SWOT
STRENGTH WEAKNESS OPPORTUNITY THREAT

1. Huge brand equity

1. Electric two 1. Slowing economy
2. Strong brand image 1. Strong competition
wheelers 2. Slowing demand
3. Excellent distribution 2. Declining service
2. Joint ventures and 3. High rate of GST
4. Wide variety of quality
acquisitions
products
EXTREME 200 DUET 125

LATEST
MARKET
OFFERINGS

DESTINI 125

XPULSE MAESTRO 125

EBT AND REVENUE TREND
INCOME STATEMENT
COMMON SIZE INCOME STATEMENT
BALANCE SHEET
COMMON SIZE BALANCE SHEET
 TECHNOLOGY ABSORPTION

• 70 patents filed in 2018-19

towards development of new
technologies
• Low cost Bluetooth enabled
Navigation System
• The expenditure incurred on
Research and Development
DUPONT ANALYSIS
Thank You!