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 Page 1

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

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.

Brokerage slab

Cash F&O
Scheme Period in
Trading Delivery Futures Options
Name Months
Min Min Min
% % % %
(paisa) (paisa) (paisa)
2% of premium
AMC or Rs. 90,
12 0.07 5 0.40 10 0.07 1
2000 whichever is
higher
1.5% of premium
AMC or Rs. 75,
12 0.05 5 0.25 5 0.05 1
6000 whichever is
higher
1% of premium
AMC or Rs. 50,
12 0.04 4 0.20 4 0.04 1
18000 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 Analysis
Indian 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

“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
marketpsychology, 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.

1

http://en.wikipedia.org/wiki/Technical_analysis
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2. Price Moves in Trends
In technical analysis, price movements are believed to follow trends. This means that after a trend has
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

3
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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.

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,
management, 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.

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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
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
approved 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

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

0.87

27.8
2015-16
0.64

2.65

0 10 20 30
Three Wheelers Two wheelers CVs Cars
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


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 13,342.65
Operating Profit 535.91 716.79 1,050.27 1,129.29 1,137.90
Net Profit 591.42 513.76 729.14 400.14 597.04
Dividend -- -- -- -- --
Earnings Per Share 11.51 9.99 14.18 7.36 10.46
Equity 514.05 514.05 514.05 543.96 570.60
Face 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

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


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

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

18.12
Miscellaneous expenses not written 2.02 6.05 10.09 14.12

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
5140.08 3855.04 3853.74 3828.34 3617.52
(Lacs)
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 ------------------- in Rs. Cr. -------------------
Tata Motors
Mar
Mar '06 Mar '07 Mar '08 Mar '09
'05
Dividend Per Share 12.50 13.00 15.00 15.00 6.00
Profitability Ratios
Net Profit Margin(%) 7.02 7.35 6.94 6.96 3.77
Return On Net Worth(%) 30.09 27.74 27.96 25.98 8.09
Return on Long Term Funds(%) 28.72 28.65 31.18 22.85 8.89
Debt Equity Ratio 0.61 0.53 0.59 0.80 1.06
Long Term Debt Equity Ratio 0.59 0.42 0.31 0.50 0.49
Debt Coverage Ratios
Total Debt to Owners Fund 0.61 0.53 0.59 0.80 1.06
113.6
Book Value 143.94 177.59 202.70 240.64
5

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

2007 May 150

2006 May 130

2005 May 125

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 No. Of No. Of
% Holding % Holding % Holding
Shares Shares Shares
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
649461 1.01 79506752 15.70 72352755 15.08
Insurance
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
2807249 4.37 2978660 0.59 2988981 0.62
Bodies
NRI's/OCB's/Foreign
489478 0.76 27471578 5.43 28637088 5.97
Others
Direcctors/Employee
46671 0.07 239972 0.05 238172 0.05
s
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
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.

.


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 ------------------- in Rs. Cr. -------------------
Mahindra and Mahindra

Net Sales 8,136.5 9,921.34 11,310.37 13,125.98 18,588.82
Total 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 2,955.24
Reported Net Profit 857.10 1,068.39 1,103.37 836.78 2,087.75


Preference Dividend 0.00 0.00 0.00 0.00 0.00
Equity Dividend 243.97 282.23 282.61 278.83 549.52
Per share data (annualized)
Shares in issue (lakhs) 2,334.0 2,380.33 2,390.73 2,726.16 5,659.08
Earnings Per Share (Rs) 36.72 44.88 46.15 30.69 36.89
Equity Dividend (%) 100.00 115.00 115.00 100.00 190.00

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

Quarterly Results of
Mar '09 Jun '09 Sep '09 Dec '09 Mar '10
Total Income 3,715.88 4,266.16 4,691.08 4,521.47 5,322.75
Net Profit 418.07 400.85 702.94 413.70 570.26
Dividend -- -- -- -- --
Dividend (%) -- -- -- -- --
Book Value -- -- -- -- --
Equity 272.62 272.98 273.36 273.56 282.95
Face Value 10.00 10.00 10.00 10.00 5.00

Table 10: Quarterly results of Mahindra & Mahindra

Analysis of profit or loss account
Sales 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
2010 May 190
2009 May 100
2008 May 115
2007 May 40


2007 Mar 75
2006 May 100
Table 11: Dividend

Balance Sheet of ------------------- in Rs. Cr. -------------------

Sources Of Funds
Total Share Capital 233.40 238.03 239.07 272.62 282.95
Equity Share Capital 233.40 238.03 239.07 272.62 282.95
Share Application Money 0.00 0.00 0.00 0.00 8.01
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
2,662.1
Reserves 3,302.01 4,098.53 4,959.26 7,539.27
4
Revaluation Reserves 13.33 12.86 12.47 12.09 0.00
2,908.8
Networth 3,552.90 4,350.07 5,243.97 7,830.23
7
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 2,277.70
Total Debt 883.39 1,636.00 2,587.06 4,052.76 2,880.15
Total Liabilities 3,792.2 5,188.90 6,937.13 9,296.73 10,710.38
Application Of Funds
2,859.2
Gross Block 3,180.57 3,552.64 4,893.89 5,276.29
5
1,510.2
Less: Accumulated. Depreciation 1,639.12 1,841.68 2,326.29 2,537.77
7
1,348.9
Net Block 1,541.45 1,710.96 2,567.60 2,738.52
8
Capital Work in Progress 205.46 329.72 649.94 646.73 964.20
1,669.0
Investments 2,237.46 4,215.06 5,786.41 6,398.02
9
Inventories 878.74 878.48 1,084.11 1,060.67 1,188.78
Sundry Debtors 637.97 700.89 1,004.88 1,043.65 1,258.08
Cash and Bank Balance 258.39 415.89 310.58 635.61 1,743.23
1,775.1
Total Current Assets 1,995.26 2,399.57 2,739.93 4,190.09
0
Loans and Advances 558.02 1,011.50 866.19 1,402.45 1,852.30
Fixed Deposits 471.92 910.18 550.65 938.82 0.00
2,805.0
Total CA, Loans & Advances 3,916.94 3,816.41 5,081.20 6,042.39
4
Deferred Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 1,711.2 2,138.77 2,525.31 3,520.20 3,640.33


3
Provisions 543.14 715.43 943.46 1,277.56 1,796.54
2,254.3
Total CL & Provisions 2,854.20 3,468.77 4,797.76 5,436.87
7
Net Current Assets 550.67 1,062.74 347.64 283.44 605.52
Miscellaneous Expenses 18.05 17.55 13.53 12.55 4.12
3,792.2
Total Assets 5,188.92 6,937.13 9,296.73 10,710.38
5

Table 12: Balance sheet of Mahindra & Mahindra

Analysis of balance sheet
Company 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 ------------------- in Rs. Cr. -------------------

Mar
Mar '07 Mar '08 Mar '09 Mar '10
'06
Dividend Per Share 10.00 11.50 11.50 10.00 19.00
Profitability Ratios
Operating Profit Margin(%) 10.71 11.45 10.23 8.32 15.89
Net Profit Margin(%) 10.28 10.34 9.45 6.22 11.11
Return On Net Worth(%) 29.60 30.18 25.51 16.03 26.70
Return on Long Term Funds(%) 23.17 26.09 19.64 12.36 26.01
Liquidity And Solvency Ratios
Current Ratio 1.21 1.31 0.86 0.90 1.11
Debt Equity Ratio 0.31 0.46 0.60 0.77 0.37
Long Term Debt Equity Ratio 0.40 0.53 0.63 0.83 0.37
Total Debt to Owners Fund 0.31 0.46 0.60 0.77 0.37
Dividend Payout Ratio Net Profit 32.45 30.39 29.10 37.29 29.87
Cash Earning Retention Ratio 65.14 72.28 71.61 70.69 73.66
Book 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 Date
PE ratio 16.37 16/07/10
EPS (Rs) 36.89 Mar, 10
Sales (Rscrore) 5,304.63 Mar, 10
Face Value (Rs) 5
Net profit margin (%) 11.11 Mar, 10
Last bonus 1:1 14/06/05
Last dividend (%) 190 24/05/10
Return on average equity 26.7 Mar, 10
Table 14: Report card


Share market watch of Mahindra & Mahindra ltd.
Month PRICE
August 920.00
September 847.30
October 896.45
November 921.95
December 1028.25
January 1062.40
February 1019.40
March 958.85
April 549.55
May 526.10
June 519.45
July 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 31/12/2009
Face value 5.00 5.00 10.00
No. Of % No. Of % No. Of %
Shares Holding Shares Holding Shares Holding
Promoter's holding
Indian Promoters 138114984 23.88 138114984 23.88 69063784 24.68
Foreign Promoters 14070507 2.43 14254608 2.46 7127304 2.55
Sub total 152185491 26.31 152369592 26.34 76191088 27.23
Non promoter's holding
Institutional investors
Banks Fin. Inst. and
117220102 20.27 119657640 20.69 59592156 21.30
Insurance
FII's 133190960 23.03 135337813 23.40 64064714 22.89
Sub total 277852033 48.04 279081526 48.25 139908653 50.00
Other investors
Private Corporate Bodies 45672952 7.90 44223273 7.65 21273737 7.60
NRI's/OCB's/Foreign
22274297 3.85 22122061 3.82 1645395 0.59
Others
Govt 448442 0.08 445132 0.08 221416 0.08
Others 30495372 5.27 30600421 5.29 16060852 5.74
Sub total 98890069 17.10 97389943 16.84 39201200 14.01
General public 49505891 8.56 49592473 8.57 24520124 8.76
Grand 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.


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