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					                  2010
INDIAN AUTOMOBILE INDUSTRY

   THE ROAD AHEAD- 2010




                    LiveTips Market
                    Resarch pvt ltd.
             Automobile industry- in INDIA
The automobile industry in India happens to be the ninth largest in the world. Following Japan, South Korea
and Thailand, in 2009, India emerged as the fourth largest exporter of automobiles. Several Indian
automobile manufacturers have spread their operations globally as well, asking for more investments in the
Indian automobile sector by the MNCs. Indian auto industry, which is currently growing at the pace of around
18 % per annum, has become a hot destination for global auto players like Volvo, General Motors and Ford.
The Indian automobile industry is going through a phase of rapid change and high growth. With new projects
coming up on a regular basis, the industry is undergoing technological change. The major players are
expanding their plants and focusing on mass customization, mass production, etc.


             INVESTMENT SCENARIO
                                                                               SNIPPETS
 It is expected that by the end of year 2010
 Indian automobile sector will be investing a        “In India there are 100 people per vehicle, while this
 huge amount about Rs. 30000 crores For
                                                           figure is 82 in China. It is expected that Indian
 example, Maruti Udyog has plans of investing
 Rs. 6,500 crores; the Tata Motors is coming up      automobile industry will achieve mass motorization
 with more investment of Rs. 2,000 crores in                                 status by 2014.”
 its compact car project. Not only the Indian
 companies but also foreign players like                     India is being recognized as potential emerging
 Hyundai are coming up with the investment of                 auto market.
 more than Rs. 3,800 crores in India.
                                                             Foreign players are adding to their investments in
                                                              Indian auto industry.
               GROWTH TRENDS
                                                             Within two-wheelers, motorcycles contribute 80%
 At present the industry is enjoying a growth                 of the segment size.
 rate of 14-17% per annum, with domestic                     Unlike the USA, the Indian passenger vehicle
 sales growth at 12.8%. The growth rate is                    market is dominated by cars (79%).
 predicted to double by 2015. As it is seen, the             Tata Motors dominates over 60% of the Indian
 total sales of passenger vehicles - cars, utility
                                                              commercial vehicle market.
 vehicles and multi-utility vehicles - in the year
 2005 reached the mark of 1.06 million. The                  2/3rd of auto component production is consumed
 current growth rate indicates that by 2012                   directly by OEMs.
 India will overtake Germany and Japan in                    India is the largest three-wheeler market in the
 salesvolumes.                                                world.
                                                             India is the largest two-wheeler manufacturer in the
                                                              world.
                NEW LAUNCHES
                                                             India is the second largest tractor manufacturer in
  At present there are many new models                        the world.
  entering the Indian market. To name a few,                 India is the fifth largest commercial vehicle
  Suzuki Heat 125 and Suzuki Zeus 125X are
                                                              manufacturer in the world.
  the two bikes in the motorcycle segment;
                                                             The number one global motorcycle manufacturer is
  Kinetic Blaze and Honda DIO in the scooter
  segment; Maruti's Zen Estillo in the car                    in India.
  segment, so on and so forth.                               India is the fourth largest car market in Asia -
                                                      recently
LiveTips Market Research pvt ltd. – http://www.livetips.biz crossed the 1 million mark.                      Page 2
  KEY PLAYERS                              UPDATE (Automobile sector 2009-10)
 Ashok Leyland
 Royal Enfield
 Audi AG                         Audi launches India’s most powerful SUV - limited edition Q7 4.2 TD Priced at
 Bajaj Auto                      Rs.66,12,500 (ex-showroom Mumbai)
 Skoda Auto India
                                 Hyundai strengthens its i20 portfolio - recently announced the launch of two
 Kinetic Motor Co. Ltd.
                                 more variants in the much-popular i20 series in the Indian market.
 Bentley Motors Limited
 Chevrolet                       Japanese auto major, Nissan Motor Co, has chosen India among the five low-
 Swaraj Mazda Ltd.               cost countries to manufacture its GenNext compact cars, including the Micra.
 Mahindra & Mahindra
 Ltd.                            Hyundai has converted India into its global hub for manufacturing small cars.
 Eicher Motors                   By 2013, the company plans to invest US$ 1 billion in its second plant in
 Tata Motors                     Chennai. The company is also planning to invest US$ 40 million in its R&D
 Mercedes Benz                   facility in Hyderabad.
 Mitsubishi Motors
 Toyota Kirloskar Motors         General Motors till date has invested around US$ 1 billion into its Indian
 Nissan Motors                   operations. The factory of its small car, Spark has been set up in Maharashtra,
HMT Tractors                     with an investment of US$ 300 million. The company also intends to make India
 Hero Honda
Yamaha Motor                     its focal point for manufacturing of export engines, power trains as well as cars
 Volvo
Honda Motors Co. Ltd.            for neighbouring countries like the US and Europe.
Hyundai Motors
BMW                              Mercedes-Benz plans to invest around US$ 64. 21 million in its plant near
Sonalika Tractors                Pune. The plant will apparently have a production capacity of 2,500 trucks and
Lamborghini Suzuki               buses and 10,00cars over two shifts every year.
Motors
LML India                        Renault has entered into partnership with Nissan Motors to set up a
Daewoo Motors                    manufacturing facility near Chennai at a cost of US$ 901.35 million to
Tafe Tractors                    manufacture 400,000 cars annually. Skoda Auto is planning to make India its
Maruti Suzuki India              regional manufacturing hub. The company plans to start manufacturing cars in
Ltd.                             India by 2010 with a target of 50,000 units.
Escorts Ltd.
Fiat India Pvt. Ltd.             Tata Motors plans to manufacture 80,000 units of its much awaited Nano at its
Force Motor                      Pantnagar plant in Uttarakhand in 2009-10. The mother facility at Sanand, in
Ford Motors                      Gujarat, may be fully operational by 2010-11 and will have a capacity of
TVS Motor Co.                    producing 1, 50,000 cars annually
Reva Electric Co.                Maruti announced to witdraw its most happening car Maruti 800 from market
Hindustan Motors                 partially due to new emission norms.




      LiveTips Market Research pvt ltd. – http://www.livetips.biz                                 Page 3
                          PERFORMANCE OF THE INDUSTRY


                          For the year ended 31-mar-2009                                               Amt (in Rs. crores)
                            ASHOK LEYLAND       BAJAJ AUTO         HERO HONDA MOTORS     MARUTI SUZUKI   TATA MOTORS
REVENUES (ANNUAL)                  60,307.00           84460.3              125,398.00         217,811.00         717,378.00
PAT                                 1,900.00            5374.8               12,817.60          12,317.00         -24,650.00
EPS                                    1.428            37.028                  64.188             42.484            -56.875
RATIOS
PE ratio                               28.93               56.09                 20.09                NA                  NA
Net profit margin(%)                    4.54                6.01                 13.26                NA                  0.8
Current ratio                           1.48                0.94                  0.49               1.61                1.02
Debt- Equity ratio                      0.56                0.88                  2.07              0.085                0.66
Return on investment(%)                 4.18               16.81                 35.21              12.07               -7.84
Dividend yield(%)                       1.78                1.07                  0.98               0.25                0.77
Payout ratio                           70.02               59.41                 31.16               8.24                 NA

Source – www.nse-india.com and www.moneycontrol.com



The year 2009, when recession was on its toes, proved difficult for the whole industry. While some
companies took it as a opportunity, others lost their important market. The table above gives a fact
figure of some key players who represent the major share of Indian automobile market.



ASHOK LEYLAND




For over five decades, Ashok Leyland has been the technology leader in India's commercial vehicle
industry, moulding the country's commercial vehicle profile by introducing technologies and
product ideas that have gone on to become industry norms.From 18 seater to 82 seater double-
decker buses, from 7.5 tonne to 49 tonne in haulage vehicles, from numerous special application
vehicles to diesel engines for industrial, marine and genset applications, Ashok Leyland offers a
wide range of products


LiveTips Market Research pvt ltd. – http://www.livetips.biz                                                         Page 4
In the year 2009 the company achieved the total revenue of Rs. 60307 crore with the total profit of
Rs. 1900 crores. The EPS remains low with the net profit margin of 4.54%. at the same time
dividend payout ratio of the company remains high at 70%.

Recent quarterly update show that in Q3 2009 the company has achieved the total revenue of Rs.
10008 million with earnings as Rs.333 million but its PAT remains negative as Rs. – 287 million.




Quarterly review shows optimism in the performance in the year 2010 where company is expected
to achieve revenues of Rs. 18586 mn in Q3 2010 with Y-o-Y growth of 86 %




BAJAJ AUTO




The Bajaj Group is amongst the top 10 business houses in India. Its footprint stretches over a wide
range of industries, spanning automobiles (two-wheelers and three-wheelers), home appliances,
lighting, iron and steel, insurance, travel and finance. The group's flagship company, Bajaj Auto, is
ranked as the world's fourth largest two- and three- wheeler manufacturer and the Bajaj brand is
well-known across several countries in Latin America, Africa, Middle East, South and South East
Asia. Founded in 1926, at the height of India's movement for independence from the British, the
group has an illustrious history.

Inspite going through the recession and the period of low demand the company has achieved total
revenue as Rs. 84460 crores with the total profit of Rs. 5374.8 crores. ROI in the year 2009 is
calculated as 16.81% with thw payout ratio of 59.4. the debt equity ratio of 0.88 shows that the
company has good amount of equity as compared to debt in its capital structure.

The quarterly review shows that company’s revenue is expected to grew at 69 % on Y-o-Y basis
with its actual Q3 2009 revenue as Rs. 20048 mn.




LiveTips Market Research pvt ltd. – http://www.livetips.biz                                   Page 5
HERO HONDA MOTORS




The company crossed the ten million unit milestone over a 19-year span. In the new millennium,
Hero Honda has scaled this to 15 million units in just five years! In fact, during the year in review,
Hero Honda sold more two wheelers than the second, third and fourth placed two-wheeler
company put together. With Hero Honda, the domestic two wheeler market was able to show
positive growth during the year in review. Without Hero Honda, the domestic market would have
actually shrunk. The Hero Honda story began with a simple vision – the vision of a mobile and an
empowered India, powered by Hero Honda. This vision was driven by Hero Honda's commitment to
customer, quality and excellence, and while doing so, maintain the highest standards of ethics and
societal responsibilities. Twenty five years and 25 million two wheelers later, Hero Honda is closer
to fulfilling this dream. This vision is the driving force behind everything that we do at Hero Honda.
We understood that the fastest way to turn that dream into a reality is by remaining focused on that
vision.

During the fiscal year 2008-09, the company has achieved the total revenue as Rs. 125398 crores
with a high EPS as 64.188 . The NP margin for this year is shown as 20%. The companyt’s dividend
yield and payout ratio shows a low trend with figures being 0.98% and 31.16 respectively.




LiveTips Market Research pvt ltd. – http://www.livetips.biz                                    Page 6
The quarterly review shows that company’s revenue is expected to grew at 32 % but quarterly it
may show a negative trend. The actual revenue of the company in Q3 2009 is Rs. 28813 mn with
PAT of Rs 3004 mn.



MARUTI SUZUKI




The brand needs no introduction as it is very well accepted brand in the Indian market. More than
half the car sold in India are Maruti cars. The company is the subsidiary of Suzuki motors. The
company offers full range of cars from entry level Maruti 800 & Alto to stylish hatchback Ritz, A
star, Swift, Wagon R, Estillo and sedans DZire, SX4 and Sports Utility vehicle Grand Vitara.


The company has achieved a total revenue of Rs. 217811 cr in the year 2008-09 with the PAT of Rs.
12317 Cr.. the ROI of the company is calculated as 12.07% with the low trend of dividend yield of
0.25%. some of the main performance indicators of the company since from the last few years are
depicted in the following charts.



                                                              While the sales of the company is
                                                              continuously increasing ,the PAT
                                                              comes down in the year 2008-09




LiveTips Market Research pvt ltd. – http://www.livetips.biz                               Page 7
                                                              Exports of the company are
                                                              continuously fluctuating with the
                                                              fluctuating demand in the foreign
                                                              market but it shows increasing trend in
                                                              2008-09. The company recently
                                                              announced to invest a huge sum for its
                                                              capacity expansion      to meet the
                                                              growing foreign demand.




                                                                The company was the market
                                                                leader in its category but with
                                                                the emergence of new players
                                                                and foreign players in the
                                                                market the company seems to
                                                                be loosing its share from 60%
                                                                in 2001-02 to 55 % in 2008-09.




The quarterly review shows that company’s revenue in Q3 2009 was Rs. 45126 mn which
expected to rice to Rs. 74624 mn in Q3 2010 with the total PAT as Rs. 6154 mn . the quarterly
growth of the company is expected to remain low with 6% (in terms of revenue) and 2% (in terms
of PAT).




LiveTips Market Research pvt ltd. – http://www.livetips.biz                               Page 8
TATA MOTORS




Tata Motors Limited is India's largest automobile company, It is the leader in commercial vehicles
in each segment, and among the top three in passenger vehicles with winning products in the
compact, midsize car and utility vehicle segments. The company is the world's fourth largest truck
manufacturer, and the world's second largest bus manufacturer. Tata Motors, 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.

The year 2008-09 shows the total revenue of the company being Rs.717378 cr but with negative
PAT which makes the ROI of the company negative to the extent of -7.84 %. The dividend yield of
the company also remains low as 0.77 %.




The quarterly review shows that company’s revenue in Q3 2009 as RS 47586 mn but has a
negative PAT to the extent of Rs. 2633 mn. The company’s Y-o-Y growth is expected as 8 % (in
terms of revenues) and 23 %(in terms of PAT). The PAT is expected to rise to the level of Rs. 4618
Cr in Q3 2009.




LiveTips Market Research pvt ltd. – http://www.livetips.biz                                Page 9
              INDUSTRY EXPACTATIONS IN THE YEAR 2010




One of the major industrial sectors in India is the automobile sector. Subsequent to the
liberalization, the automobile sector has been aptly described as the sunrise sector of the Indian
economy as this sector has witnessed tremendous growth.Automobile Industry was delicensed in
July 1991 with the announcement of the New Industrial Policy.

The passenger car industry was, however, delicensed in 1993. No industrial licence is required for
setting up of any unit for manufacture of automobiles except in some special cases. The norms for
Foreign Investment and import of technology have also been progressively liberalized over the
years for manufacture of vehicles including passenger cars in order to make this sector globally
competitive. At present 100% Foreign Direct Investment (FDI) is permissible under automatic
route in this sector including passenger car segment. The import of technology/technological
upgradation on the royalty payment of 5% without any duration limit and lump sum payment of
USD 2 million is also allowed under automatic route in this sector. With the gradual liberalization of
the automobile sector since 1991, the number of manufacturing facilities in India has grown
progressively.The cumulative production data for April-January 2010 shows production growth of
23.07 percent over same period last year.

DOMESTIC SALES EXPECTATIONS
Passenger Vehicles segment during April-January 2010 grew at 25.21 percent over same period last
year. Passenger Cars grew by 24.75 percent, Utility Vehicles grew by 21.95 percent and Multi
Purpose Vehicles grew by 37.05 percent in this period.

The overall Commercial Vehicles segment registered positive growth at 30.39 percent during April-
January 2010 as compared to the same period last year. Medium & Heavy Commercial Vehicles
(M&HCVs) registered growth at 20.58 percent, Light Commercial Vehicles grew at 39.66 percent.

Three Wheelers sales recorded a growth rate of 25.77 percent in April-January 2010. While
Passenger Carriers grew by 32.54 percent during April-January 2010, Goods Carriers grew at 4.20
percent.

Two Wheelers registered a growth of 23.74 percent during April-January 2010. Mopeds, Scooters
and Motorcycles grew by 31.73 percent, 20.56 percent and 24.32 percent respectively.

LiveTips Market Research pvt ltd. – http://www.livetips.biz                                  Page 10
EXPORTS

During April-January 2010,overall automobile exports registered a growth rate of 13.24
percent.Passenger Vehicles segment, Three Wheelers and Two Wheelers segments grew by 33.92
percent, 4.60 percent and 8.84 percent respectively in this period. Commercial Vehicles recorded
growth of (-) 7.52 percent.

AUTO COMPONENT INDUSTRY




Surge in automobile industry since the nineties has led to robust growth of the auto component
sector in the country. In tandem with the industry trends, the Indian component sector has shown
great advances in recent years in terms of growth, spread, absorption of new technologies and
flexibility. Indian auto component industry has seen major growth with the arrival of world vehicle
manufacturers from Japan, Korea, US and Europe.

Today, India is emerging as one of the key auto components center in Asia and is expected to play a
significant role in the global automotive supply chain in the near future. The auto component
industry is also expected to drive the growth of the engineering sector in view of its strong
downstream and upstream linkages with many other segments of the engineering sector like raw
materials, capital goods, intermediate products etc.

Auto component industry supports industries like automobiles, machine tools, steel, aluminum,
rubber, plastics, electrical, electronics, forgings and machining.India has also emerged as an
outsourcing hub for auto parts for international companies such as Ford, General Motors, Daimler
Chrysler, Fiat, Volkswagon, and Toyota.During the year 2008-09,the turnover and export for auto
component industry was recorded at US $ 15.85 billion and US $ 3.11 billion respectively.




LiveTips Market Research pvt ltd. – http://www.livetips.biz                                Page 11
                                THE ROAD AHEAD
The Indian auto industry is likely to see a growth of 10-12 per cent in sales in 2010, according to a
report by the global rating firm, Fitch. According to its report, Indian Auto Sector Outlook,
competition in the country's auto sector is likely to increase due to increasing penetration of global
original equipment manufacturers (OEM).The key elements which help the India to move ahead on
its path are :



    GROWTH DRIVERS OF                                INDIA’S PRODUCTION IN WORLD
  INDIAN AUTO MARKET 2010                                     PRODUCTION

       Rising industrial and agricultural                Well-developed, globally competitive auto
        output                                             ancillary industry
       Rising per capita income                          Established automobile testing and R&D
       Favourable demographic distribution                centres
        with rising working population and                Among one of the lowest cost producers of
        middle class                                       steel in the world
       Urbanisation                                      World's second largest manufacturer of two
       Increasing disposable incomes in                   wheeler
        rural agri-sector                                 Fifth largest manufacturer of commercial
       Availability of a variety of vehicle               vehicles
        models meeting diverse needs and                  Largest manufacturers of tractors in the world
        preferences                                       Fourth largest passenger car market in Asia
       Greater affordability of vehicles                 India is the second largest two-wheeler
       Easy finance schemes                               market in the world
       Favourable government policies                    11th largest passenger car market in the
       Robust production                                  world
                                                          Expected to be the seventh largest auto
                                                           industry by 2016




In addition to all the above factors , INDIA today is becoming one of the favorite destinations
of foreign auto players which is clear from the number of initiatives taken by them:

       German car major Audi will start assembling its sports utility vehicle Audi Q5 from mid-
        2010. The company plans to assemble more cars locally at its Aurangabad plant instead of
        importing completely built units (CBUs).

       Ford India commenced commercial production of its compact car Figo, and diesel and petrol
        engines at a new factory in Chennai. The Figo will be built exclusively in India and exported
        to Asian countries and South Africa.



LiveTips Market Research pvt ltd. – http://www.livetips.biz                                      Page 12
      Japanese major Nissan has decided to shift the entire production of its small car, Micra, from
       the UK to India. After production of the Micra begins here, Nissan plans to manufacture four
       more models in India, involving a total investment of over US$ 412.2 million.

      Suzuki Motorcycle India (SMIPL), a wholly-owned subsidiary of Japanese auto major Suzuki
       Motor Corporation, plans to double production capacity of its two-wheelers to 300,000
       units by the end of the current fiscal year. The company will invest US$ 26.77 million.

      Volkswagen has set a target to localise production in India to about 80 per cent in 2-3 years
       from the current levels of almost 50 per cent as it seeks to offer cars at more competitive
       prices.

THE FUTURE
      The Indian automobile industry is expected to grow to US$ 40 billion by 2015 from the
       current level of US$ 7 billion in 2008. By the year 2016 the industry is expected to
       contribute 10% of the nation’s GDP. The industry manufacturers over 11 million vehicles a
       year, employing more than three million people.

      The greatest challenge and competition would be from the Chinese automobile industry.
       The Chinese automobile industry has been able to give stiff completion to India in terms of
       productivity, cost of manufacturing and technology. Again the present trend of excess
       manufacturing capability, reduced margins put additional pressure on the industry.

      The global recession has had a dampener effect on the growth of the industry, but market
       experts believe it is only a short term phenomenon and are confident of the industry
       bouncing back.

      On the positive side, India’s strength in software sector, combined with skilled labor and
       low cost of manufacturing should place it in a favorable position globally.

      Recently Ratan Tata, Chairman (Tata Motors) created history by launching the world's
       cheapest car NANO. The cars pricing is around one lakh, gaining instant recognition in the
       automobile industry across the globe. It heralded the coming to age of the Indian
       Automobile Industry.

                                        Conclusion:

  The analysis above gives the optimistic view about the industry and the overall industry
  shows a positive growth which recommend the investors to keep a good watch on the
  major players to benefit in terms of returns on their investments.




LiveTips Market Research pvt ltd. – http://www.livetips.biz                                 Page 13
          ANALYST NAME:                               EMAIL ID:                                               EXTN


          Shine Pkurian                               shine@livetips.biz                                         124
          Dhritiman Das                               dhritiman @livetips.biz                                    124
          Sharath Natesh                              sharath@livetips.biz
          Prakash Ramani                              prakash @livetips.biz
          Deepak Jodhani                              deepak@livetips.biz
          Md. Muzaffar D J                            muzaffar.dj@livetips.biz




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     LiveTips Market Research pvt ltd. – http://www.livetips.biz                                                                          Page 14

				
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