Geojit profile reports

TECHNICAL ANALYSIS OF AUTOMOBILE SECTOR

PROFILE OF GEOJIT FINANCIAL SERVICES LTD.

Geojit, a joint venture with Kerala State Industrial Development Corporation Ltd. is a
pioneer in the retail financial services sector. Over two decades the company has grown to
offering complete management solutions. Today the company has over Rs.20 billion in assets
under its custody.

Geojit’s shares are listed on the Bombay Stock Exchange. The company is a member
of the National Stock Exchange of India Ltd., the Bombay Stock Exchange and the National
Securities Depository Ltd., and a charter member of the Association of Financial Planners,
India. More than 1000 professionals are operating through over 250 offices across the country
provide services to a growing retail investor base of 200,000. Prominent institutional clients
include banks, mutual funds and other institutions such as UTI and insurance companies.

Geojit has a large pool of certified professionals who plan, execute and manage
customized investment strategies for clientele. Financial literacy programmes are conducted
on a regular basis through the branch network to raise investment awareness.

Early application of innovative technology in the industry led to many national firsts
such as internet trading, electronic securities settlement on the web and an online integrated
trading screen for stocks and derivatives.

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BASAVESWAR ENGNEERING COLLEGE BAGALKOT


YEAR EVENTS

1988 The company, Geojit Securities Limited (GSL), was a partnership firm, with
two partners Mr. C.J. George and Mr. Ranjit, under the name and style of M/s
Geojit & Company established on 4th November, to act as stock and share
brokers with membership on the Cochin Stock Exchange.
1994 - The company was incorporated as a Public Limited Company on 24th
November and obtained its Certificate of commencement of business on 25th
January 1995.
- The company is at present engaged in the activities of stock and share
broking, underwriting, marketing of initial public offering of companies and
mutual funds, corporate advisory services, investments in shares, participating
in Bought Out Deals, syndication of inter-corporate deposits, debt, bought-
outs etc.
- The company has at present branches at Trichur, Kottayam, Muvattupuzha
and Coimbatore apart from having representative offices at Mumbai.

1995 The company has a subsidiary in the name of Geojit Stock and Shares Limited
(GSSL) to carry on the activities as a Dealer of Over The Counter Exchange of
India.
1996 - The company had made a public issue of equity shares aggregating to Rs.95/-
lakhs, during the period under report which received an overwhelming support
and was oversubscribed over 14 times.
- The Company held 100% of the paid up Capital of Rs.30,00,000/- M/s Geojit
Stock & Shares Ltd., a wholly owned subsidiary of the Company as at 31st
March.

1998 The Company, a joint venture company with Kerala State Industrial
Development Corporation (KSIDC), has announced improved working results
for 1997-98.
1999 - The equity shares of the company are presently listed at five Stock Exchanges
viz., Madras, Ahemedabad, Coimbatore, Delhi and Cochin
- The Company based in Kochi, to set up a full-fledged office in the UAE,
which will not only enable it to deal in Indian shares and securities, but also
help it become a licensed stock broking company in that country.
2000 - Geojit Securities Ltd, a leading retail share broking firm launched Internet
securities trading for the first time in India.
- Geojit Securities is a joint venture with Kerala State Industrial Development
Corporation (KSIDC) with branches in 40 cities.
- ABN Amro Bank is set to pick up an equity stake in Geojit Securities Ltd one
of the largest stock brokers and depository participant in the country.
- The company is planning to introduce multi-bank, multi-DP interfaces to
facilitate and promote Internet trading in the country.Geojit Securities Ltd, the
first company to start online trading services, has signed a MoU with UTI
Bank to enable investors to buysell demat stocks through the company's
website.
- The Company has signed a deal with Centurion Bank to provide payment
gateway for Internet trading.

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- The Company launched its online interface with HDFC Bank for Internet
trading.
- Geojit Securities Ltd, a leading stock broking company, has decided to issue
bonus shares at 1:1 ratio, to capitalize part of general reserve.
-
-

2001 - The Kochi-based retail broking firm, Geojit Securities Ltd., is setting up an
overseas venture jointly with a UAE partner to provide broking and
depository services to NRIs in the Gulf countries.
- Geojit Securities has inked a joint venture (JV) with UAE based brokerage
house Barjeel Shares & Bonds to set up a 20:80 joint venture with an initial
capital of $ 1 million, christened Barjeel Geojit Securities.
- Bonus Shares were issued by the company in the ratio 1:1.

2002 - Sheikh Sultan Bin Saud Al Qasimi appointed as Director of Geojit Securities.
- Mr. T Koshy appointed as Director of Geojit Securities with effect from
October 26, 2002

2003 The Company has unveiled a new logo and changed its name to Geojit Financial
Services Ltd, offering a growing range of new and innovative financial products
and services.
2004 - Geojit Securities inks pact with Doha Bank
- UTI Bank, Geojit in pact for trading platform in Qatar
- Delists shares from Cochin Stock Exchange
- Shares of Geojit Securities Ltd delisted from Coimbatore Stock Exchange
from May 21 and Madras Stock Exchange effective May 31
- Geojit Financial Services Ltd in association with Doha Bank launches India
Wealth Management Services for non-resident Indians living in Qatar

2005 Geojit has tied up with global financial investments SAOG, Muscat, in the
Sultanate of Oman
2006 Geojit Financial Services Ltd has informed that the Board of Directors of the
Company at its meeting held on October 22, 2006, has approved the proposal of
the Company to issue and allot to BNP Paribas S.A. (the "Investor"), on a
preferential allotment basis, equity shares, warrants convertible into equity
shares or any combination thereof, such that the total number of equity shares
issued (whether as equity shares or upon the conversion of the warrants) shall
not exceed 7,96,31,170 equity shares of Re 1, at price of Rs 26 per equity share,
which has been determined in accordance with the applicable laws and
guidelines

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PRODUCTS AND SERVICES

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PRODUCTS:

Equity
F & O (Futures and Options)
Margin Trading Funding Scheme
Loan Against Shares
Loan Against Commodity Trading
Depository
Commodity
Portfolio Management Services (PMS)

1) Equity:

Equity/ordinary share capital, as a long-term source of finance, represents ownership
capital/securities and its owners – equity-holders/ordinary shareholders – share the reward
and risk associated with the ownership of corporate enterprises. A shareholder can exercise,
sell in the market and renounce/forfeit his pre-emptive rights partially/completely. He does
not gain/lose from rights issues. Ordinary share capital is a high-risk-high-reward source of
finance for corporate. The shareholders share the risk, return and control associated with
ownership of companies.

2) F & O (Futures and Options):

The National Stock Exchange and The Stock Exchange, Mumbai have commenced
trading in Derivatives Market with Index Futures being the first instrument. Now both the
exchanges provide trading in Index Futures and Options and Stock Futures and Options.

A derivative is a financial contract, between two or more parties, which is derived from
the future value of an underlying asset. At any point of time there will always be available
near three months contract periods. For e.g. in the month of Jan 2006 one can enter into Jan,
Feb or Mar contracts. The last Thursday of each month is the expiry day for that month’s
contract. When one contract expires, a new contract is introduced. For instance, on expiry of
Jan 2006 contract, April contract shall get activated.

Currently, settlements of all Derivatives trades are in cash. There is Daily as well as
Final Settlement. As long as the position is open, the same will be marked to Market at the
Daily Settlement Price, the difference will be credited or debited accordingly and the position

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shall be brought forward to the next day at the daily settlement price. Any position which
remains open at the end of the final settlement day (i.e., last Thursday) shall be closed out by
the Exchange at the Final Settlement Price which will be the closing spot value of the
underlying.

There are two types of margins collected on the open position, viz., Initial Margin
which is collected upfront and Mark to Market Margin to be paid on T+1 day. As per SEBI
Guidelines it is mandatory for clients to give margin, failing which the outstanding positions
may be closed out.

There are three types of Members in the Futures and Options Segment

 Trading Members are only eligible to trade, their trades are settled by the Clearing
Members.
 Trading cum clearing members are members who are eligible to trade and also
settle trades on their own behalf and also settle on behalf of other trading members.
 Professional Clearing Members are members who are only specialized in the
clearing and settlement activities. They do not trade on their own behalf or on behalf
of other members
 Self Clearing Members are those who trade and settle only their own trades. Geojit
Financial Services Ltd is trading cum clearing member at NSE.

3) Margin Trading Funding Scheme:
In Marginal Trading, an Investor buys securities by borrowing a portion of the
transaction value and using the securities in the portfolio as collateral. An investor who
purchases securities may pay for the securities fully in cash or may borrow a part of the
transaction value from the brokerage firm.

4) Loan Against Shares:
Geojit Credits Pvt. Ltd., a subsidiary of Geojit Financial Services Ltd, registered as a
Non-Banking Finance Company (NBFC) offers Loans against security of shares. The facility
is available to all customers of Geojit Financial Services Ltd.

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Key Features of the Scheme:

1. All securities defined under Group I of NSE are eligible for Loan against Shares

2. Loan is provided against a minimum of two securities and minimum loan amount is
Rs.50000/-

3. Loan up to 50% of the current market value of approved shares.

4. Upper ceiling on quantum of loan shall be as determined by Geojit Credits P Ltd on a
case to case basis

5. Speedy disbursal through RTGS / direct credit to the customer’s bank account /
cheque

6. Hassle free processing and simple documentation

7. Securities are to be transferred to Geojit Credits Pvt. Ltd

8. Fixed charges of 1.00 % of loan amount is charged upfront and is non refundable.

9. Rate of interest is 14 % p.a. for Loans above Rs 3 lacks and 15% pa for Loans up to
Rs 3 lacs. This is subject to change from time to time. Interest is charged on Daily
Outstanding Balance in Loan account at monthly rests. Interest debited every month
should be repaid by chque/DD payable at Kochi with in 7 days of debit.

10. The credit is provided as an overdraft facility for a period of One year at a time,
renewable by mutual consent.

11. Loan can also be redeemed by instructing Geojit Credits Pvt. Ltd to sell the securities

12. Loans are re-valued daily

13. Margin calls are made if the value of the securities fall by 10% which can be met with
either by redeeming the loan partially or placing additional securities

14. Securities may be liquidated if the margins are not furnished in case of a fall of 20%
value of the securities

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5) Loan Against Commodity Trading:
Geojit Credits Pvt. Ltd offers loans against Pledge of Warehouse Receipts for delivery
at Commodity Exchanges.

Key Features of the Scheme:-

1. Loans against Pledge of Physical and Demat warehouse receipts

2. Loans up to 80% of sale value price contracted for Futures delivery

3. Loans are also considered against Pledge of warehouse receipts without Futures Sell
contract on a case-to-case basis at higher margins ranging from 30% to 50% of the
value

4. Loans available till sale proceeds are realised on settlement from the Commodity
Exchange else upto a maximum of three months

5. Provision to switch between different future contracts (subject to validity of
warehouse receipts)

6. Simple documentation

7. Speedy disbursal of loans through RTGS

6) Depository:
A depository can be compared to a bank. It holds securities such as shares, debentures,
bonds, government securities, units etc. of investors in electronic form. There are two
depositories in India, The National Securities Depository Limited (NSDL) and Central
Depository Services Limited (CDSL). An individual who desires to avail the depository
services can approach a Depository Participant (DP). Banks, financial institutions, custodians,
brokers or any other entity eligible as per SEBI (Depositories and Participants) Regulations,
1996 can apply to the Depository to become a Depository Participant. As on 31st March,
2006 there are 526 Depository Participants in India.

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Geojit, is a depository participant of NSDL & CDSL. Investors can open demat
accounts with NSDL & CDSL through Geojit. One can approach the nearest branch of Geojit
for opening an account. Agreement charges (statutory charges) along with Annual
Maintenance Charge (AMC) are collected upfront while opening an account. It takes two to
three days to open a demat account. Upon activation of the demat account, a Welcome Letter
is sent to the customer along with the Delivery Instruction Slip book.

DP facilities offered by Geojit

De-materialization: Consumers can convert their physical shares into electronic form
by surrendering the shares for dematerialization at the Geojit branch.

Re-materialization: Re-materialization enables consumers to convert the
dematerialized shares into physical form.

Repurchase: This facility helps consumers to submit the units of open-ended Mutual
Funds in case of re-purchase.

Pledge: Consumers can pledge securities to avail a loan.

Transfer: Consumers can transfer securities from one demat account to another.

IPOs: In case consumers have applied for an IPO and receive an allotment then the
securities are transferred directly to their demat account. The same applies for bonus
and rights issues.

Commodity De-mat Account: If consumers are a commodity player, they may need
to open a commodity de-mat account with Geojit.

Speed-e: If consumers register for Speed-e services, then transfer instructions can be
placed online over the internet to pre-notified Clearing Members Pool a/c. This does
away with the need to submit a physical delivery instruction slip.

Internet Services: If consumer have access to Internet then they can register with
Geojit to view their demat account over the Internet. This is very beneficial as
consumers can avail of a host of services at no extra cost. They will be able to view

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their holdings,reports,ledgers and will have free access to Geojit’s research reports at
any time.

SMS Alert Facility: The alert messages for debits (transfers) and IPO credits would
be sent to the account holders who have subscribed to this facility. Depository
provides this facility and no charge is levied on DPs for providing this service to
investors.

7) Commodity:
Geojit Commodities, a subsidiary of Geojit Financial Services Limited, is mainly
engaged in the business of Commody Futures Trading. Geojit Commodities is a member of:

National Multi – Commodity Exchange of India limited (NMCE)
National Commodity & Derivatives Exchange Limited (NCDEX)
Multi – Commodity Exchange (MCX)
India Pepper and Spice Trade Association (IPSTA)
Singapore Commodity Exchange (SICOM)
Dubai Gold Commodity Exchange (DGCX).

Geojit provides information on commodity futures, along with technical and
fundamental analysis online at its website and also through the company's large branch
network. The company conducts Seminars, distributes free in-house literature and holds
interactive sessions that help raise awareness on the futures market. The number of
participants is continuously on the rise thus leading to increased volumes and market
efficiency.
Geojit Commodity offers futures trading through multiple exchanges in varied
commodities such as:

Agri- commodities: oilseeds, soya, groundnut, pulses, rice, wheat, sugar, spices,
rubber, guar, pepper, cardamom, coffee, etc
Precious metals: gold and silver,
Base metals: steel, aluminium, nickel, zinc, copper, etc
Energy products: crude oil and furnace oil

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Geojits clientele in commodities range from investors, co-operative societies, state and
national institutions to dealers, traders, manufacturers, financiers, speculators, arbitragers,etc.

Geojit does not have proprietary interest in any commodity and therefore is price
neutral. Transaction costs are highly affordable attracting a spectrum of investors.
Membership in multiple exchanges gives clients the added advantage of arbitrage. Geojit has
specialized staff that provide the required guidance, help and enable clients to enter at the
appropriate price.

8) PMS (Portfolio Management Services):

Geojit, a SEBI registered Portfolio Manager (Reg. No.INP000000316) offers
discretionary portfolio management services. Geojit has a team of experts who carefully take
investment decisions based on the clients' objectives. The Portfolio Management team has a
successful track record of more than 10 years in the capital market. The team has access to
Geojit's strong Equity Research, and Fundamental & Technical Analysis.

 Investment Objective: To generate medium to long-term capital growth (2-3 years)
by identifying undervalued stocks and those with growth opportunities from a select
list of well researched stocks
 Strategy: Identifying growth stocks from a select list through extensive research.
 Minimum Investment: Rs.10 lakhs for resident Indians and Rs.25 lakhs for Non-
Resident Indians.
 Reports: Portfolio and NAV are communicated bi-weekly via e-mail.
 Risk factors: As the stocks are normally held for medium to long term, the net asset
value will be affected by market volatility.
 PMS fee:
 Option 1: 3% p.a. (charged @0.75% at the end of every quarter on the average of
beginning and ending NAV).
 Option 2: 1% p.a. (charged @0.25% at the end of every quarter on the average of
beginning and ending NAV) and performance fee.

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OVERVIEW OF EQUITY
MARKET

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Current state of Indian Economy

Highlights-January 2011

Quick Estimates of National Income released by CSO shows the real GDP growth at
8.0 percent during the year 2009-10. The Advance Estimates also expects the Indian
economy to grow at 8.6 percent during 2010-11. There is also a high expectation from
the agriculture sector.
As per IIP estimates, industrial growth slowed to the level of 2.5 percent in December
2010 from the growth of 18 percent in the same month of previous year.
The manufacturing sector logged 2 percent growth in IIP during December 2010; the
slowest growth since April 2009.
Volatility continues in the capital goods segment as the sector once again observed
major
contraction in output by 9.3 percent in December 2010. However, the cumulative
growth in capital goods from April to December 2010 was more than 16 percent
higher than the growth of 11.2 percent during the same period of 2009.
Six core infrastructure industries grew by 6.1 per cent in December 2010 after logging
a 21-month low growth. However, it was slightly low as compared to the numbers
recorded in the same month last year. In December 2010 growth was mainly seen in
crude oil sector, petroleum refinery sector and steel sector.
The WPI based inflation continues to remain on the higher side on account of the
rising prices of food articles. According to the Economic Survey 2010-11, this rise in
food prices in December 2010 has been on account of supply side constraints e.g.
vegetables, onions, tomatoes, fruits, milk, egg and fish.
The broad money (M3) growth has been 10.8 percent during the period from March to
December 2010-11; slightly down from the growth of 11.0 percent during the same
period of previous fiscal. While growth in the bank credit to the government remained
sluggish however, increased to the commercial sector during the year 2010-11.
The fiscal performance has been better with higher growth in revenue vis-a-vis the
percentage increase in expenditure during the month of December 2010.

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Subsequently, fiscal deficit narrowed by 45 percent in the ninth month of 2010 -11
over the same month of previous fiscal.

Merchandise exports were valued USD 22.5 billion in December 2010, growing by
36.4 percent. However, India’s imports experienced a significant decline by 11.1 per
cent in December 2010. As a result, the deficit saw a considerable reduction to USD
2.6 billion in December 2010 as against USD 11.8 billion in December 2009.

OVERVIEW OF EQUITY MARKET IN INDIA

BSE (Bombay Stock Exchange)

SENSEX - THE BAROMETER OF INDIAN CAPITAL MARKETS

Introduction:

For the premier Stock Exchange that pioneered the stock broking activity in India,

128 years of experience seems to be a proud milestone. A lot has changed since 1875 when

318 persons became members of what today is called "The Stock Exchange, Mumbai" by

paying a princely amount of Re1.

Since then, the country's capital markets have passed through both good and bad

periods. The journey in the 20th century has not been an easy one. Till the decade of eighties,

there was no scale to measure the ups and downs in the Indian stock market. The Stock

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Exchange, Mumbai (BSE) in 1986 came out with a stock index that subsequently became the

barometer of the Indian stock market.

SENSEX is not only scientifically designed but also based on globally accepted

construction and review methodology. First compiled in 1986, SENSEX is a basket of 30

constituent stocks representing a sample of large, liquid and representative companies. The

base year of SENSEX is 1978-79 and the base value is 100. The index is widely reported in

both domestic and international markets through print as well as electronic media.

The Index was initially calculated based on the "Full Market Capitalization"

methodology but was shifted to the free-float methodology with effect from September 1,

2003. The "Free-float Market Capitalization" methodology of index construction is regarded

as an industry best practice globally. All major index providers like MSCI, FTSE, STOXX,

S&P and Dow Jones use the Free-float methodology.Due to its wide acceptance amongst the

Indian investors, SENSEX is regarded to be the pulse of the Indian stock market. As the

oldest index in the country, it provides the time series data over a fairly long period of time

(From 1979 onwards). Small wonder, the SENSEX has over the years become one of the

most prominent brands in the country. The growth of equity markets in India has been

phenomenal in the decade gone by. Right from early nineties the stock market witnessed

heightened activity in terms of various bull and bear runs. The SENSEX captured all these

events in the most judicial manner. One can identify the booms and busts of the Indian stock

market through SENSEX.

SENSEX MILESTONES:
 Robust portfolio investments and heavy fund buying lifted the Bombay Stock
Exchange's benchmark 30-share Sensex past the magical 12,000 mark. The Sensex
finally closed at an all-time high of 12,040 points.

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 This is the fastest 1,000-point gain by the Sensex. It only took 15 trading sessions for
the index to cross from 11,000 to 12,000. Interestingly, the Sensex has taken only 10
months to gain 5,000 points!
 The unprecedented Bull Run started on May 6, 2003 when the Sensex was at 3,001.21
level. In took just 67 trading sessions to cross the 4,000-mark and touch 4,026.27
points on August 19, 2003.

 The rally continued and the index gained another 1,000 points in 54 trading sessions
to post 5,068.66 points on November 3, 2003.
 Thereafter, it pierced through the 6,000 mark on January 2, 2004 in another 43 trading
sessions. The market then seemed to pause for breath as it took a whopping 370
trading sessions to cross the 7,000 mark, at 7001.55 on June 20, 2005.
 From 7,000-mark, the sentiment turned distinctly firm following good liquidity that
played a significant role to determine the market direction and Sensex crossed 8,000-
mark in just 55 trading sessions at 8, 060.26 on September 8, 2005 and 54 trading
days to cross 9,000-mark at 9, 005.63 on November 28, 2005.
 From 9K to 10K, it took just 48 trading sessions. The index crossed 10,000-mark on
February 6, 2006 at 10,002.83.
 From 10K to 11K, it only took 29 trading sessions.
 The Bombay Stock Exchange, the oldest stock exchange in Asia, was established in
1875 as the Native Share and Stock Brokers Association at Dalal Street in Mumbai. A
lot has changed since then when 318 persons became members upon paying Re 1.
 In 1956, the BSE obtained permanent recognition from the Government of India -- the
first stock exchange to do so -- under the Securities Contracts (Regulation) Act, 1956.
 The Sensex, first compiled in 1986, is a 'Market Capitalization-Weighted' Index of 30
component stocks representing a sample of large and financially sound companies.
The BSE- Sensex is the benchmark index of the Indian capital markets.

The BSE Sensex comprises these 30 stocks: ACC, Bajaj Auto, Bharti Tele, BHEL,
Cipla, Dr Reddy's, Gujarat Ambuja, Grasim, HDFC, HDFC Bank, Hero Honda, Hindalco,
HLL, ICICI Bank, Infosys, ITC, L&T, Maruti, NTPC, ONGC, Ranbaxy, Reliance, Reliance

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Energy, Satyam, SBI, Tata Motors, Tata Power, TCS, Tata Motors and Wipro. Here's a
timeline on the rise and rise of the Sensex through Indian stock market history.

1000, July 25, 1990- On July 25, 1990, the Sensex touched the magical four-digit figure
for the first time and closed at 1,001 in the wake of a good monsoon and excellent
corporate results.
2000, January 15, 1992 -On January 15, 1992, the Sensex crossed the 2,000-mark and
closed at 2,020 followed by the liberal economic policy initiatives undertaken by the then
finance minister and current Prime Minister Dr Manmohan Singh.
3000, February 29, 1992 -On February 29, 1992, the Sensex surged past the 3000 mark
in the wake of the market-friendly Budget announced by the then Finance Minister, Dr
Manmohan Singh.
4000, March 30, 1992 -On March 30, 1992, the Sensex crossed the 4,000-mark and
closed at 4,091 on the expectations of a liberal export-import policy. It was then that the
Harshad Mehta scam hit the markets and Sensex witnessed unabated selling.
5000, October 8, 1999 -On October 8, 1999, the Sensex crossed the 5,000-mark as the
BJP-led coalition won the majority in the 13th Lok Sabha election.
6000, February 11, 2000 -On February 11, 2000, the infotech boom helped the Sensex to
cross the 6,000-mark and hit and all time high of 6,006.
7000, June 20, 2005 -On June 20, 2005, the news of the settlement between the Ambani
brothers boosted investor sentiments and the scrips of RIL, Reliance Energy, Reliance
Capital and IPCL made huge gains. This helped the Sensex crossed 7,000 points for the
first time.
8000, September 8, 2005 -On September 8, 2005, the Bombay Stock Exchange's
benchmark 30-share index -- the Sensex -- crossed the 8000 level following brisk buying
by foreign and domestic funds in early trading.
9000, November 28, 2005 -The Sensex on November 28, 2005 crossed the magical
figure of 9000 to touch 9000.32 points during mid-session at the Bombay Stock Exchange
on the back of frantic buying spree by foreign institutional investors and well supported
by local operators as well as retail investors.
10,000, February 7, 2006 - The Sensex on February 6, 2006 touched 10,003 points
during mid-session. The Sensex finally closed above the 10K-mark on February 7, 2006.

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11,000, March 27, 2006 - The Sensex on March 21, 2006 crossed the magical figure of
11,000 and touched a life-time peak of 11,001 points during mid-session at the Bombay
Stock Exchange for the first time. However, it was on March 27, 2006 that the Sensex
first closed at over 11,000 points.
12,000, April 20, 2006 - The Sensex on April 20, 2006 crossed the magical figure of
12,000 and closed at a lifetime peak of 12,040 points for the first time.
13,000, October 30, 2006- The Sensex had touched the 13,000 level on October 30.

14,000, December 5, 2006- The Bombay Stock Exchange's 30-share benchmark stock
index, the Sensex, crossed the 14,000 mark, Tuesday, December 5, opening with a bang
at 14,028, up 154 points from its previous close, thanks to a freak trade at the Reliance
counter which saw the stock open at Rs. 1,350, up Rs. 90 from the previous day's close.
With the index completing the last 1,000 point journey in just 26 sessions.

15,000, July 6, 2007- The Sensex on July 6, 2007 crossed another milestone and reached
a magic figure of 15,000. it took almost 7 month and 1 day to touch such a historic
milestone.

16,000, September 19, 2007- The Sensex on September 19, 2007 crossed the 16,000
mark and reached a historic peak of 16322 while closing. The bull hits because of the rate
cut of 50 bps in the discount rate by the Fed chief Ben Bernanke in US.

17,000, September 26, 2007- The Sensex on September 26, 2007 crossed the 17,000
mark for the first time, creating a record for the second fastest 1000 point gain in just 5
trading sessions. It failed however to sustain the momentum and closed below 17000. The
Sensex closed above 17000 for the first time on the following day. Reliance group has
been the main contributor in this bull run, contributing 256 points. This also helped
Mukesh Ambani's net worth to grow to over $50 billion or Rs.2 trillion. It was also during
this record bull run that the Sensex for the first time zoomed ahead of the Nikkei of
Japan.

18,000, October 9, 2007- The Sensex crossed the 18k mark for the first time on October
9, 2007. The journey from 17k to 18k took just 8 trading sessions which is the third
fastest 1000 point rise in the history of the sensex. The sensex closed at 18,280 at the end

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of day. This 788 point gain on 9th October was the second biggest single day absolute
gains.

19,000, October 15, 2007- The Sensex crossed the 19k mark for the first time on October
15th 2007. It took just 4 days to reach from 18k to 19k. This is the fastest 1000 points
rally ever and also the 640 point rally was the second highest single day rally in absolute
terms. This made it a record 3000 point rally in 17 trading sessions overall.

20,000, October 29, 2007- The Sensex crossed the 20k mark for the first time with a
massive 734.5 point gain but closed below the 20k mark. It took 11 days to reach from
19k to 20k. The journey of the last 10,000 points was covered in just 869 sessions as
against 7,297 sessions taken to touch the 10,000 mark from 1,000 levels. In 2007 alone,
there were six 1,000-point rallies for the Sensex.

NSE (NATIONAL STOCK EXCHANGE)

The Organization:

The National Stock Exchange of India Limited has genesis in the report of the High
Powered Study Group on Establishment of New Stock Exchanges, which recommended
promotion of a National Stock Exchange by financial institutions (FIs) to provide access to
investors from all across the country on an equal footing. Based on the recommendations,
NSE was promoted by leading Financial Institutions at the behest of the Government of India
and was incorporated in November 1992 as a tax-paying company unlike other stock
exchanges in the country.

On its recognition as a stock exchange under the Securities Contracts (Regulation)
Act, 1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM)
segment in June 1994. The Capital Market (Equities) segment commenced operations in
November 1994 and operations in Derivatives segment commenced in June 2000.

NIFTY:

Page 19


The Nifty is relatively a new comer in the Indian market. S&P CNX Nifty is a 50
stock index accounting for 23 sectors of the economy. It is used for purposes such as
benchmarking fund portfolios; index based derivatives and index funds.

The base period selected for Nifty is the close of prices on November 3, 1995, which
marked the completion of one-year of operations of NSE's capital market segment. The base
value of index was set at 1000.

S&P CNX Nifty is owned and managed by India Index Services and Products Ltd.
(IISL), which is a joint venture between NSE and CRISIL. IISL is a specialized company
focused upon the index as a core product. IISL have a consulting and licensing agreement
with Standard & Poor's (S&P), who are world leaders in index services.

Page 20


RESEARCH ON
TECHNICAL
ANALYSIS

Page 21


TITLE OF THE PROJECT:

“Technical Analysis on Automobile Sector Undertaken at Geojit Financial Services Ltd
Bagalkot.”

SCOPE OF THE STUDY:

This study is most important because technical analysis helps investors in better
understanding the markets and gauges the direction in which their investments might be
headed and it’s utility helps in estimating the future trends of the stock prices and to make a
decent profit out of it.

OBJECTIVES OF THE STUDY:

1) To predict investor positions (Buy, sell & hold).

2) To know the future trend of Stock Prices of Tata Motors and Maruti Udyog Ltd. in
capital market

METHODOLOGY:

Primary data is collected through direct interactions with the Branch Manager and
Employees of Geojit Financial Services, Ltd Bagalkot.

The Secondary data is collected from the relevant text books on the subject matter and
company’s official website.

TOOLS:

1. Moving Average Method.

 Tools Used: MS-Excel has been used for calculations.

LIMITATIONS OF THE STUDY:

1. The study is limited only to automobile sector and 3 companies
2. I have used only 1 Technical tool to predict the movement of Scrip’s.
3. Only Technical Analysis is used to predict the stock prices of the companies.

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THEORETICAL
FRAME WORK

Page 23


Technical analysis is the examination of past price movements to forecast future price
movements. Technical analysts are sometimes referred to as chartists because they rely
almost exclusively on charts for their analysis.

 Moving Average:

A Moving Average is an indicator that shows the average value of a security's price
over a period of time. When calculating a moving average, a mathematical analysis of the
security's average value over a predetermined time period is made. As the securities price
changes, its average price moves up or down.

There are several popular ways to calculate a moving average. Meta Stock for Java
calculates a "simple" moving average--meaning that equal weight is given to each price over
the calculation period.

Interpretation:

The most popular method of interpreting a moving average is to compare the
relationship between a moving average of the security's price with the security's price itself.
A buy signal is generated when the security's price rises above its moving average and a sell
signal is generated when the security's price falls below its moving average.

This type of moving average trading system is not intended to get you in at the exact
bottom nor out at the exact top. Rather, it is designed to keep you in line with the security's
price trend by buying shortly after the security's price bottoms and selling shortly after it tops.

The critical element in a moving average is the number of time periods used in
calculating the average. When using hindsight, you can always find a moving average that
would have been profitable. The key is to find a moving average that will be consistently
profitable. The most popular moving average is the 39-week (or 200-day) moving average.
This moving average has an excellent track record in timing the major (long-term) market
cycles.

Advantages:

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The advantage of moving average system of this type (i.e., buying and selling when
prices break through their moving average) is that you will always be on the "right" side of
the market: prices cannot rise very much without the price rising above its average price. The
disadvantage is that you will always buy and sell some late. If the trend does not last for a
significant period of time, typically twice the length of the moving average, you will lose
your money.

 Support and Resistance:

Support and resistance represent key junctures where the forces of supply and demand
meet. In the financial markets, prices are driven by excessive supply (down) and demand
(up). Supply is synonymous with bearish, bears and selling. Demand is synonymous with
bullish, bulls and buying. These terms are used interchangeably throughout this and other
articles. As demand increases, prices advance and as supply increases, prices decline. When
supply and demand are equal, prices move sideways as bulls and bears slug it out for control.

What Is Support?

Support is the price level at which demand is thought to be strong enough to prevent
the price from declining further. The logic dictates that as the price declines towards support
and gets cheaper, buyers become more inclined to buy and sellers become less inclined to
sell. By the time the price reaches the support level, it is believed that demand will overcome
supply and prevent the price from falling below support.

Support does not always hold and a break below support signals that the bears have
won out over the bulls. A decline below support indicates a new willingness to sell and/or a
lack of incentive to buy. Support breaks and new lows signal that sellers have reduced their
expectations and are willing sell at even lower prices. In addition, buyers could not be
coerced into buying until prices declined below support or below the previous low. Once
support is broken, another support level will have to be established at a lower level.

Where Is Support Established?

Support levels are usually below the current price, but it is not uncommon for a
security to trade at or near support. Technical analysis is not an exact science and it is

Page 25


sometimes difficult to set exact support levels. In addition, price movements can be volatile
and dip below support briefly. Sometimes it does not seem logical to consider a support level
broken if the price closes 1/8 below the established support level. For this reason, some
traders and investors establish support zones.

What Is Resistance?

Resistance is the price level at which selling is thought to be strong enough to prevent
the price from rising further. The logic dictates that as the price advances towards resistance,
sellers become more inclined to sell and buyers become less inclined to buy. By the time the
price reaches the resistance level, it is believed that supply will overcome demand and
prevent the price from rising above resistance.

Resistance does not always hold and a break above resistance signals that the bulls
have won out over the bears. A break above resistance shows a new willingness to buy and/or
a lack of incentive to sell. Resistance breaks and new highs indicate buyers have increased
their expectations and are willing to buy at even higher prices. In addition, sellers could not
be coerced into selling until prices rose above resistance or above the previous high. Once
resistance is broken, another resistance level will have to be established at a higher level.

Where Is Resistance Established?

Resistance levels are usually above the current price, but it is not uncommon for a
security to trade at or near resistance. In addition, price movements can be volatile and rise
above resistance briefly. Sometimes it does not seem logical to consider a resistance level
broken if the price closes 1/8 above the established resistance level. For this reason, some
traders and investors establish resistance zones.

So, Here, Identification of key support and resistance levels is an essential ingredient
to successful technical analysis. Even though it is sometimes difficult to establish exact
support and resistance levels, being aware of their existence and location can greatly enhance
analysis and forecasting abilities. If a security is approaching an important support level, it
can serve as an alert to be extra vigilant in looking for signs of increased buying pressure and
a potential reversal. If a security is approaching a resistance level, it can act as an alert to look
for signs of increased selling pressure and potential reversal. If a support or resistance level is

Page 26


broken, it signals that the relationship between supply and demand has changed. A resistance
breakout signals that demand (bulls) has gained the upper hand and a support break signals
that supply (bears) has won the battle.

 Price Oscillator:

The Price Oscillator displays the difference between two moving averages of a
security's price. The difference between the moving averages can be expressed in either
points or percentages.

The Price Oscillator is almost identical to the MACD, except that the Price Oscillator
can use any two user-specified moving averages. (The MACD always uses 12 and 26-day
moving averages, and always expresses the difference in points.)

Interpretation:

Moving average analysis typically generates buy signals when a short-term moving
average (or the security's price) rises above a longer-term moving average. Conversely, sell
signals are generated when a shorter-term moving average (or the security's price) falls below
a longer-term moving average. The Price Oscillator illustrates the cyclical and often
profitable signals generated by these one or two moving average systems.

 Price Rate-Of-Change:

The Price Rate-of-Change ("ROC") indicator displays the difference between the
current price and the price x-time periods ago. The difference can be displayed in either
points or as a percentage. The Momentum indicator displays the same information, but
expresses it as a ratio.

Interpretation:
It is a well-recognized phenomenon that security prices surge ahead and retract in a
cyclical wave-like motion. This cyclical action is the result of the changing expectations as
bulls and bears struggle to control prices.

Page 27


The ROC displays the wave-like motion in an oscillator format by measuring the
amount that prices have changed over a given time period. As prices increase, the ROC rises;
as prices fall, the ROC falls. The greater the change in prices, the greater the change in the
ROC.

The time period used to calculate the ROC may range from 1-day (which results in a
volatile chart showing the daily price change) to 200-days (or longer). The most popular time
periods are the 12- and 25-day ROC for short to intermediate-term trading. These time
periods were popularized by Gerald Appel and Fred Hitschler in their book, Stock Market
Trading Systems.

The 12-day ROC is an excellent short- to intermediate-term overbought/oversold
indicator. The higher the ROC, the more overbought the security; the lower the ROC, the
more likely a rally. However, as with all overbought/oversold indicators, it is prudent to wait
for the market to begin to correct (i.e., turn up or down) before placing your trade. A market
that appears overbought may remain overbought for some time. In fact, extremely
overbought/oversold readings usually imply a continuation of the current trend.

The 12-day ROC tends to be very cyclical, oscillating back and forth in a fairly
regular cycle. Often, price changes can be anticipated by studying the previous cycles of the
ROC and relating the previous cycles to the current market

 Relative Strength Index (RSI):

The Relative Strength Index ("RSI") is a popular oscillator. It was first introduced by
Welles Wilder in an article in Commodities (now known as Futures) Magazine in June, 1978.

The name "Relative Strength Index" is slightly misleading as the Relative Strength
Index does not compare the relative strength of two securities, but rather the internal strength
of a single security. A more appropriate name might be "Internal Strength Index."

Interpretation:

When Wilder introduced the Relative Strength Index, he recommended using a 14-

Page 28


day Relative Strength Index. Since then, the 9-day and 25-day Relative Strength Indexs have
also gained popularity. The fewer days used to calculate the Relative Strength Index, the
more volatile the indicator.

The Relative Strength Index is a price-following oscillator that ranges between 0 and
100. A popular method of analyzing the Relative Strength Index is to look for a
divergence in which the security is making a new high, but the Relative Strength Index is
failing to surpass its previous high. This divergence is an indication of an impending
reversal. When the Relative Strength Index then turns down and falls below its most recent
trough, it is said to have completed a "failure swing." The failure swing is considered a
confirmation of the impending reversal.

In Mr. Wilder's book, he discusses five uses of the Relative Strength Index:

1. Tops and Bottoms. The Relative Strength Index usually tops above 70 and bottoms
below 30. It usually forms these tops and bottoms before the underlying price chart.
2. Chart Formations. The Relative Strength Index often forms chart patterns such as
head and shoulders or triangles that may or may not be visible on the price chart.
3. Failure Swings (also known as support or resistance penetrations or breakouts). This
is where the Relative Strength Index surpasses a previous high (peak) or falls below a
recent low (trough).
4. Support and Resistance. The Relative Strength Index shows, sometimes more
clearly than price themselves, levels of support and resistance.
5. Divergences. As discussed above, divergences occur when the price makes a new
high (or low) that is not confirmed by a new high (or low) in the Relative Strength
Index. Prices usually correct and move in the direction of the Relative Strength
Index.

Trend lines:

In the preceding section, we saw how support and resistance levels can be penetrated
by a change in investor expectations (which results in shifts of the supply/demand lines).
This type of a change is often abrupt and "news based."

Page 29


In this section, we'll review "trends." A trend represents a consistent change in prices
(i.e., a change in investor expectations). Trends differ from support/resistance levels in that
trends represent change, whereas support/resistance levels represent barriers to change.

As shown in the following chart, a rising trend is defined by successively higher low-
prices. A rising trend can be thought of as a rising support level--the bulls are in control and
are pushing prices higher.

As shown in the next chart, a falling trend is defined by successively lower high-
prices. A falling trend can be thought of as a falling resistance level--the bears are in control
and are pushing prices lower.

Bar Chart:

The Bar chart is one of the most popular types of charts used in technical analysis. As
illustrated on the left, the top of the vertical line indicates the highest price at which a security
traded during the day, and the bottom represents the lowest price. The closing price is

Page 30


displayed on the right side of the bar and the opening price is shown on the left side of the
bar. A single bar like the one to the left represents one day of trading.

The chart below is an example of a bar chart for AT&T (T):

The advantage of using a bar chart over a straight-line graph is that it shows the high,
low, open and close for each particular day.

Candle stick Charting:

Candlestick charts have been around for hundreds of years. They are often referred to
as "Japanese candles" because the Japanese would use them to analyze the price of rice
contracts.

Similar to a bar chart, candlestick charts also display the open, close, daily high and
daily low. The difference is the use of color to show if the stock went up or down over the
day.

Page 31


The chart below is an example of a candlestick chart for AT&T (T). Green bars
indicate the stock price rose, red indicates a decline:

Investors seem to have a "love/hate" relationship with candlestick charts. People
either love them and use them frequently or they are completely turned off by them. There
are several patterns to look for with candlestick charts - here are a few of the popular ones
and what they mean.

This is a bullish pattern - the stock opened at (or near) its low and
closed near its high

.

Page 32


The opposite of the pattern above, this is a bearish pattern. It
indicates that the stock opened at (or near) its high and dropped
substantially to close near its low.

Known as "the hammer", this is a bullish pattern only if it occurs
after the stock price has dropped for several days. A small body along
with a large range identifies a hammer. This pattern indicates that a
reversal in the downtrend is in the works.

Known as a "star”. For the most part, stars typically indicate a
reversal and or indecision. There is a possibility that after seeing a
star there will be a reversal or change in the current trend.

Point and Figure Chart:

The point & figure (P&F) chart is somewhat rare. In fact, most charting services do
not even offer it. This chart plots day-to-day increases and declines in price: increases are
represented by a rising stack of "X"s, while decreases are represented by a declining stack of
"O"s. This type of chart was traditionally used for intraday charting (a stock chart for just one
day), mainly because it can be long and tedious to create a P&F chart manually over a longer
period of time.

The idea behind P&F charts is that they help you to filter out less significant price
movements and to focus on the most important trends. Below is an example of a P&F chart
for AT&T (T):

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POPULAR CHART PATTERNS:

Technical analysts often use proven successful price patterns from great stocks as
tools to find new great stocks. Let's look at a few examples

Cup and Handle - This is a pattern on a bar chart that can be as short as seven weeks
and as long as 65 weeks. The cup is in the shape of a "U". The handle has a slight
downward drift. The right-hand side of the pattern has low trading volume. As the
stock comes up to test the old highs, the stock will incur selling pressure by the people
who bought at or near the old high. This selling pressure will make the stock price
trade sideways with a tendency towards a downtrend for anywhere from four days to
four weeks, then it will take off.

Page 34


This pattern looks like a pot with a handle. It is one of the easier patterns to detect;
and investors have made a lot of money using it.

Head and Shoulders - This is a chart formation resembling an "M" in which a stock's
price:

- Rises to a peak and then declines, then
- Rises above the former peak and again declines, and then
- Rises again but not to the second peak and again declines.

The first and third peaks are shoulders, and the second peak forms the head. This pattern
is considered a very bearish indicator.

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Double Bottom - This pattern resembles a "W" and occurs when a stock price drops
to a similar price level twice within a few weeks or months. You should buy when the
price passes the highest point in the handle. In a perfect double bottom, the second
decline should normally go slightly lower than the first decline to create a shakeout of
jittery investors. The middle point of the "W" should not go into new high ground.
This is a very Bullish indicator.

The belief is that, after two drops in the stock price, the jittery investors will be out
and the long-term investors will still be holding on.

Page 36


COMPANY ANALYSIS

Page 37


OVERVIEW OF AUTOMOBILE INDUSTRY IN INDIA

The global automotive industry is a highly diversified sector that comprises of
manufacturers, suppliers, dealers, retailers, original equipment manufacturers, aftermarket
parts manufacturers, automotive engineers, motor mechanics, auto electricians, spray painters
or body repairers, fuel producers, environmental and transport safety groups, and trade
unions. United States, Japan, China, Germany and South Korea are the top five automobile
manufacturing nations throughout the world. The United States of America is the worldâ€™s
largest producer and consumer of motor vehicles and automobiles accounting for 6.6 million
direct and spin-off jobs and represents nearly 10% of the S10 trillion US economy. The
automobile is one of the important industries in the world, which provides employment to 25
million people in the world.

The Indian automobile industry is going through a technological change where each
firm is engaged in changing its processes and technologies to sustain the competitive
advantage and provide customers with the optimized products and services. Starting from the
two wheelers, trucks, and tractors to the multi utility vehicles, commercial vehicles and the
luxury vehicles, the Indian automobile industry has achieved tremendous amount of success
in the recent years.

Page 38


The market shares of the segments of the automobile industry

The automobile industry had a growth of 15.4 % during April-January 2007, with the
average annual growth of 10-15% over the last decade or so. With the incremental investment
of $35-40 billion, the growth is expected to double in the next 10 years. Consistent growth
and dedication have made the Indian automobile industry the second- largest tractor and two-
wheeler manufacturer in the world. It is also the fifth-largest commercial vehicle
manufacturer in the world. The Indian automobile market is among the largest in Asia.

The key players like Hindustan Motors, Maruti Udyog, Fiat India Private Ltd, Tata Motors,
Bajaj Motors, Hero Motors, Ashok Leyland, Mahindra & Mahindra have been dominating
the vehicle industry. A few of the foreign players like Toyota Kirloskar Motor Ltd., Skoda
India Private Ltd., Honda Siel Cars India Ltd. have also entered the market and have catered
to the customers’ needs to a large extent.Not only the Indian companies but also the
international car manufacturing companies are focusing on compact cars to be delivered in
the Indian market at a much smaller price. Moreover, the automobile companies are coming
up with financial schemes such as easy EMI repayment systems to boost sales.

There have been exhibitions like Auto-expo at Pragati Maidan, New Delhi to share the
technological advancements. Besides, there are many new projects coming up in the
automobile industry leading to the growth of the sector.

Page 39


The Government of India has liberalized the foreign exchange and equity regulations
and has also reduced the tariff on imports, contributing significantly to the growth of the
sector. Having firmly established its presence in the domestic markets, the Indian automobile
sector is now penetrating the international arena. Vehicle exports from India are at their
highest levels. The leaders of the Indian automobile sector, such as Tata Motors, Maruti and
Mahindra and Mahindra are leading the exports to Europe, Middle East and African and
Asian markets.

The Ministry of Heavy Industries has released the Automotive Plan 2006-2016,
with the motive of making India the most popular manufacturing hub for automobiles and its
components in Asia. The plan focuses on the removal of all the bottlenecks that are inhibiting
its growth in the domestic as well as international arena.

Growth in the Sector:

 At present the industry is enjoying a growth rate of 14-17% per annum, with domestic
sales growth at 12.8%. The growth rate is predicted to double by 2015.
 As it is seen, the total sales of passenger vehicles - cars, utility vehicles and multi-
utility vehicles - in the year 2005 reached the mark of 1.06 million. The current
growth rate indicates that by 2012 India will overtake Germany and Japan in sales
volumes.
 Financing schemes have become an important factor in the growth of automobile
sales. More and more financial schemes are coming up with easy installment plans to
lure the customers.
 Apart from domestic production, the industry is consistently focusing on the
automobile exports. The auto component segment is contributing a lot in the export
arena. The liberalized policies of the government are now making the companies go
for more and more exports.
The automobile exports are increasing year by year. According to the Society
of Indian Automobile Manufactures (SIAM) automobile exports in the last five years
are as follows:

Page 40


SWOT ANALYSIS OF INDIAN AUTOMOBILE INDUSTRY:

STRENGTHS:

Globally cost competitive
Adheres to strict quality controls
Has access to latest technology
Provides support to critical infrastructure and metal industries

WEAKNESSES:

Industry has low level of research and development capability
Industry is exposed to cyclical downturns in the automotive industry
Most component companies are dependent on global majors for technology

OPPORTUNITIES:

May serve as sourcing hub for global automobile majors
Significant export opportunities may be realised through diversification of export
basket
Implementation of Value-Added-Tax (VAT) in FY2004 will negate the cascading
impact of prices

THREATS:

The presence of a large counterfeit components market poses a significant threat
Pressure on prices from OEMs continues
Imports pose price based competition in the replacement market

Page 41


Budget over the years

Budget 2005-06 Budget 2006-07 Budget 2007-08
Custom duty on second Agricultural lending target Customs duty on new and
hand motorcars and set at Rs 1,750 bn for FY07, second hand motor cars/two
motorcycles reduced to an increase of 32.5%. One wheelers will continue at
100% as compared to 105% time grant to farmers who 60% and 100% respectively
earlier. Custom duty on new have availed loans from
cars maintained at 60%. scheduled commercial Secondary and higher
banks, RRBs and PSCs for education cess @ 1% of the
Excise duty on tractors of Kharif and Rabi 2005-06 of aggregate of duties of
engine capacity more than a principle amount up to Rs excise has been imposed on
1800 cc for semi trailers to 0.1 m and interest rate of up excisable goods including
attract @ 16%. to 2%. Short-term credit to automobiles. This would be
farmers at 7% for loans up in addition to existing
Introduction of new income to Rs 0.3 m and 0.6 m education cess of 2%
tax brackets. hectors to be brought under imposed in budget 2004
irrigation in FY07.
Peak customs duty reduced A weighted deduction of
from 20% to 15%. Excise duty on cars having 150% for expenditure
engine capacity up to 1,200 relating to in-house research
Excise duty on tyres, tubes cc (petrol based engines) and development to be
and flaps reduced from 24% and 1,500 cc (diesel based extended to five more years
to 16%. Customs duty on engines) and length of the
lead cut to 5%. car up to 4,000 mm reduced Hike in the dividend
from 24% to 16%. distribution tax from the
current 12.5% to 15%
Budget support for NHDP
enhanced from Rs 93 bn to Farm credit outlay to be
Rs 99 bn in 2006-07. increased by Rs 500 bn and
Around 1,000 kms of 5 m new farmers to be
access-controlled added to the banking system
expressways (totaling six)
to be developed on BOT
basis.

Custom duty on alloy steel
and non-ferrous (primary
and secondary) metals
reduced from 10% to 7.5%.
Peak customs duty reduced
from 15% to 12.5%.

Page 42


Key Positives Key Negatives

Rising middle class: Expansion of Competition from imports: With India
population between the age group of 25 to coming under the WTO purview and the
50 years, increasing affluence of the Indian increasing free trade agreements (FTAs),
middle class and heightened competition competition is expected to rise multifold.
amongst automobile manufacturers, Indian companies also have to contend
resulting in improved quality offerings, with imports in the future. Already a
will continue to be the key drivers for the number of global auto companies are
industry in terms of both market size and introducing vehicles through the
production capacities. completely knocked down (CKD) route.

The 'Nano' effect: Penetration of cars in Taxation anomalies: Indian automobile
India at around 7 per thousand is even industry is amongst the highly taxed
below countries like Pakistan and Sri industries as not only the final product
Lanka. However, the launch of Tata's small bears heavy taxes but the cascading effect
of duties on some key raw materials and
car 'Nano', touted to be the cheapest in the
world is likely to change that. The price components also hurts profit margins of
will make cars affordable to thousands of auto companies. Also, multiple tax rules
families, thus greatly pushing up the that exist in different states are eroding the
density in the country and giving a big comparative advantage of a large domestic
boost to volumes. market thus making the uniform
implementation of VAT (Value Added
Increasing exports: The Indian auto Tax) necessary.
industry has emerged as an export hub, on
account of its low cost technical manpower
and increasing focus on quality. To give a
perspective, in the last five years (FY02-
FY07), volume exports of Indian
automobiles have increased by 41%
CAGR, led by motorcycles (CAGR of
57%). This development has led to
domestic players increasing their share of
exports in the overall pie.

Infrastructure thrust: Improvement in
road infrastructure has led to increased
movement of goods through roadways.
Around 65% of all the goods movement in
the country takes place by roads as opposed
to 55% a decade ago. Also, owing to the
fact that an estimated 45% of CVs
(commercial vehicles) plying on the roads
are more than 10 years old, demand for
HCVs (heavy commercial vehicles) is
expected to grow by a steady rate in the
long term.

Page 43


Low interest rate regime: Close to 80%
of the new vehicles being purchased in the
country are financed, thus underlying the
importance of a low interest rate regime to
the fortunes of the industry. Though the
interest rates have risen significantly in
recent times, we believe it is likely to have
only a small impact over the medium term
as there has been a substantial rise in
income levels.

Regulation led benefits: Implementation
of pollution norms like restriction on the
age of the vehicle plying on the road and
overloading of commercial vehicles would
seemingly aid higher volume growth of this
segment.

Page 44


COMPANY ANALYSIS

MARUTI UDYOG LIMITED

Maruti Udyog Ltd is one of India's leading automobile manufacturers and the market leader
in the car segment, both in terms of volume of vehicles sold and revenue earned. 18.28% of
the company is owned by the government, and 54.2% by Suzuki of Japan. The Indian
government held an Initial Public Offering of 25% of the company in June of 2003.

The company annually exports more than 30,000 cars and has an extremely large domestic
market in India selling over five hundred thousand cars annually. Maruti 800, till 2004, was
the India's largest selling compact car ever since it was launched in 1983. More than a million
units of this car have been sold worldwide so far. Currently, Maruti Alto tops the sales charts.

Due to the large number of Maruti 800s sold in the Indian market, the term "Maruti" is
commonly used to refer to this compact car model. Till recently the term "Maruti", in popular
Indian culture, was associated to the Maruti 800 model.

The largest selling car from Maruti's stable, Maruti 800

In the order they were launched:

Maruti 800: Launched 1983. Largest selling car in India, till 2004.
Maruti Omni: Launched 1984.
Maruti Gypsy: Launched 1985.
Maruti 1000: Launched 1990
Maruti Zen: Launched 1993 with a facelift in 2003.Production ended in 2006.
Maruti Esteem:Launched 1994
Maruti Wagon-R:Launched 1999 Modified 2006
Maruti Baleno:Launched 1999
Maruti Alto:Launched 2000. Currently the largest selling car in India
Maruti Grand Vitara:Launched 2003
Maruti Versa: Launched 2004
Maruti Swift: Launched 2005
Maruti Zen Estilo Launched in 2006
Page 45


Maruti Swift Diesel Launched in 2007

Services offered

Authorized Service Stations- Maruti is one of the companies in India which has
unparalleled service network. To ensure the vehicles sold by them are serviced properly
Maruti had 1545 listed Authorized service stations and 30 Express Service Stations on 30
highways across India.
Maruti Insurance- Launched in 2002 Maruti provides vehicle insurance to its
customers with the help of the National Insurance Company, Bajaj Allianz, New India
Assurance and Royal Sundaram. The service was set up the company with the inception of
two subsidiaries Maruti Insurance Distributors Services Pvt. Ltd and Maruti Insurance
Brokers Pvt. Limited.
Maruti Finance- To promote its bottom line growth, Maruti launched Maruti Finance
in January 2002. Prior to the start of this service Maruti had started two joint ventures
Citicorp Maruti and Maruti Countrywide with Citi Group and GE Countrywide respectively
to assist its client in securing loan. Maruti tied up with ABN Amro Bank, HDFC Bank, ICICI
Limited, Kotak Mahindra, Standard Chartered Bank, and Sundaram to start this venture
including its strategic parnters in car finance. Again the company entered into a strategic
partnership with SBI in March 2003. Since March 2003, Maruti has sold over 12,000 vehicles
through SBI-Maruti Finance. SBI-Maruti Finance is currently available in 166 cities across
India.
Maruti TrueValue- Maruti True Value is a service offered by Maruti Udyog to its
customers. It is a market place for used Maruti Vehicles. One can buy, sell or exchange used
Maruti vehicles with the help of this service in India
N2N Fleet Management- N2N is the short form of End to End Fleet Management
and provides lease and fleet management solution to corporates. Its impressive list of clients
who have signed up of this service include Gas Authority of India Ltd, DuPont, Reckitt
Benckiser, Sona Steering, Doordarshan, Singer India, National Stock Exchange and
Transworld. This fleet management service include end-to-end solutions across the vehicle's
life, which includes Leasing, Maintenance, Convenience services and Remarketing.
Accessories- Many of the auto component companies other than Maruti Udyog
started to offer components and accessories that were compatible. This caused a serious threat
and loss of revenue to Maruti. Maruti started a new initiative under the brand name Maruti

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Genuine Accessories to offer accessories like alloy wheels, body cover, carpets, door visors,
fog lamps, stereo systems, seat covers and other car care products. These products are sold
through dealer outlets and authorized service stations throughout India.
Maruti Driving School
Exports- Maruti Exports Limited is the subsidary of Maruti Udyog Limited with its
major focus on exports and it does not operate in the domestic Indian market. The first
commercial consignment of 480 cars were sent to Hungary. By sending a consignment of 571
cars to the same country Maruti crossed the benchmark of 3,00,000 cars. Since its inception
export was one of the aspects government was keen to encourage. Every political party
expected Maruti to earn foreign currency. Angola, Benin, Djibouti, Ethiopia, Europe, Kenya,
Morocco, Sri Lanka, Uganda, Chile, Guatemala, Costa Rica and El Salvador are some of the
markets served by Maruti Exports

Key Competitors-

Tata Motors
Hyundai India
Ford India
FIAT India
General Motors India

Pride Pointers

• India’s largest automobile company
• MUL Rolls out one car every 43 second.
• Around 4 million people in India are proud to own maruti cars.
• The highest installed production capacity
• More than 35,000 trained technicians for customer support.
• Largest Sales network-270 sales outlets
• Largest service networks- 359 dealers workshop
• Cities covered by sales- 172
• Cities covered by service- 922
• Spare Parts Store- 26
• MGP Shopee- 11

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• True Value network- 127 outlets

Some Milestones-

1983- Launched, hence bringing the first revolution in the Indian car market in terms of

• Technology
• Availability- production Capacity
• Fuel Efficiency
• Choice of colour
• Shape May- 1993, Zen the world car unvieled at a world premier.
• November- 1994, Esteem the first luxury car on Indian roads launched
• December- 1999, Baleno, the top end of the luxury car launched.
• March-2000 WagonR the original tall boy launched.
• September-2000, Alto launched in three variants
• October-2001, Versa, India’s first MPV launched in three variants
• April-2002 Grand Vitara, the SUV launched.

Some Milestones in Exports

• MUL Export cars to more than 100 countries.
• India’s largest exporter of completely built cars (CBU) during 2001-2002 both in
terms of volume and value.
• Cumulative export sales crossing the 2.5 lakh mark, far more than any car company in
the country.

Local market trends
Sales, particularly in the small car segment, will drive passenger car sales in the near
in term. However, within the next two years , capacity is expected to be twice the total
demand for cars.
With developments in the small car segment acquiring a degree of stability in terms of
price competition, the action is shifting to the mid-size car segment. sales in this segment will
pick up as new models come in and income levels rise but it is still some times till it comes
anywhere close to the economy sized segment.

Page 48


What will also drive car sales is the wide availability of finance schemes by a variety
of banks and FI’s.
Sales in the used car market is also expected to do well as more an dmore older
models get replaced by newer ones at a faster pace. The coming in of Euro 3 and 4 norms will
also increase scrappage rates.
In view of expected surplus in the domestic market, India will emerge as one of the
leading car sourcing point in the Indian subcontinent.
Consumers will be the beneficiaries as a result of marketing war, as they will be
offerd technologically superior products at better price and terms and conditions. But the
customer has a risk of model discontinuation as a result of shake-out expected in the industry.
India offers a releatively low cast production base and is strategically positioned as a
launching base for third country export to Asia-pacific and European markets
Growth in road transport, increasing urbanization and privatization of public transport
will into growing demand for commercial vechile which is sited to reach three hundred
thousand by 2001, growth of disposable incomes will push up demand for two-wheelers to
4.5 million, of three-wheelers to 250 thousand and of passenger car to 420 thousand over the
same time span.
India has added advantage of an extensively segmented market and a well- developed
dealer network.
Growth of consumer finance leasing and hire-purchase options for vehicle dealers and
buyers also boost demand.
A well developed component industry offers opportunities for sourcing. The scope is
vast for foreign collaboration to produce branded models stressing on emission standards,
fuel efficiency, advanced features and contemporary styles.

Page 49


TATA MOTORS

Tata Motors Limited formerly known as TELCO (TATA Engineering and
Locomotive Company), (NYSE: TTM) - is India's largest passenger automobile and
commercial vehicle manufacturing company. It is a part of the Tata Group, and has its
headquarters in Mumbai, Maharashtra. One of the world's largest manufacturers of
commercial vehicles and known for its hatchback passenger vehicle Tata Indica, Tata Motors
has its manufacturing base in Jamshedpur, Lucknow, Pune and Singur. The OICA ranked it
as the world's 21st largest vehicle manufacturer, based on figures for2006.

Tata Motors was established in 1945, when the company began making trains. Tata
Motors was first listed on the NYSE in 2004. Tata Motors gained Rs. 320 billion during
2001-2006 which was among the top 10 corporate profits in India. In 2004 it also bought
Daewoo's truck manufacturing unit, now known as Tata Daewoo Commercial Vehicle, in
South Korea. In March 2005, it acquired a 21% stake in Hispano Carrocera SA, giving it
controlling rights in the company. On 10 January 2008, Tata Motors launched their much
awaited Tata Nano, noted for its Rs 100,000 price-tag, at Auto Expo 2008 in Pragati Maidan,
Delhi.

Tata Motors Limited is India's largest automobile company, with revenues of Rs.
32,426 crores (USD 7.2 billion) in 2006-07. It is the leader by far in commercial vehicles in
each segment, and the second largest in the passenger vehicles market with winning
products in the compact, midsize car and utility vehicle segments. The company is the
world's fifth largest medium and heavy commercial vehicle manufacturer, and the world's
second largest medium and heavy bus manufacturer.

The company's 22,000 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." Tata Motors helps its employees realise their potential through innovative HR
practices. The company's goal is to empower and provide employees with dynamic career
paths in congruence with corporate objectives. All-round potential development and
performance improvement is ensured by regular in-house and external training. The
company has won several awards recognizing its training programmes.

Page 50


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. In 2004, it acquired the Daewoo Commercial Vehicles Company, 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.

The Tata Group is one of India's largest and most respected business conglomerates,
with revenues in 2006-07 of $28.8 billion, the equivalent of about 3.2 per cent of the
country's GDP, and the international revenues of the Group in 2006-07 were US$ 10.8
billion, contributing to 38% of the total Group revenues. Tata companies together employ
over 300,000 people.

Awards:

Tata Motors chosen as India's Most Trusted Brand in Cars...

Business today selects Mr. P.P. Kadle as India's Best CFO in 2005...

Tata Motors is 'Commercial Vehicle Manufacturer of the Year'...

Industry and Technology Award, 2002.

Advertising Awards...

Tata Engineering was conferred Bharat Gaurav Puraskar...

Best Value for Money Car of the Year - Tata Indigo CNBC Auto Car Auto Awards -

2...

National Award for R&D Efforts...

Best Company Award at Work skills Competition...

'Prof. Vasant Rao Rolling Trophy' for Value Engineering - 2002...

Tata Motors team wins The Runners up Position at The Asian Business Simulation.

Page 51


Management:

Board of Directors

Mr. Ratan N Tata (Chairman)

Mr. N A Soonawala

Dr. J J Irani

Mr. V R Mehta

Mr. R Gopalakrishnan

Mr. Nusli N Wadia

Mr. S A Naik

Mr. S M Palia

Mr. Ravi Kant

Mr. P P Kadle

Page 52


Senior Management:

Mr. Ravi Kant Managing Director

Mr. P P Kadle Executive Director (Finance and Corporate Affairs)

Mr. A P Arya President (Heavy and Medium Commercial Vehicles)

Mr. P M Telang President (Light and Small Commercial Vehicles)

Sr. Vice President (Manufacturing and Commercial -
Mr. Rajiv Dube
Passenger Cars)

Mr. C Ramakrishnan Vice-President (Chairman's Office

Vice-President (Sales & Marketing - Commercial Vehicle
Mr. Shyam Mani
Business)

Mr. K C Girotra Vice President (Lucknow Works & FBV)

Mr. R S Thakur Vice President (Finance)

Mr. M V Rajarao Vice President (Manufacturing)

Mr. R K Ghosh Vice President (Customer Care-Commercial Vehicles)

Mr. A I Rebello Chief (Tata Motor Finance)

Vice President (Corporate Finance – Accounts and
Mr. P Y Gurav
Taxation)

Dr S J Tambe Vice President (Human Resource)

Mr. H K Sethna Company Secretary

Mr. Debasis Ray Head - Corporate Communications

Page 53


Manufacturing:

Tata Motors owes its leading position in the Indian automobile industry to its strong focus on

indigenization. This focus has driven the Company to set up world-class manufacturing units

with state-of-the-art technology. Every stage of product evolution-design, development,

manufacturing, assembly and quality control, is carried out meticulously. Our manufacturing

plants are situated at Jamshedpur in the East, Pune in the West and Lucknow in the North.

Jamshedpur:

This was the first unit of the Company established in 1945 and is spread over an area of 822

acres. It consists of 3 divisions - Truck, Engine (including the Gear Box division) and Axle.

The divestments in March 2000.

Pune:

The Pune unit is spread over 2 geographical regions- Pimpri and Chinchwad and has a

combined area of around 510 acres. It was established in 1966 and has a Production

Engineering Division.

Lucknow:

Established in 1991 and covering an area of 600 acres, the Lucknow Plant was established to

assemble Medium Commercial Vehicles (MCVs) to meet the demand in the Northern Indian

market. In 1995, the unit started manufacturing bus.

Page 54


Research & Development:

Research provides the much-needed inspiration for the birth of new ideas, which in turn

breathes new life into products. World-class automotive research and development are key

factors that contribute to the leadership of the Company.

Engineering Research Centre (ERC):

The Research Centre at Jamshedpur regularly upgrades components and aggregates. A well-

equipped torture track enables rigorous and exhaustive testing of modifications before they

are used as regular fitments. The Engineering Research Centre in Pune was setup in 1966 and

is among the finest in the country. It has been honored with two prestigious awards - 'The

DSIR National Award for R&D Effort in Industry - 1999' and 'National Award for Successful

Commercialization of Indigenous Technology by an Industrial Concern - 2000.

LOCATION OF MANUFUFACTURING PLANTS:

1 Jamshedpur

2 Pimpri

3 Chinchwad near Pune in Maharashtra.

Associates:

Over the years, Tata Motors has made substantial investments in building companies that

add value, facilitate and support its diverse range of business activities.

Tata Technologies Ltd. (TTL) and its subsidiaries

Telco Construction Equipment Co. Ltd. (Telcon)

Page 55


HV Axles Ltd. (HVAL)

TAL Manufacturing Solutions Ltd. (TAL)

Concorde Motors (India) Ltd. (Concorde) [formerly known as Minicar (India) Ltd.]

Tata Motors Insurance Services Ltd. (TMISL) [formerly known as Concorde
Motors Ltd.]

COLLABORATION:

The company has technical tie up with The Institute of development in Automotive

Engineering, Italy. (For assistance in small car body design and styling)]

1. Le Moteur Modern, France.

(For the development of diesel and petrol engine for passenger car)

Corporate Social Responsibility:

Green Matters

Tata Motors, a Company that cares about the future...

True to the tradition of the Tata Group, Tata Motors is committed in letter and spirit to

Corporate Social Responsibility. It is a signatory to the United Nations Global Compact, and

is engaged in community and social initiatives on labour and environment standards in

compliance with the principles of the Global Compact. In accordance with this, it plays an

active role in community development, serving rural communities around its manufacturing

locations.

Tata Motors believes in technology for tomorrow. Our products stand testimony to this.

Our annual expenditure on R&D is approximately 2% of our turnover. We have also set up

Page 56


two in-house Engineering Research Centers that house India's only Certified Crash Test

Facility. We ensure that our products are environmentally

Sound in a variety of ways. These include reducing hazardous materials in vehicle

components, developing extended life lubricants, fluids and using ozone-friendly

refrigerants. Tata Motors has been making conscious effort in the implementation of

several environmentally sensitive technologies in manufacturing processes. The Company

uses some of the world's most advanced equipment for emission check and control.

Tata Motors concern is manifested by a dual approach -

1) Reduction of environmental pollution and regular pollution control drives

2) Restoration of ecological balance.

Our endeavors towards environment protection are soil and water conservation

programmes and extensive tree plantation drives. Tata Motors is committed to restoring

and preserving environmental balance, by reducing waste and pollutants, conserving

resources and recycling materials.

Reducing Pollution:

Tata Motors has been at the forefront of the Indian automobile industry's anti-pollution

efforts by introducing cleaner engines. It is the first Indian Company to introduce vehicles

with Euro norms well ahead of the mandated dates. Tata Motors' joint venture with

Cummins Engine Company, USA, in 1992, was a pioneering effort to introduce emission

control technology for India. Over the years, Tata Motors has also made investments in

setting up of an advanced emission-testing laboratory. With the intention of protecting the

Page 57


environment, Tata Motors has upgraded the performance of its entire range of four and six

cylinder engines to Meet international emission standards. This has been accomplished

with the help of world-renowned engine consultants like Ricardo and AVL. These engines

are used in Tata Motors vehicles in the Indian market, as well as in over 70 export markets.

Tata Motors is constantly working towards developing alternative fuel engine technologies.

It has manufactured CNG version of buses and followed it up with a CNG version of its

passenger car, the Indica

Page 58

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