Industry Analysis

1. Automobile Industry in India
Presentation by – Amit Singh Bhadauriya , Roll Number -14BM60041

2. Automobile Industry in India
Contents :
• Introduction of Automobile Industry in India
• Advantage India
• Market Overview and Trends
• Growth Drivers
• Effect of Macroeconomic Policies
• Success Stories
• Opportunities
• Useful Information
• Current and future outlook of auto industry

3. INTRODUCTION
Indian Automotive Industry growth decades started in the 1970s. Between 1970 and 1984 cars were considered a luxury
product; manufacturing was licensed, expansion was restricted; there were Quantitative Restriction (QR) on imports and
tariff structure designed to restrict the market but starting in 2000, several landmark policy changes like QR and 100%
FDI through automotive route were introduced. In 2003, Core group on Automotive R&D (C.A.R) was set up to identify
priority areas for automotive R&D in India . Indian Auto Industry is 2nd in Two Wheelers, 3rd in Small Cars and 5th in
Commercial Vehicles among the top 10 in World .
India is a global hub of automobile industry having:
• 15 Manufacturers of passenger cars and multi-utility vehicles
• 9 Manufacturers of commercial vehicles
• 16 Manufacturers of 2/3 wheelers
• 14 Manufacturers tractors
• 5 Manufacturers of engines
Sources : Automotive Mission Plan, 2006-2016, A Mission for Development of Indian Automotive Industry, [Online] Available: http://www.siamindia.com/upload/AMP.pdf
Sunil Kakkar,“Indian Auto Industry, the way forward”, Maruti Suzuki India Ltd.
Automobile Industry in India

4. ADVANTAGE INDIA
Automobile Industry in India
Growing demand
• Strong growth in demand due to
rising income, middle class, and a
young population is likely to propel
India among the world’s top five auto
manufacturers by 2015
• Growth in export demand is set to
accelerate
Innovation opportunities
• Tata Nano and the upcoming Pixel
have opened up the potentially large
ultra low-cost car segment
• Innovation is likely to intensify
among engine technology and
alternative fuels
Rising investments
Advantage India
• India has significant cost
advantages; auto firms save 10-25
per cent on operations vis-à-vis
Europe and Latin America
• A large pool of skilled manpower
and a growing technology base would
induce greater investments
Policy support
• The government aims to develop
India as a global manufacturing as well
as R&D hub
• There has been a wide array of policy
support in the form of sops, taxes and
FDI encouragement
FY16E
Market
size:
USD145
billion
FY10
Market
size:
USD57.
7 billion
Source: Automotive Mission Plan (2006–2016) Notes: R&D – Research and Development; FDI – Foreign Direct Investment; FY – Indian Financial Year (April – March); FY16E – Estimated figure for Financial Year
201

5. Automobile Industry in India
EVOLOLUTION OF INDIAN AUTOMITIVE SECTOR
• Closed market
• Five players
• Long waiting
periods and
outdated models
• Seller’s market
• Joint venture (JV):
Indian government and
Suzuki formed Maruti
Udyog; commenced
production in 1983
• Component
manufacturers entered
the market via JV
• Buyer’s market
• Sector de-licensed in 1993
• Major original equipment
manufacturers (OEMs) started
assembly operations in India
• Imports permitted from April
2001
• Introduction of value- added
tax in 2005
• More than 35 market
players
• Removal of most import
controls
• Indian companies gaining
acceptance on a global scale
• Setting up of National
Automotive Board to act as
facilitator between the
government and industry
Before 1982
0.4 million
units (1982)
1983–92
0.6 million
units (1992)
1993–2007
11 million
units (2007)
2008
onwards
20.7 million
units (FY13)
Source: Tata Motors, Society of Indian Automobile Manufacturers (SIAM), Aranca Research Note: JV – Joint Venture

6. Automobile Industry in India
THE AUTOMATIVE MARKET IS SPLIT INTO FOUR SEGMENTS
Automobiles
Two-wheelers Passenger vehicles Commerce vehicles Three-wheelers
 Mopeds
 Scooters
 Motor cycles
 Electric two-wheelers
 Passenger Cars
 Utility vehicles
 Multi purpose
vehicles
 Light commercial
vehicles
 Medium and
heavy commercial
vehicles
 Passenger carriers
 Goods Carriers

7. ROBUST GROWTH IN REVENUES
Automobile Industry in India
Revenue Trend over the past few years (USD millions)
70
60
50
40
30
20
10
0
30.5
Market* break-up by revenues (2011)
36.6 47.8%
33.3
43.3
58.6
FY07 FY08 FY09 FY10 FY11
31.8%
20.04%
Trucks Cars Two-wheelers
Total production of automobiles in India (million units)
6.5
Passenger Vehicles Commercial Vehicles Two Wheeler Three Wheeler
8.5 8.4
13.4
15.5 15.9
1.2 1.3 1.8 3 3.1 3.2
0.4 0.4 0.5 0.6 0.4 0.5 0.8 0.8 0.8 0.8 0.8 0.8
20
15
10
5
0
FY05 FY07 FY09 FY11 FY12 FY13
Source: Society of Indian Automobile Manufacturers (SIAM), Aranca Research

8. Automobile Industry in India
MARKET BREAK-UP BY PRODUCTION VOLUME
Market share by volume (FY13)
77
51
4 4
Two Wheelers Passenger Vehicles Commercial Vehicles Three Wheelers
5.9
15.3
78.7
Mopeds Scooters Motor Cycles
70.6
29.4
LCV MCV & HCV
81.7
18.3
Passenger Carrier Goods Carrier
80.7
19.7
Passenger Cars Utility Vehicles
Source: Society of Indian Automobile Manufacturers (SIAM), Aranca Research

9. Market Leaders in each segments
Automobile Industry in India
Source: Society of Indian Automobile Manufacturers (SIAM), Aranca Research

10. Automobile Industry in India
Notable Trends in Indian Automotive Sector
Improving product-development
New product
launches Alternative fuels New financing
capabilities
• Increasing R&D
investments from both
the government and the
private sector • Private
sector innovation has
been a key determinant
of growth in the sector;
two good examples are
Tata Nano and Tata Pixel;
while the former has
been a success in India,
the latter is intended for
foreign markets
options
• Carmakers such as
BMW, Audi, Toyota,
Skoda, Volkswagen and
Mercedes-Benz have
started providing
customised finance to
customers through
NBFCs • Major MNC and
Indian corporate houses
are moving towards
taking cars on operating
lease instead of buying
them
Note: NBFCs - Non-Banking Finance Companies
• Large number of
products available to
consumers across
various segments;
this has gathered
pace with the entry
of a number of
foreign players •
Reduced overall
product lifecycle have
forced players to
employ quick product
launches
• In FY11, the CNG
market was worth more
than USD330 million;
CNG cars and taxis are
expected to register a
CAGR of 28 per cent
over FY11–FY14 • The
CNG distribution
network in India is
expected to increase to
250 cities by 2018 from
30 cities in 2009

11. Automobile Industry in India
1 year 1-5 year 5-10 years
•Increased
access to
credit and
lower
interest
loans
•Investment
in
Infrastruct
ure
spending
can boost
the
commercial
vehicles
segment.
•Growing working
population (441 million
people in 2015/16)
•Upward migration of
household income
levels (600 million
people have annual
income of more than
$10,200)
•Middle class
expanding by 30 - 40
million every year
Can propel growth
1 year 1-5 year 5-10 years
•Impact of
delayed
monsoon (85%
of normal,
subsequent
impact on
paddy
cultivation) on
rural demand.
•Non-availability
of
Key raw
material (like
Steel) at
cheap price.
•Possible
increase of
interest rates
(by 2-2.5%
BPLR)
because of
planned
government
borrowing.
Economic Factors
•Non- availability of
supplier base with
demanded capability
(Quality and Quantity).
•Poor execution of
Infrastructure
investments.
(Construction of
Highways of 16km per
day against the target of
32 km per day)
•Increase in crude oil
price($ 35/barrel to $ 70/
barrel in 14 months).
Can Stunt Growth

12. Automobile Industry in India
Social Factors
• Rapid Urbanization of semi urban regions
• Rising aspirational levels. Improvement in living standards
of middle class
• Increased spending on Fashion & lifestyle comforts.
• Seeking “Value for money”- consumer behavior
• Increasing customer emphasis on aesthetics and comfort.
• A perfect marriage of rise in disposable income and demographic
dividend (From US$ 556 per annum US$ 1150 by 2015)

13. Automobile Industry in India
Technological Factors
Frugal Engineering is the way forward
‘Upgradeable’ green cars : Plug and play style engines to replace old ones: the Tata Nano model
Downsize the cars without losing out on interior space. Lower cost, low fuel consumption , less material usage and less pollution
Grants and Incentives for R&D work
100% grant for fundamental research, 75% for pre-competitive technology, 50%for product development
Extension of 150% weighted deduction on R&D expenditure
Developing India as a Testing hub: National Automotive Testing and R&D Infrastructure Project
Investment of INR 17.18 Billion (about USD 380 million) in setting up, inter alia, independent automotive testing centers within the three automotive
hubs in the country
Setting up of comprehensive Testing and Validation facilities including Field Tracks for Agricultural Tractors, Trailers, Construction Equipments and
various other off-road vehicles at Rae Bareilly in Northern India
Collaborations and Foreign Tie ups for research and technology transfer Developing engines for bio-fuels, electric or hybrid vehicles

14. Automobile Industry in India
Strong Policy Support
Auto Policy 2002 NATRiPs Union Budget
FY14
Automotive
Mission Plan
(AMP) 2006–16
Dept. of Heavy
Industries &
Public Enterprises
• Automatic
approval for foreign
equity investment
up to 100 per cent;
no minimum
investment criteria
• Encourage R&D by
offering rebates on
R&D expenditure
• Set up at a total
cost of USD388.5
million to enable
the industry to be
on par with global
standards
• Nine R&D centres
of excellence with
focus on low-cost
manufacturing and
product
development
solutions
Industries & Public
Enterprises
• Worked towards
reduction of excise
duty on small cars and
increase budgetary
allocation for R&D •
Weighted increase in
R&D expenditure to
200 per cent from 150
per cent (in-house) and
175 per cent from 125
per cent (outsourced)
• AMP’s vision is to make
India a preferred destination
for designing and
manufacturing of
automobiles and achieve a
market size of USD154 billion
by 2016 • Setting up of a
technology modernisation
fund focussed on SMEs •
Establishment of automotive
training institutes, auto
design centres and special
auto parks
• Proposal to
allocate USD2.7
billion for JNNURM
to bolster sales
volumes of
Medium and Heavy
Commercial
Vehicles (MHCV)
• Two wheelers
consumption is
going to increase
to 12% from 8%
expected earlier .
Notes: SME – Small and Medium Enterprises, R&D - Research and Development, NATRiP – National Automotive Testing and R&D Infrastructure Project, AMP - Automotive Mission, JNNURM - Jawaharlal
Nehru National Urban Renewal Mission

15. Automobile Industry in India
Key financial ratios of Maruti Suzuki & Tata Motors
Maruti Suzuki India Ltd
Industry :Automobiles -
passenger cars
Mar-13
Mar-
12
Mar-
11
Mar-
10
Mar-
09
Mar-
08
Mar-
07
Mar-
06
Mar-
05
Mar-
04
Key Ratios
Debt-Equity Ratio 0.08 0.05 0.04 0.07 0.09 0.1 0.06 0.04 0.08 0.11
Long Term Debt-Equity Ratio 0.01 0 0.02 0.05 0.06 0.07 0.06 0.04 0.08 0.11
Current Ratio 0.85 1.08 1.13 1.19 1.22 1.13 1.52 1.73 1.42 1.37
Turnover Ratios
Fixed Assets 2.84 2.98 3.69 3.34 2.9 3.13 3.1 2.95 2.77 2.43
Inventory 26.99 24.6 31.15 30.27 23.89 24.18 21.74 19.06 24.11 23.84
Debtors 41.58 44.83 50.01 36.56 29.1 29.97 24.69 23.69 20.69 16.24
Interest Cover Ratio 14.77 35.74
125.3
5
108.2
4 29.91 43 61.63 86.78 37.25 21.47
PBIDTM (%) 9.5 7.88 10.15 13.93 9.63 14.89 15.05 13.93 13.48 12.91
PBITM (%) 5.71 5 7.67 11.35 6.58 12.19 13.47 12 10.05 8.43
PBDTM (%) 9.12 7.74 10.09 13.83 9.41 14.61 14.83 13.8 13.21 12.52
CPM (%) 8.08 6.58 8.08 10.4 7.68 10.93 10.66 9.99 9.83 10.11
APATM (%) 4.29 3.7 5.6 7.82 4.63 8.23 9.08 8.06 6.4 5.63
ROCE (%) 15.16 12.69 23.15 31.95 15.76 30.51 35.63 34.68 31.28 25.34
RONW (%) 12.48 10.06 17.81 23.58 12.08 22.67 25.38 24.19 21.42 18.59
Source :http://www.capitaline.com
Tata Motors Ltd
Industry :Automobiles –
HCVs and MCVs
Year
20130
3
20120
3
20110
3
20100
3
20090
3
20080
3
20070
3
20060
3
20050
3
20040
3
No.Of Companies 4 9 9 10 7 8 8 6 5 5
Key Ratios
Debt-Equity Ratio 0.97 0.94 1 1.03 0.9 0.66 0.55 0.57 0.52 0.49
Long Term Debt-Equity
Ratio 0.96 0.92 0.86 0.67 0.52 0.39 0.36 0.5 0.49 0.45
Current Ratio 0.96 0.99 0.77 0.62 0.73 0.92 1.1 1.13 0.99 0.91
Turnover Ratios
Fixed Assets 2.07 2.54 2.41 2.19 2.19 3.22 3.62 3.13 3.04 2.55
Inventory 9.58 11.14 11.49 10.87 9.08 10.74 11.64 11.18 12.58 11.75
Debtors 16.76 18.52 17.09 15.65 17.16 24.55 25.72 20.46 18.98 14.67
Interest Cover Ratio 1.6 2.58 2.77 2.73 1.63 5.79 8.2 7.45 8.69 6.96
PBIDTM (%) 7.2 7.88 9.68 10.72 7.58 9.32 10.18 10.35 10.52 11.56
PBITM (%) 4.07 5.22 7.02 7.95 4.56 7.31 8.31 8.14 8.3 9.08
PBDTM (%) 4.65 5.85 7.15 7.8 4.79 8.06 9.17 9.26 9.56 10.26
CPM (%) 4.56 5.26 6.27 6.75 4.68 6.66 7.25 7.52 7.73 7.41
APATM (%) 1.43 2.61 3.61 3.98 1.66 4.65 5.38 5.31 5.51 4.93
ROCE (%) 6.19 9.02 10.91 10.97 6.83 19.65 27.28 25.74 29.48 31.18
RONW (%) 4.27 8.75 11.2 11.17 4.72 20.63 27.39 26.08 29.57 24.97

16. Current and future outlook of auto industry
Automobile Industry in India
Current Scenario Future Trend
•India will be a Automotive hub, led by small cars and
auto component domains
•Export of automotive components to ASEAN,BRIC,EU
and USA for OEMs as well as Aftermarket
•Booming Automobiles (Particularly cars) second sales
and remodeling
•Increased deployment of IT-enabled Automobile
support systems like GPS,ABS,ASR and Safety systems
.
•Quality Certification (Deming, Six Sigma,TQM,TS16949)
amongst suppliers have attained critical mass and the
entire market will follow to get quality certifications.
•Will be a hub for optimal cost, high quality vehicular
testing and terrain data acquisition services
•Alternate fuel (Bio fuel, electricity) and environment
friendly green engines (Bharat emission norms)
Auto analysts believe that sales volume of the automobile companies will get a boost
after finance minister left more money in hands of salaried employees . Post budget
announcement two-wheeler volume likely to grow by 12% from earlier estimate of 8%.
Companies such as Hero MotoCorp , Maruti & TVS Motor will be key beneficiary of
budget announcement".
 Luxury cars launch :German luxury car maker BMW launched the all new BMW
ActiveHybrid 7 sedan. German luxury car maker Porsche launched its compact
sports utility vehicle Macan in India . Mercedes-Benz launched the AMG version of
its sedan CLA 45 .
 Bajaj Auto sales rise 3 per cent in June
 Domestic passenger car sales up 14.76 per cent in June 2014
 Volkswagen plans Rs 1500-cr investment in India
 Bajaj Auto reports marginal rise in Q1 profit at Rs 740 crore
 Maruti June sales up 33 pc at 1,12,773 units
 Nissan India sales up over two-fold in May
 Hero MotoCorp sales up 6 per cent in May
 Mid range cars launch :Honda launches MPV Mobilio at Rs 6.49 lakh . Nissan rolls
out new Sunny; priced from Rs 7.29 lakh . Ford India launches 2014 Fiesta at Rs 7.69
lakh. Mahindra XUV500 Sportz launched at Rs 13.68 lakh
 Domestic car sales up 3.08%, bikes 11.71% in May
Source : http;//Businesstoday.intoday.in/categorylist/22/1/auto.html and http://economictimes.indiatimes.com/industry/auto/articlelist/13359412.cms

17. Automobile Industry in India
Thank you !!!!