The document provides an overview of the auto industry in India. It notes that the industry contributes approximately 8% to India's GDP and over 45% to manufacturing GDP. The two-wheeler segment is the largest sub-segment, though industry growth declined by 14% in 2018-19. Key drivers of two-wheeler demand include rising incomes, fuel efficiency, financing options, and government support for farmers. Leading companies in the industry such as Hero MotoCorp, TVS Motors, and Bajaj Auto are discussed along with auto component manufacturers like Rico Auto and Maharashtra Scooters. Financial ratios are also presented for several of the major companies.
2. NAME ROLL NO
MONIK DAMANIA 64
AMIT GULVE 76
HIMANI KESWANI 80
ANJALI NANDA 92
SHWETA THAKKER 117
AYUSHI VYAS 120
3. Introduction
• It contributes approx. 8% of India’s GDP and more than 45 % of
manufacturing GDP
• India is the largest producer of two wheeler
• Industry Registered 14% Degrowth in 2018-19
• Expected to reach Rs 16-18 trillion by 2026
• Increase in per capita income levels, high fuel efficiency,
easy financing options, government policy for farmers &
preference of two-wheeler in eMobility will further boost sales
In India
GDP
AUTO
SECTOR
5. Two Wheelers: Demand Drivers
Bussiness need
• General commute to fulfil business requirement
• Necessity for entry level jobs
• Last mile connectivity for delivery requirements of E-Commerce and
Food delivery companies
• Commitment towards electric fleet
• Rural demand for multiple use cases
6. Consumption need
• Higher disposable income
• Demand during festive season in October and November
• Good monsoon helps with rural demand
• Urban demand from youth and women
• High end bike as status symbol
13. Negative impact on Two wheeler
• BS VI Emission Requirement
• 5-year TP insurance
• ABS and CBS requirement
• Driving License requirement in West Bengal
• Bike pooling
• NBFC Crises
14. Atul Auto ltd.
● First vehicle rolled in 1970.
● More than 1 million vehicles on global roads.
● Fastest growing 3 wheeler vehicle.
● 3 Wheeler products across the fuel range- Diesel, Petrol, CNG, LPG
and Electric.
● Among top 5 three wheeler companies in India.
● Market Cap (Rs Cr.) 310.61
● C.E.O - Jayantibhai J Chandra
15. Hero Motocorp Ltd.
• Hero Motocorp Ltd. Formerly Hero Honda, is an Indian motorcycle
and scooter manufacturer
• Founded in 1984
• Largest two-wheeler manufacturer in the world and also in India.
• It has a market share of 36%
• In 2019, Hero Splendor came out as the best selling two-wheeler in
India
• Market Cap (Rs Cr.) 35,553.61
• C.E.O - Pawan Munjal
16. TVS Motors
• Indian multinational motorcycle company
• Founded in 1978
• Manufactures motorcycles, mopeds and scooters
• Third largest 2-wheeler company in India
• 2nd largest exporter in India
• Market share - 18.83%
• Market Cap (Rs Cr.) 15,288.30
• C.E.O - K. N. Radhakrishnan
17. Bajaj Auto
• Founded by Jamnalal Bajaj in Rajasthan in the
1940s
• Bajaj Auto is a part of the Bajaj Group
• Manufactures motorcycles, scooters and auto
rickshaws
• It is the world's largest three-wheeler
manufacturer
• Market Share of 30.6 per cent
• Market Cap (Rs Cr.) 60,188.34
• C.E.O – Rajiv Bajaj
18. Contribution
to GDP 2.3
%
Share in
export 4 %
Employment
50 Lakh
Approx
Domestic
After market
$ 10.6 Billion
Export $
15.6 Billion
Turnover
$ 57 Billion
Auto Ancillary
NO UNITS % INCREASES
IN 2019
Supply to
OEM
3460052
(66.67 %)
15.2
After market 67491
(12.98 %)
10.1
Export 106048
(20.4 %)
19.8
19. Rico Auto Industries
• Rico is a world-class engineering company supplying a wide range of high
precision fully machined aluminum and ferrous components and assemblies to
automotive OEMs across the globe
• Rico Auto Incorporated (1984-85) and Commercial Production Started (1986)
• Rico’s integrated services include design, development, tooling, casting,
machining and assembly across ferrous and aluminum products
• Customers : GKN, Toyota, Allison Transmissions, Volkswagen India, Musashi,
Kohler, Avtec, Bentley
• Rico has in house dies and pattern design and manufacturing. Rico manufacture
over 200 dies and patterns and 600 die inserts annually
• Rico’s consolidated group total turnover is over US$ 245 Million
• Market Cap (Rs Cr.) 263.13
• C.E.O - Arvind Kapur
20. Maharashtra Scooters
• Its an Auto Ancillary company supplies parts to various OEM
• Incorporated on 11thJun 1975
• Company started manufacturing of Bajaj Super & Bajaj Chetak
models of scooters
• Discontinued production of geared scooters from 1st Apr 2006
• Company is currently manufactures casting dies, jigs & fixtures
• Market Cap (Rs Cr.) 2,423.26
• Shriniwas Pathak – C.E.O
21.
22. RATIOS
Hero Motocorp TVS Baja Auto Atul Auto Rico Auto Maharashtra Scooters
Liquidity
Current Ratio 1.96 0.78 1.45 2.11 0.96 0.07
Quick Ratio 1.71 0.49 1.25 1.47 0.73 0.07
Solvency or Leverage
Debt/Equity Ratio -- 0.41 -- -- 0.5 --
Management Efficiency
Inventory Turnover Ratio 31.38 15.49 31.46 11.61 12.25 9.6
Profitability
Return On Equity (%) 26.32 20.02 21.46 31.37 8.4 0.64
Net Profit Margin (%) 10.05 3.68 15.45 11.27 4.07 502.06
Valuation
Yield 0.07 0.03 0.06 0.07 0.06 0.02
EPS 169.48 14.11 161.6 27.53 3.6 63.7
P / E 8.68 24.72 11 4.68 8.25 29.87
Dividend Payout Ratio (%) 56.05 24.81 37.13 21.68 22.19 51.8
Post coming off growing economy and favourable financing environment till FY 12, the two wheeler domestic sales continued muted growth for the years FY 13- FY 16 on account of weak consumer sentiment, unfavourable monsoons and lower GDP growth
Post FY 16, on account of near normal monsoons and revival in rural consumer demand, two wheeler sales have shown a steady growth which has continued till FY 19 (Dec). The growth rate was slightly muted in FY 17 on account of demonetization which impacted the liquidity for buyers for a brief period
Two wheeler sales have witnessed contraction in Q1 FY 20 across all segments on account of multiple factors like muted rural
demand owing to low crop realization and delayed monsoon, liquidity squeeze, increased on-road price to insurance premium hikes over the last year
Motorcycles have been steadily losing market shares to scooters since FY 12 and the share has shrunk from 75.12% in FY 12 to 62.46% in FY 18
However FY19 & Q1 FY 20data suggests motorcycle regaining the market share on account of new model launches, strong rural demand
despite subdued festive seasons and increase in on-road prices on account of increase in insurance premiums.
Scooters, post their continuous years of growth showed some signs of stagnation on account of demand shifting towards entry level motor cycles and key changes in regulation in West Bengal (major scooter market) on account of buyers requiring driving license to purchase two wheelers.
Two wheeler segment displayed healthy growth from FY 18 on account of above average marriage season; healthy rural demand and aggressive pricing at entry level segment by motorcycle OEMs
However the segment witnessed degrowth in Q1 FY 20 on account of muted demand and one –off factors combining
Motorcycles with sub-segment (75-110 cc) continues to dominate the market share largely driven by upbeat rural demand on
account of factors like MSP hikes on crops, near normal monsoon for past 3 years and loan waivers in select states.
Significant degrowth has been observed in 110-125 cc segment on account of lack of new model launches and demand shifting to
125-150 cc segment
However impact on uneven monsoon in FY 2019 and muted crop realization for kharif crop seasons could play dampeners in the
growth pattern of the overall industry
All segments showed degrowth in Q1 FY 2020 on account of multiple factors- liquidity squeeze, flattish demand, lower crop realization
On account of flattish festival demand, there was growth revival witnessed in all segments especially 125-150cc subsegment which had
earlier seen degrowth . The growth was on account of new model launches and aggressive pricing strategies from OEMs
Two segments saw degrowth in current FY 2019 : 110-125 cc (due to lack of new models) and 250 cc (due to plant issues at Eicher Motors
which is dominant player in this segment)
Hero Motors continues to dominate the market share of overall motorcycle sales over the years and has continued with nearly 50% market
share as oFY2019 supported by renewed rural demand and marriage season
Bajaj has shown considerable growth in sales and has grown by approximately 200 bps in FY 2019 on account of aggressive pricing and new model launches especially due to launch of stripped down version of Pulsar 150 in 125-150 cc subsegment.
Honda Motors retains the third position in market share primarily on account of dominance of its models in 110-125 cc subsegment while TVS retains fourth spot in market share
Scooter segment displayed consistent double digit growth from FY 12 till FY 18 on account of sales post BS III, good monsoon and festive demand
This segment witnessed degrowth in FY 2019 despite new model launches on account of Kerala floods (key market for scooters), tight liquidity conditions for financiers, increase in on road prices due to insurances and muted demand in urban areas
The Government of India has decided to leapfrog from the exiting BS – IV emission norms to the BS- VI,
thereby skipping the BS - V norms.
BS - VI norms will come to effect from 1st April 2020. The cost of better engines conforming to BS VI
emission norms is expected to increase the costs by 10-15%. Although some estimates are lower.
While first half of FY19 will see flat growth, there could be some recovery in the second half due to pent-up demand on festivals and pre-buying of BS IV vehicles (Similar spike was seen before transition to BS IV norms in April 2017. That period saw a deep discounting on older models just before April 2017 for inventory clearance. Better preparation expected from OEMs and dealers this time.)
Hero may consider exporting more of its BS IV inventory, especially to countries such as Nepal,
Bangladesh and Sri Lanka
The Supreme Court mandated 5-year third-party (TP) insurance post Sep-18, shooting up the premiums.
Honda estimated an impact of 6% on the price of its products due to insurance ruling
Insurance premium for 100-125 cc bikes have increased from ~ Rs 1800 to ~ Rs 5,000
2Ws having an engine capacity higher than 125cc are mandatory to have anti-lock braking system (ABS)
and for two-wheelers below that capacity are mandatory to have combined braking system (CBS) from April 1, 2019. So cheaper models will not be available in FY20, impacting demand.
The WB government introduced stringent rules from Jun-18 barring sale and registration of two-
wheelers in the name of people without driving licences.
This saw a decline of ~60% in 2W sales in WB which earlier had a demand of ~ 1 lac units a month
There have since been relaxations to the rules like payment of fee for learning license while buying 2W,
but purchases have been delayed for more clarifications