Introduction

The automobile industry is one of India’s most vibrant and growing industries. This industry accounts for 22 per cent of the country's manufacturing gross domestic product (GDP). The auto sector is one of the biggest job creators, both directly and indirectly. It is estimated that every job created in an auto company leads to three to five indirect ancillary jobs. India's domestic market and its growth potential have been a big attraction for many global automakers. India is presently the world's third largest exporter of two-wheelers after China and Japan. According to a report by Standard Chartered Bank, India is likely to overtake Thailand in global auto-export market share by the year 2020. The next few years are projected to show solid but cautious growth due to improved affordability, rising incomes and untapped markets. With the government’s backing, and trends in the international scenario such as the decline in prices of natural rubber, the Indian automobile industry is slated to witness some major growth.

Background

The history of the automobile industry in India actually began about 4,000 years ago when the first wheel was used for transportation. In the early 15th century, the Portuguese arrived in China and the interaction of the two cultures led to a variety of new technologies, including the creation of a wheel that turned under its own power. By the 1600s, small steam-powered engine models were developed, but it was another century before a full-sized engine-powered automobile was created. The dream a carriage that moved on its own was realized only in the 18th century when the first car rolled on the streets. Steam, petroleum gas, electricity and petrol started to be used in these cars. India's transport network is developing at a fast pace and the automobile industry is growing too. The automobile industry also provides employment to a large section of the population. Thus the role of automobile industry cannot be overlooked in Indian Economy.A brief timeline is as shown below:

The automobiles sector is compartmentalized in four different sectors which are as follows:

Two-wheelers which comprise of mopeds, scooters, motorcycles and electric two-wheelers

Passenger Vehicles which include passenger cars, utility vehicles and multi-purpose vehicles

Commercial Vehicles that are light and medium-heavy vehicles Three Wheelers that are passenger carriers and goods carriers.

The world standing for the Indian automobile sector, as per the Confederation of the Indian industry is as follows:

1. Largest three-wheeler market2. Second largest two-wheeler market3. Tenth largest passenger car market4. Fourth largest tractor market5. Fifth largest commercial vehicle market6. Fifth largest bus and truck segment

Financial Performance

Automobile companies across segments continue to face tremendous pressure on profit margins due to elevated inflation levels.Added to this are the heightened marketing costs incurred and heavy discounts offered by vehicle manufacturers to attract consumers to the showrooms.This partially explains the price hikes initiated by the vehicle OEMs to protect margins,despite the weak demand environment.Going ahead, amidst rising market competition,new product launches , as also product refreshes planned,OEMS are expected to increase spend on marketing and promotional activites.Although commodity prices are not expected to witness steep hikes, overall cost and competitiev presuures would keep the profit margins under presurre.

Problem

The year 2013-2014 has seen a decline in the industry’s otherwise smooth-running growth. High inflation, soaring interest rates, low consumer sentiment and rising fuel prices along with economic slowdown are the major reason for the downturn of the industry. Except for the two-wheelers, all other segments in the industry have been weakening. There is a negative impact on the automakers and dealers who offered high discounts in order to push sales. To match the decline in demand, automakers have resorted to production cuts and lay-offs, due to which capacity utilization for most automakers remains at a dismal level. Despite the comprehensive market being under extreme burden, the luxury car market has observed a robust double-digit hike during the year 2013-2014, as a result of rewarding new launches at compelling lower price points. Further, with the measured increases in the price of diesel, the overall market continues to shift towards petrol-fuelled cars.

Purpose

Methodolgy

Investor Analysis of Automobile Industry

Market size

The cumulative foreign direct investment (FDI) inflows into the Indian automobile industry during the period April 2000 – August 2014 was recorded at US$ 10,119.68 million, as per data by Department of Industrial Policy and Promotion (DIPP). Data from industry body Society of Indian Automobile Manufacturers (SIAM) showed that 137,873 passenger cars were sold in July 2014 compared to 131,257 units during the corresponding month of 2013. Among the auto makers, Maruti Suzuki, Hyundai Motor India and Honda Cars India emerged the top three gainers with sales growth of 15.45 per cent, 12 per cent and 11 per cent, respectively. The three-wheeler segment posted a 24 per cent growth to 51,461 units on the back of increased demands from the urban market. Total sales across different vehicle segments grew 12 per cent year on year (y-o-y) to 1,586,123 units. Scooter sales have jumped by 29 per cent in the ongoing fiscal, and now form 27 per cent of the total two-wheeler market from just 8 per cent a decade back. The ever-rising demand for scooters, which has far outstripped supply has prompted Honda to set up its first dedicated scooter plant in Ahmedabad. Tractor sales in the country is expected to grow at a compound annual growth rate (CAGR) of 8–9 per cent in the next five years making India a high-potential market for many international brands.

Investments

To match production with demand, many auto makers have started to invest heavily in various segments in the industry in the last few months. Some of the major investments and developments in the automobile sector in India are as follows:

1. Ashok Leyland plans to invest Rs 450–500 crore (US$ 73.54–81.71 million) in India, by way of capital expenditure (capex) and investment during FY15. The company is required to manage Rs 6,000 crore (US$ 980.56 million) of assets in seven locations across the world, for which maintenance capex is needed.

2. Honda Motors plans to set up the world's largest scooter plant in Gujarat to roll out 1.2 million units annually and achieve leadership position in the Indian two-wheeler market. The company plans to spend around Rs 1,100 crore (US$ 179.76 million) on the new plant in Ahmedabad, and expand its range with a few more offerings.

3. Yamaha Motor Co has restructured its business in India. Now, Yamaha Motor India (YMI) will take care of its India operations. “The restructuring is part of Yamaha’s mid-term plan aimed at improving organisational efficiency,” as per Mr Hiroyuki Suzuki, Chief Executive and Managing Director. YMI would be responsible for corporate planning and strategy, business planning and business expansion, quality control, and regional control of Yamaha India Business.

4. Tata Motors plans to use the 'hub-and-spoke' model in which India will be the key manufacturing base while it will have mini-hubs in overseas markets. The company also plans to set up mini hubs in potential markets like Africa, Middle-East and South East Asia.

5. Hero Cycles through its unit OPM Global has acquired a majority stake in German bicycle company Mitteldeutsche Fahrradwerke AG (MIFA) for €15 million (US$

19.11 million). The company plans to invest an additional €4 million (US$ 5.09 million) as capital expenses in restructuring the acquired company.

Government Initiatives

The Government of India encourages foreign investment in the automobile sector and allows 100 per cent FDI under the automatic route. To boost manufacturing, the government had lowered excise duty on small cars, motorcycles, scooters and commercial vehicles to eight per cent from 12 per cent, on sports utility vehicles to 24 per cent from 30 per cent, on mid-segment cars to 20 per cent from 24 per cent and on large-segment cars to 24 per cent from 27 per cent. The government’s decision to resolve VAT disputes has also resulted in the top Indian auto makers namely, Volkswagen, Bajaj Auto, Mahindra & Mahindra and Tata Motors announcing an investment of around Rs 11,500 crore (US$ 1.87 billion) in Maharashtra. The Automobile Mission Plan for the period 2006–2016, designed by the government is aimed at accelerating and sustaining growth in this sector. Also, the well-established Regulatory Framework under the Ministry of Shipping, Road Transport and Highways, plays a part in providing a boost to this sector. The Government of India-appointed SIAM and Automotive Components Manufacturers Association (ACMA) are responsible in working for the development of the Indian automobile industry.

Road Ahead

The future of the auto industry depends on the positive sentiments and the demand for vehicles in the market. With the festival season coming up, the Indian auto sector will see a rise in demand which is expected to bring in major growth. An auto dealer survey by firm UBS suggested that the Indian auto industry, riding on trends like the upcoming festival season and decline in fuel price, will observe a 12 per cent y-o-y growth in FY15. Also, keeping up with international trends, there is expected to be a surge in the number of hybrid vehicles in the Indian auto sector in the years to come. Factors determining the growth of the industry

1. Fuel economy and demand for greater fuel efficiency is a major factor that affects consumer purchase decision that will bring leading companies across two-wheeler and four-wheeler segment to focus on delivering performance-oriented products.

2. Sturdy legal and banking infrastructure3. Increased affordability, heightened demand in the small car segment and the surging

income of the Indian population4. India is the third largest investor base in the world5. The Government technology modernization fund is concentrating on establishing

India as an auto-manufacturing hub. 6. Availability of inexpensive skilled workers7. Industry is perusing to elevate sales by knocking on doors of women, youth, rural and

luxury segments8. Market segmentation and product innovation

 

Employment Opportunities

There are a wide range of jobs available in the automobile industry. With the number of vehicles available on the road today, the need and requirement for people who can fix these machines is fast increasing. Careers like automobile technician, car or bike mechanics are a great option. Becoming a diesel mechanic is also a significant alternative. Diesel mechanics are responsible for repairing and servicing diesel engines. As they are also required to repair engines of trucks and buses, other than cars, they are provided with hefty wages. If communication with people instead of repairing cars is what interests you, then you have the opportunity of becoming a salesperson or sales manager in an automobile company. Career opportunities in automobile design, paint specialists, job on the assembly line and insurance of vehicles is also available. Employment Trends

The Automotive Mission Plan for the period of 2006-2016 aims to make India emerge as a global automative hub. The idea is to make India as the destination choice for design and manufacture of automobiles and auto components, with outputs soaring to reach US$ 145 billion which is basically accounting for more than 10% of the GDP. This would also provide further employment to over 25 million people by 2016 making the automobile the sunrise sector of the economy.  According to the Confederation of Indian Industry, the automobile sector currently employs over 80 lac people. An extension in production in the automobile industry is forecasted, it is likely to rise to Rs. 600000 crore by 2016.  Future Trends in the Automobile Industry

As the auto-shows began in January 2014, the industry promised a blend of technology and automotives. With the recession trend breaking its leashes form the past two years, 2014 is expected to get back on track with the sales of automobiles in the country.Almost Self-governing cars are predicted to be on the streets by 2020More than half the cars on the streets are going to be powered by diesel by 2020Industry watcher Gartner indicates that 30 percent of motorists want parking info. The facility is likely to come up after glitches in the infrastructure catch up.High Performance Hybrid cars are likely to gain greater popularity among consumers. The Indian automobile industry has a prominent future in India. Apart from meeting the advancing domestic demands, it is penetrating the international market too. Favoured with various benefits such as globally competitive auto-ancillary industry; production of steel at lowest cost; inexpensive and high skill manpower; entrenched testing and R & D centres etc., the industry provide immense investment and employment opportunities.

Comparative Analysis of automobile Industry

TATA MOTORS

Tata Motors Limited (formerly TELCO, short for Tata Engineering and Locomotive Company) is an Indian multinational automotive manufacturing company headquartered inMumbai, Maharashtra, India and a subsidiary of the Tata Group. Its products include passenger cars, trucks, vans, coaches, buses, construction equipment and military vehicles. It is the world's 17th-largest motor vehicle manufacturing company, fourth-largest truck manufacturer, and second-largest bus manufacturer by volume.

Tata Motors is listed on the Bombay Stock Exchange, where it is a constituent of the BSE SENSEX index, the National Stock Exchange of India, and the New York Stock Exchange. Tata Motors is ranked 314th in the 2012 Fortune Global 500 ranking of the world's biggest corporations.

Tata Motors Cars

Tata Motors Cars is a division of Tata Motors which produces passenger cars under the Tata Motors marque. Tata Motors is among the top four passenger vehicle brands in India with products in the compact, midsize car, and utility vehicle segments.[20] The company’s manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand), Dharwad (Karnataka) and Sanand (Gujarat). Tata's dealership, sales, service, and spare parts network comprises over 3,500 touch points.[20]Tata Motors has more than 250 dealerships in more than 195 cities across 27 states and fourUnion Territories of India.[21] It has the third-largest sales and service network after Maruti Suzukiand Hyundai.

Tata Daewoo

Tata Daewoo (officially Tata Daewoo Commercial Vehicle Company and formerly Daewoo Commercial Vehicle Company) is a commercial vehicle manufacturer headquartered in Gunsan, Jeollabuk-do, South Korea, and a wholly owned subsidiary of Tata Motors. It is the second-largest heavy commercial vehicle manufacturer in South Korea and was acquired by Tata Motors in 2004. The principal reasons behind the acquisition were to reduce Tata's dependence on the Indian commercial vehicle market (which was responsible for around 94% of its sales in the MHCV segment and around 84% in the light commercial vehicle segment) and expand its product portfolio by leveraging on Daewoo's strengths in the heavy-tonnage sector.

Tata Hispano

Tata Hispano Motors Carrocera, S.A. was a bus and coach manufacturer based in Zaragoza, Aragon, Spain, and a wholly owned subsidiary of Tata Motors. Tata Hispano has plants in Zaragoza, Spain, and Casablanca, Morocco. Tata Motors first acquired a 21% stake

in Hispano Carrocera SA in 2005,[8] and purchased the remaining 79% for an undisclosed sum in 2009, making it a fully owned subsidiary, subsequently renamed Tata Hispano. Over the end of 2013, Tata Hispano closed the activity, due the bad management of Manchi Raja Rao, leaving 287 unemployed people and closing 70 years of history.

Jaguar Land Rover

Jaguar Land Rover PLC is a British premium automaker headquartered in Whitley, Coventry, United Kingdom, and has been a wholly owned subsidiary of Tata Motors since June 2008, when it was acquired from Ford Motor Company.[32] Its principal activity is the development, manufacture and sale of Jaguar luxury and sports cars and Land Rover premium four-wheel-drive vehicles. It also owns the currently dormant Daimler, Lanchester, and Rover brands.[33]

TML Drivelines

TML Drivelines Ltd. is a wholly owned subsidiary of Tata Motors engaged in the manufacture of gear boxes and axles for heavy and medium commercial vehicles. It has production facilities at Jamshedpur and Lucknow.Tata TechnologiesTata Technologies Limited (TTL) is an 86.91%-owned subsidiary of Tata Motors which provides design, engineering, and business process outsourcing services to the automotive industry. It is headquartered in Pune (Hinjewadi) .

Various Initiatives:

1. Information technology initiatives The Company’s business strategies are well supported by IT proactively building the capabilities. The Company’s IT leverages strong partnerships with product and services companies to support business growth and innovation. This has enabled us to strengthen our core technology capabilities. The major highlights of IT initiatives at the Company are: The Company commemorated 10 years of its path breaking CRM solution, one of the largest in automotive industry with 4,000+ channel partners and more than 50,000+ users. The Company played a key role in setting up AutoDX, a SIAM ACMA initiative for electronic data interchange (EDI). The Company is implementing cloud based employee collaboration tools which will bring a diverse and multi locational workforce closer, enabling the One Team One Vision initiativeThe Company is extending its enterprise applications to mobiles through mobile apps. First five applications have been piloted for Telematics, Rural Marketing, Dealer Sales Force (CV and PV) and Quality Inspections. The Company won the ‘CSI Award for the Excellence in IT’ for executing the large and complex migration of entire Manufacturing Execution System (MES) platform in car plant.

2. Digital product development systems initiatives Product development processes continue to grow on best of the breed tools and technology solutions, for enhancing product development capabilities, addressing quality and speed.

Capabilities were developed for realistic product visualization in digital platform for product style. Bid response mechanisms for specific customers were developed. Processes relating to early manufacturing feedback in engineering functions were evolved with state of the art toolsets.

3. Research and development Specific areas in which R & D carried out by the Company The Company’s R&D is aligned towards developing and acquiring the technology, core competence and skill sets required for robust and timely delivery of the envisaged future product portfolio with leading product attributes across the range of commercial and passenger vehicles. For the passenger vehicle product range, the focus is on stunning design, driving pleasure and connected car technologies and for the commercial vehicle product range the focus is to be the market leaders by enhancing fuel efficiency and minimizing total cost of ownership.

Profit Analysis:

Consolidated Profit for the year increased to `13,991.02 crores from`9,892.61 crores in FY 2012-13, after considering the profit from associate companies and share of minority. The increase in profit as compared to last year is attributable to higher volume in JLR. Consolidated Balance Sheet Shareholders’ fund was `65,603.45 crores and `37,637.30 crores as at March 31, 2014 and 2013, respectively.

Reserves increased from `36,999.23 crores as at March 31, 2013 to `64,959.67 crores as of March 31, 2014. The increase represents strong performance on a consolidated basis as explained above. An amount of `5,399.55 crores (as at March 31, 2013 `1,578.07 crores), balance in hedging reserves account, representing marked to market impact on the derivative financial instruments. Balance in Profit & Loss Account and General Reserve has gone up by `13,303.73 crores, representing results from operations for the year, net of distribution of dividend and transfer to other reserves. These were offset by debit in the pension reserve of JLR, which increased by `1,343.67 crores (net), due to changes of actuarial assumptions (discount rate and inflation rate).

Borrowings (` in crores) As at March 31, 2014 As at March 31, 2013 Long term borrowings 45,258.61 32,155.29 Short term borrowings 9,695.86 11,620.21 Current maturities of long term borrowings 5,687.81 9,940.21 Total 60,642.28 53,715.71 Current maturities of Long term borrowings represents amount of loan repayable within one yearLong term borrowings including the current portion increased by `8,850.92 crores to `50,946.42 crores. Loans and advances include i. Credit entitlement of Minimum Alternate Tax (MAT) of `787.59 crores as at March 31, 2014 (`1,516.40 crores as at March 31, 2013), relating to Tata Motors.

Trade Receivables (net of allowance for doubtful debts) were `10,574.23 crores as at March 31, 2014, representing a decrease of `385.37 crores

Cash and bank balances were `29,711.79 crores, as at March 31, 2014 compared to `21,114.82 crores as at March 31, 2013

Analysis:

Cash generated from operations before working capital changes was `34,685.08 crores as compared to `24,405.53 crores in the previous year, representing an increase in cash generated through consolidated operations, consistent with the growth in revenue on a consolidated basis. After considering the impact of working capital changes and net movement of vehicle financing portfolio, the net cash generated from operations was `40,459.59 crores as compared to `24,402.66 crores in the previous year. The following factors contributed to net increase in working capital for the year:- Increase in trade and other assets amounting `3,254.09 crores mainly due to increase in sales to importers at JLR. The above increases were offset by increase in trade and other payables by `4,552.24 crores (due

to revenue growth) and net increase in provisions of `888.18 crores. Decrease in inventories amounting to `2,852.55 crores (mainly in finished goods) due to higher volumes / activity at JLR. b. The net cash outflow from investing activity increased during the current year to `29,893.02 crores from `23,491.38 crores for the last year. Capital expenditure was at `26,9.

Risks: 1. Deterioration in global economic conditions: The automotive industry, and the

demand for automobiles, is influenced by general economic conditions, including among other things, rates of economic growth, availability of credit, disposable income of consumers, interest rates, environmental and tax policies, safety regulations, freight rates and fuel and commodity prices. Negative trends in any of these factors impacting the regions where the Company operates could materially and adversely affect our business, results of operations and financial condition.

2. Economic outlook in India: The Indian automotive industry is affected substantially by the general economic conditions in India and around the world. The demand for automobiles in the Indian market is influenced by factors including the growth rate of the Indian economy, easy availability of credit, and increase in disposable income among Indian consumers, interest rates, freight rates and fuel prices

3. Input Costs / Supplies: Prices of commodity items used in manufacturing automobiles, including steel, aluminium, copper, zinc, rubber, platinum, palladium and rhodium have become increasingly volatile in recent years. Further price movements would closely depend on the evolving economic scenarios across the globe. While the Company continues to pursue cost reduction initiatives, an increase in price of input materials could severely impact the Company’s profitability to the extent such increase cannot be absorbed by the market through price increases and / or could have a negative impact on the demand

4. Environmental Regulations: The automotive industry is subject to extensive Governmental regulations regarding vehicle emission levels, noise, safety and levels of pollutants generated by the production facilities. These regulations are likely to become more stringent and compliance costs may significantly impact the future results of operations. In particular, the US and Europe have stringent regulations relating to vehicular emissions. The proposed tightening of vehicle emissions regulations by the European Union will require significant costs for compliance.

5. Growing business through mergers and acquisitions: The Company believes that its acquisitions provide opportunities to grow significantly in the global automobile markets by offering premium brands and products. The acquisitions have provided access to technology and additional capabilities while also offering potential synergies.

BAJAJBajaj Auto Limited is an Indian two-wheeler and three-wheeler manufacturing company.[2] Bajaj Auto manufactures and sells motorcycles,scooters and auto rickshaws. Bajaj Auto is a part of the Bajaj Group. It was founded by Jamnalal Bajaj in Rajasthan in the 1930s. It is based in Pune,Mumbai, with plants in Chakan (Pune), Waluj (near Aurangabad) andPantnagar in Uttarakhand.[3] The oldest plant at Akurdi (Pune) now houses the R&D centre 'Ahead'.

Bajaj Auto is the world's third-largest manufacturer of motorcycles and the second-largest in India.[4] It is the world’s largest three-wheeler manufacturer.

On 31 March 2013, its market capitalisation was INR 520 billion (US$9.57 billion), making it

India's 23rd largest publicly traded company by market value.[5] The Forbes Global 2000 list for

the year 2012 ranked Bajaj Auto at 1,416.[3]

Products[edit]

Bajaj manufactures and sells motorcycles, scooters, auto-rickshaws and most recently, cars. Bajaj Auto is India’s largest exporter of motorcycles and three-wheelers.[1] Bajaj Auto’s exports accounted for approx. 35% of its total sales. 47% of its exports are made to Africa.[1] Boxer motorcycle is the largest selling single brand in Africa.[1]

Motorcycles[edit]

Motorcycles in production are the XCD, Platina, Discover, Pulsar and Avenger. Bajaj also distributes motorcycles in India for other manufacturers, such as the Kawasaki Ninja 250R,[10] theNinja 650R and new for 2012, the KTM Duke 200.[citation needed]

In FY 2012-13, it sold approx. 3.76 million motorcycles which accounted for 31% of the market share in India.[1] Of these, approx. 2.46 million motorcycles (66%) were sold in India and remaining 34% were exported.[1]

Three wheelers[edit]

It is the world's largest manufacturer of 3-wheelers and accounts for almost 84% of India’s three-wheeler exports.[1] During the FY 2012-13, it sold approx. 480,000 three-wheelers which was 57% of the total market share in India.[1] Out of these 480,000 three-wheelers, 53% were exported and remaining 47% were sold in India.[1]

Cars[edit]

Low cost carsIn 2010, Bajaj Auto announced cooperation with Renault and Nissan Motor to develop a US$2,500 car, aiming at a fuel efficiency of 30 kilometres per litre (85 mpg-imp; 71 mpg-US) (3.3 L/100 km), or twice an average small car, and carbon dioxide emissions of 100 g/km.[11][12]

On 3 January 2012, Bajaj auto unveiled the Bajaj RE60, a mini car for intra-city urban transportation. 

Financial statements :

Thus from the above statements we observe that :1. Net sales and other operating income was flat at 20,348 crore. 2. Sales in volume terms reduced by 8.7%, with Bajaj Auto selling 3.87 million units compared

to 4.24 million units in the previous year. This is a cause of concern and I shall dwell upon it in this letter.

3. Exports rose by 2.4% — 1.58 million units in 2013-14 versus 1.55 million units last year. In terms of revenue, however, depreciation of the Indian rupee helped in lifting exports by 22.1% to H 8,199 crore.

4. Company’s operating EBITDA was 7.8% higher than the previous year. The operating EBITDA margin was 21.2% of net sales and other operating income, which was 1.6 percentage points higher than in 2012-13. It is by far the highest margin in the industry.

5. Profit before tax (PBT) grew by 8.6% to H 4,632 crore. 6. Profit after tax (PAT) was up by 6.6% at H 3,243 crore. This brings an observation regarding

Company’s performance. At one level, one can but only applaud an organisation that responds to a very challenging environment by delivering the Company’s highest EBITDA; a significantly industry-leading EBITDA margin; and all time high PBT and PAT. At another level, however, we need to ask why should Bajaj Auto have a flat growth in the top line? Or why should the Company, with its outstanding offerings of motorcycles, lose 4 percentage points of domestic market share — to 20% in 2013-14?

Maruti Suzuki

Maruti Suzuki India Limited (/marutI i suzuki/),(मा�रुति� सु�जु�की इण्डि �या� लि�मिमाटे��) commonly referred to as Maruti and formerly known as Maruti Udyog Limited(मा�रुति� उद्यो�ग लि�मिमाटे��), is an automobile manufacturer in India.[8] It is a subsidiary of Japanese automobile and motorcycle manufacturer Suzuki.[7] As of November 2012, it had a market share of 37% of the Indian passenger car markets.[9] Maruti Suzuki manufactures and sells a complete range of cars from the entry level Maruti 800, Alto, to the hatchback Ritz, Celerio, , A-Star,Swift, Wagon R, Zen and sedans DZire, Ciaz, Kizashi and SX4, in the 'C' segment Eeco,Omni, Multi Purpose vehicle Suzuki Ertiga and Sports Utility vehicle Grand Vitara.[10]

The company's headquarters are at No 1, Nelson Mandela Road, New Delhi.

Maruti Udyog Limited was established in February 1981, though the actual production

commenced only in 1983. It started with Maruti 800, based on the Suzuki Alto kei car which at

the time was the only modern car available in India. Its only competitors were Hindustan

Ambassador and Premier Padmini. Originally, 74% of the company was owned by the Indian

government, and 26% by Suzuki of Japan.[12] As of May 2007, the government of India sold its

complete share to Indian financial institutions and no longer has any stake in Maruti Udyog.Beginnings

Maruti's history begins in 1970, when a private limited company named 'Maruti technical services private limited' (MTSPL) is launched on November 16, 1970. The stated purpose of this company was to provide technical know-how for the design, manufacture and assembly of "a wholly indigenous motor car". In June 1971, a company called 'Maruti limited' was incorporated under the Companies Act and Sanjay Gandhi became its first managing director. "Maruti Limited" goes into liquidation in 1977

Suzuki enters

In 1982, a license & Joint Venture Agreement (JVA) is signed between Maruti Udyog Ltd. and Suzuki of Japan. At first, Maruti Suzuki was mainly an importer of cars. In India's closed

market, Maruti received the right to import 40,000 fully built-up Suzukis in the first two years, and even after that the early goal was to use only 33% indigenous parts. This upset the local manufacturers considerably. There were also some concerns that the Indian market was too small to absorb the comparatively large production planned by Maruti Suzuki, with the government even considering adjusting the petrol tax and lowering the excise duty in order to boost sales.

Market liberalisation

In 1994 Maruti Suzuki produces its 1 millionth vehicle since the commencement of production,

being the first company in India to do so. This is still not enough in a booming market and the

next year Maruti's second plant is opened, with annual capacity reaching 200,000 units. Maruti

also launches a 24-hour emergency on-road vehicle service, the first of its kind in the country. In

1996 the United Frontgovernment is formed, with Murasoli Maran new Industries Minister.

Model Launched Category Image

Omni 1984 Minivan

Gypsy 1985 SUV

Zen 1993 Hatchback

WagonR 1999 Hatchback

Swift 2005 Hatchback

Grand Vitara 2007 Mini SUV

Swift DZire 2008 Sedan

Ritz 2009 Hatchback

Eeco 2009 Hatchback [[ ]]

Estilo August 2009 HATCHBACK

Alto K10 2010 Hatchback

Kizashi 2011 Sedan

Ertiga 2012 Mini MPV

Alto 800 2012 Hatchback

Stingray 2013 Hatchback

Celerio 2014 Hatchback

Ciaz 2014Sedan

Maruti Suzuki already has a very significant share in the consolidated balance sheet of Suzuki, Japan. In the next decade, the weightage of Maruti Suzuki in Suzuki’s global results will increase significantly. Suzuki has, therefore, been giving thought as to how to strengthen Maruti Suzuki, improve its finances and competitive position and enhance its capability to overcome the increasing global competition in India. The answer to achieve all these objectives has been found by Suzuki Japan bringing in the very low cost funds available in that country to establish the manufacturing capacity in Gujarat. The amount of these funds, in the form of Suzuki’s equity, would be what is required to meet the total capex requirements less the depreciation accruing in Gujarat. The Gujarat plant would enter into a contract manufacturing agreement with Maruti. The production in Gujarat would be as per Maruti’s requirements; the cars would be provided to Maruti at cost, with no mark up on account of a return on capital employed; the Gujarat company would not sell cars to any one else anywhere; the Gujarat company would not make any profit or loss or accumulate any surplus; Maruti would realise all the profits arising from the production in Gujarat. In addition, Maruti would have available thousands of crores of Rupees that it would not be investing in Gujarat, and those funds would earn additional profit for Maruti and its shareholders. Thus Maruti would earn much higher profits, without deploying any funds in Gujarat than what it could do by investing its own money. The much higher availability of funds with Maruti would enable the company to strengthen its R&D and develop, and maintain the much larger number of models required to achieve sales of 3 million cars. In addition, the Company would also be able to invest in strengthening and de-risking its infrastructure for sales, service and spare parts, required to cater to a sale of 3 million cars a year. This is a unique arrangement not existing anywhere in the world. MNCs do not normally establish

100 per cent subsidiaries and pass on the profits from the production of these subsidiaries to a listed joint venture. Suzuki is an exception with this wonderful model that will ensure the future of Maruti Suzuki in India for the next 30 years.

Hero MotoCorp

Hero Motocorp Ltd., formerly Hero Honda, is an Indian motorcycle and scootermanufacturer based in New Delhi, India. The company is the largest two wheeler manufacturer in the world.[2] In India, it has a market share of about 46% share in 2-wheeler category.[2][4] The 2006 Forbes 200 Most Respected companies list has Hero Honda Motors ranked at #108.[5] On 31 March 2013, the market capitalisation of the company was INR 308 billion (USD 5.66 billion).[6]

Hero Honda started in 1984 as a joint venture between Hero Cycles of India andHonda of Japan.[7] In 2010, when Honda decided to move out of the joint venture, Hero Group bought the shares held by Honda.[8][9] Subsequently, in August 2011 the company was renamed Hero MotoCorp with a new corporate identity.[10]

In June 2012, Hero Motocorp approved a proposal to merge the investment arm of its parent Hero Investment Pvt. Ltd. into the automaker. The decision comes after 18 months of its split from Honda Motors.[11]

Termination of Honda joint venture[edit]

In December 2010, the board of directors of the Hero Honda Group had decided to terminate the joint venture between Hero Group of India and Honda of Japan in a phased manner. The Hero Group would buy out the 26% stake of the Honda in JV Hero Honda.[14]

Logo of Hero Honda, as the company was known till August 2011

Under the joint venture Hero Group could not export to international markets (except Sri Lanka and Nepal) and the termination would mean that Hero Group can now export. Since the beginning, the Hero Group relied on their Japanese partner Honda for the technology in their bikes. So there are concerns that the Hero Group might not be able to sustain the performance of the joint venture alone.[15]

The Japanese auto major will exit the joint venture through a series of offmarket transactions by giving the Munjal family—that held a 26% stake in the company—an additional 26%. Honda, which also has an independent fully owned twowheeler subsidiary—Honda Motorcycle and Scooter India (HMSI)—will exit Hero Honda at a discount and get over $1 billion for its stake. The discount will be between 30% and 50% to the current value of Honda's stake as per the price of the stock after the market closed on Wednesday.[16]

The rising differences between the two partners gradually emerged as an irritant. Differences had been brewing for a few years before the split over a variety of issues, ranging from Honda's reluctance to fully and freely share technology with Hero (despite a 10-year technology tie-up that expires in 2014) as well as Indian partner's uneasiness over high royalty payouts to the Japanese company. Another major irritant for Honda was the refusal of Hero Honda (mainly managed by the Munjal family) to merge the company's spare parts business with Honda's new fully owned subsidiary Honda Motorcycle and Scooter India (HMSI).[16]

As per the arrangement, it will be a two-leg deal. In the first part, the Munjal family, led by Brijmohan Lal Munjal group, will form an overseas-incorporated special purpose vehicle (SPV) to buy out Honda's entire stake, which will be backed by bridge loans. This SPV would eventually

be thrown open for private equity participation and those in the fray include Warburg Pincus, Kohlberg Kravis Roberts(KKR), TPG, Bain Capital, and Carlyle Group.[17]

Honda will continue to provide technology to Hero Honda motorbikes until 2014 for existing as well as future models.[18]

Formation of Hero MotoCorp[edit]

The name of the company was changed from Hero Honda Motors Limited to Hero MotoCorp Limited on 29 July 2011.[2] The new brand identity and logo of Hero MotoCorp were developed by the British firm Wolff Olins.[19] The logo was revealed on 9 August 2011 in London, to coincide with the third test match between England and India.[19]

Hero MotoCorp can now export to Latin America, Africa and West Asia.[19] Hero is free to use any vendor for its components instead of just Honda-approved vendors.[19]

On 21 April 2014, Hero MotoCorp announced their plan on a $40 Mn joint venture with Bangladesh's Notiol Niloy Group in the next five years.[20] also hero updated its 100cc engine range in 2014 for 100cc bikes except hero dawn.

Some key initiatives undertaken during FY 2013-14 include the following: 1. The company created a new state-of-the-art data centre facility to support growth in IT

infrastructure and resources. This not only provided computing power to the organisation, but also reduced energy consumption in line with some of the latest ‘Green Technologies’.

2. Moreover, the use of ‘cloud’ technologies was also increased. Several IT-based solutions, including design collaboration, test data management, schedule manager, workflows and analytics were implemented.

3. The company launched a mobility initiative, based on Global Positioning System (GPS) and other technologies for Rural Sales Executives of dealers. In addition, nearly all workflows and dashboards have been mobile enabled. Hero became India’s first Company to adopt ‘autoDX’, which is a SIAM-ACMA B2B EDI cloud-based initiative on EDIFACT--- an established procedure to connect seamlessly with the supplier community.

4. The company launched an IT enabled programme for measuring the performance of our network partners with a consistent focus on improving the overall customer experience. The analytics paradigm has been strengthened by providing business insights to internal users and channel partners, accelerating well informed business decisions.

5. The digital landscape has also been strengthened by expanding our presence on social media platforms, extending to cover customers in global markets, where we have started operations. Auto Expo was one of the biggest events this year where our IT capability was visible to the entire world, thanks to real-time RFID based tracking, real-time social media video wall and the launch of India’s first digital showroom.

6. The company enabled GPS (Global Positioning System) based tracking, linked with our Dealer Management System, which provided dealers full visibility of their shipments.

Thus we see that it is a strong, independent and forward looking Company.It is an organisation that is being re-developed and re-engineered so that it can tap opportunities at a global level. The Company now operates on a much bigger scale, with facilities and joint ventures across continents. The engineers are encouraged and supported to deliver breakthrough innovations and not just incremental improvements. As the economy recovers on the back of a strong government and as the global business cycle upticks, consumer demand will grow across India. Hero MotoCorp is well poised to ride an economic recovery over the next 12-18 months, with increased manufacturing capacity and number of upgrades and new models in the pipeline.

Which sector to invest?A low P/E ratio is generally better than a high P/E ratio.A company with a lot of cash on its balance sheet is superior to one excessively burdened with debt, and analysts' recommendations should always be taken with a grain of salt. Following are favourable conditions:

1. net income is positive, indicating that the company is generating a profit;2. revenue and earnings have grown over time; and3. operating cash flow is positive and growing.

Past performance is not a guarantee but can indicate whether a company may continue to grow and deliver strong returns for shareholders.

The price to earnings ratio (PE Ratio) is the measure of the share price relative to the annual net income earned by the firm per share. PE ratio shows current investor demand for a company share. A high PE ratio generally indicates increased demand because investors anticipate earnings growth in the future. The PE ratio has units of years, which can be interpreted as the number of years of earnings to pay back purchase price.

PE ratio is often referred to as the "multiple" because it demonstrates how much an investor is willing to pay for one dollar of earnings. PE Ratios are sometimes calculated using estimations of next year's earnings per share in the denominator. When this happens, it is usually noted

Ratios

Determine Your GoalsThe first step to actively picking out a stock from the sea of available alternatives is to determine what the purpose of your portfolio is. Investors focused on income, capital preservation or capital appreciation requirements will have different investment criteria. Income-oriented investors will usually focus on low-growth firms in industries and sectors such as the utilities, although other alternatives such as REITs and master limited partnerships are also readily available. Those who have a low risk tolerance and are primarily concerned with capital preservation tend to invest in stable blue chip corporations. And investors who are looking for capital appreciation should target companies of ranging market caps and life cycle stages. (To learn more, check out The Stock Cycle: What Goes Up Must Come Down.)Keeping diversification in mind, any one of the aforementioned investor types could use a combination of the above strategies. However, deciding which category you fall under is the easy part; figuring out what stocks to actually pick is where the process becomes more complicated. Although there is no single correct method on how to go about picking stocks, a basic strategy should help investors narrow down their search before they start analyzing the financials of a firm.

Keep Your Eyes OpenIn order to be an informed investor, it is essential to be up to date with current market events and opinions. Reading blogs, magazines and online financial news is a simple form of passive research which can be done on a daily basis. Sometimes, a news article or blog post will form the foundation of the underlying investment thesis.For example, reading a newspaper article about a major acquisition can spur further research into the fundamentals which drive that particular industry. The internet provides a tremendous level of convenience whereby any major event will be analyzed through multiple perspectives by different investment professionals. Sometimes, the underlying argument can be as simple as "there is currently a movement away from poverty in the emerging markets which is causing an increased number of people to cross the border into middle class status - as a result, there will be a surge in demand for product/commodity X." Taking this argument one step further, the investor can deduce that with an increase in the demand for X, producers of X will likely prosper.This type of basic analysis forms the basis of the overall "story" behind the investment, which justifies purchasing any stock in the specific industry of interest. An important research requirement is to scrutinize the assumptions and theories of the original argument: if the supply of X is infinite, an upward demand push will likely have minimal effects on companies in the business of selling/producing X. Once you are comfortable and convinced of the general argument after performing this form of qualitative research, corporate press releases and investor presentation reports are a good place for continued analysis. (Cut through the information clutter and decipher the useful news from the useless. Check out Financial Media 4-1-1 For Investors.)Finding CompaniesThe next stage in the stock picking process involves finding the companies which you may be potentially interested in. There are three simple ways of going about this task:1. Find the ETFs which track the performance of the industry and check out their holdings. This can be as easy as just searching for "Industry X ETF"; the official ETF page will disclose either all or only the top holdings of the fund.2. Use a screener to filter stocks based on specific criteria such as sector and industry. Screeners offer users additional features such as sorting companies based on market cap, dividend yield and other useful investment metrics.3. Continue searching through the blogosphere, stock analysis articles and financial news releases for ideas on companies in the chosen investment space. Remember to be critical of everything you read and analyze both sides of the argument.The three aforementioned methods are by no means the only ways on how to pick a company, but they do offer an easy way to start. There are also clear advantages and disadvantages associated with each strategy that investors should take note of.Searching for companies based on ETF holdings is probably the quickest way of narrowing down your search. However, ETFs typically hold only the largest companies in the space, often ignoring micro and small cap corporations. These types of funds also tend to focus on domestic markets. Stock screeners offer a very efficient alternative to narrow down the list of companies subject to desired inputs. Although screeners provide a more comprehensive list of securities which includes international firms, the investment metrics which are presented are often somewhat misleading. Seeking out experts' opinions via news sources is the most time consuming alternative, but it undoubtedly carries significant advantages. Firstly, reading

stock analysis pieces will further your understanding on industry fundamentals. Secondly, investors will often come across junior companies which can neither be found through screeners or within ETF holdings. Finally, research at this stage cuts down your subsequent research time later on in the stock-picking process.Turn to Corporate PresentationsOnce you are convinced that "Industry X" is a solid investment and you are familiar with the major players, it is time to turn your attention to investor presentations. Although presentations are less comprehensive than financial statements, they provide a general overview of how firms make their money and are much easier to browse through than 10-Q and 10-K reports. Additionally, presentation reports will usually have forward-looking information on the expected direction of the company and its industry. While the previous tips of going through fund holdings or performing a screen will produce a large number of potential equity investment options, looking through company websites and presentations lets you further refine your search. This stage of stock picking becomes more active.The information of an investor presentation report includes such material as balance sheet/income statement/cash flow statement performance, operational highlights, future growth opportunities and a general industry overview. Analyzing presentations involves more in-depth scrutiny of the actual company in order to decide why a particular stock is likely to outperform one of its competitors. Investors must now determine which companies are most attractive based on the presented information and narrow down their search once again. A key consideration is that the purpose of an investor presentation report is to give the company a chance to put its best foot forward.

References: Media Reports, Press Releases, Department of Industrial Policy and Promotion (DIPP), Automotive Component Manufacturers Association of India (ACMA), Society of Indian Automobile Manufacturers (SIAM), Union Budget 2014-15