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A Project Report on Procedural Study &Market Share Determination on Maruti Finance” at ICICI Bank

A Project Report on Procedural Study &Market Share Determination on Maruti Finance” at ICICI Bank

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A Project Report on Procedural Study &Market Share Determination on Maruti Finance” at ICICI Bank
A Project Report on Procedural Study &Market Share Determination on Maruti Finance” at ICICI Bank

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Published by: Babasab Patil (Karrisatte) on Sep 21, 2012
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“Procedural Study & Market Share Determination on Maruti Finance” at ICICI Bank 
INTRODCTION TO Indian Auto Industry
The automobile industry in India offers significant employment opportunities. Theautomobile industry including component industry employs 0.45 million people directly andaround 10 million people indirectly.The auto industry recorded a turnover of US$ 10 billion while the auto-component industryrecorded a turnover of US$ 2.7 billion in 1999-2000.Many international auto majors entered the country post liberalisation in 1991.India’s largest car-maker Maruti Udyog Ltd (MUL) was recently privatised with Suzuki Motor Corporation moving into the driving seat after acquiring a majority stake and managementcontrol in the Maruti Suzuki joint venture in early 2002.
Policy Initiatives
Auto policy announced by the government in 2002 has opened the automobile sector to 100 per cent foreign direct investment and removed the minimum capital investment norm for fresh entrants. This will benefit manufacturers who are planning to enter the Indian market, particularly in the burgeoning motorcycle market.The new policy has taken into account the need to address emerging problems and make theauto sector WTO compatible.The policy is also in favour of providing excise duty concessions to small cars, multi-utilityvehicles and low emission vehicles. It envisages India becoming a major hub for themanufacture of small cars and a global supplier of components. The policy also includesincentives to facilitate R&D.Import tariffs are to be fixed in a manner so as to promote manufacturing in India, as opposedto mere assembly, without giving undue protection to domestic industry. While ensuring a balanced transition towards open trade, the automotive tariff structure will be reviewed periodically to prevent India from becoming a ‘dumping ground’ for international rejects.
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“Procedural Study & Market Share Determination on Maruti Finance” at ICICI Bank 
India enjoys a distinct cost advantage with respect to auto-ancillary manufacturingcapabilities. While developed nations’ labour cost component is 30-35 per cent of sales, Indianlabour cost is only around 8-9 per cent of sales.The number of vehicles manufactured in India has risen from 3 million units annually in 1999to 5 million units in 2002. This has also led to an increase in domestic demand for automotivecomponents.
Other global players in component manufacturing
Japanese and British component manufacturers are already operating JVs in India. Americancompanies, which have or are planning to set up plants in India, include Delphi (anautomotive components division of General Motors, USA), Delco Electronics, Textron andMagna International of Canada.Auto majors such as DaimlerChrysler, Volvo, Renault, Toyota and Honda are planning tooutsource their requirements from India.Automotive components manufactured in India are of top quality and used as originalcomponents for vehicles made by top international companies such as General Motors,Mercedes and IVECO among othersThe industry encompasses commercial vehicles, multi-utility vehicles, passenger cars, twowheelers, three wheelers, tractors and auto components. There are in place 15 manufacturersof cars and multi utility vehicles, 9 of commercial vehicles, 14 of Two/Three Wheelers and10 of Tractors besides 5 of engines. With an investment of Rs.50,000 crores, the turnover wasRs. 59,500 crores in Automotive Sector during 1999-2000. It employs 4,50,000 peopledirectly and 100,00,000 people indirectly and is now inhabited by global majors in keencontention.India manufactures about 38,00,000 2-wheelers, 5,70,000-passenger cars, 1,25,000 MultiUtility Vehicles, 1,70,000 Commercial Vehicles and 2,60,000 tractors annually. India rankssecond in the production of two wheelers and fifth in commercial vehicles.
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“Procedural Study & Market Share Determination on Maruti Finance” at ICICI Bank 
India’s automotive component industry manufactures the entire range of parts required by thedomestic automobile industry and currently employs about 250,000 persons. Auto componentmanufacturers supply to two kinds of buyers – original equipment manufacturers (OEM) andthe replacement market. The replacement market is characterised by the presence of severalsmall-scale suppliers who score over the organised players in terms of excise duty exemptionsand lower overheads. The demand from the OEM market, on the other hand, is dependent onthe demand for new vehicles.There has been a slowdown in the automobile sector in the past two years. However, thecomponent industry maintained a low but positive growth rate mainly due to its export performance. Over the years, the component industry has maintained a 10% - 12% share of exports in the total production.Roads occupy an eminent position in transportation as they, as per the present estimate, carrynearly 65% of freight and 87% of passenger traffic. Although, India has 3.3 millionkilometers of road network, which is the second largest in the world, the Indian highways aregetting overpopulated. Traffic management and road sense also need attention.
Improving Road Infrastructure
Traffic on roads is growing at a rate of 7 to 10% per annum while the vehicle populationgrowth for the past few years is of the order of 12% per annum. Poor road infrastructure andtraffic congestion can be a bottleneck in the growth of vehicle industry. A balanced andcoordinated approach will be undertaken for proper maintenance, upgradation anddevelopment of roads by encouraging private sector participation besides public investmentand incorporating latest technologies and management practices to take care of increase invehicular traffic.For the convenience of traveling public the Government shall also promote multi-modaltransportation and the implementation of mass rapid transport systems.
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