RAM A STUDY ON EQUITY RESEARCH ANALYSIS AT INDIA BULLS LIMITED

SUBMITTED BY ENROLLMENT NO. SUBMITTED TO: – HYDERABAD A REPORT SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENT OF MASTERS DEGREE IN BUSINESS ADMINISTRATION HYDERABAD
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DECLARATION I declare that this project report entitled “EQUITY ANALYSIS” is original and bonafide work of my own in the partial fulfillment of the requirements for the award of the Degree of MASTER OF BUSINESS ADMINISTRATION and submitted to the Department of Management, Hyderabad. The data that has been collected by me is truly authentic and contains true and complete information ,

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ACKNOWLEDGEMENT I am extremely grateful to my Faculty guide, whose experienced guidance has

supported my honest efforts at all stages of my report. I would like to express my heart-full gratitude to all those people who had enabled the successful completion of my Final thesis of my Management Thesis-II whose constant guidance and encouragement crowned all my efforts with success.

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CONTENTS

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with each share of stock representing a tiny piece of ownership. As we all know firsthand. he will buy it. The price of a security represents a consensus.. The price at which an investor is willing to buy or sell depends primarily on his expectations. if one looks hard enough there may still be a genuine aid for the Day Trader and Short Term Investor. they just cannot afford to ignore either fundamental or technical analysis NEED OF THE STUDY To start any business capital plays major role. But there is usually a fairly strong consensus of a stock's future earnings that the average investor cannot disprove Fundamental analysis and technical analysis can co-exist in peace and complement each other. he will sell it. The more shares you own.e. These simple statements are the cause of a major challenge in forecasting security prices. If he expects the security's price to rise. In an industry plagued with skepticism and a stock market increasingly difficult to predict and contend with. because they refer to human expectations. Capital can be acquired in two ways by issuing shares or by taking debt from financial institutions or borrowing money from financial institutions. Since all the investors in the stock market want to make the maximum profits possible. If prices are based on investor expectations.INTRODUCTION India is a developing country. then knowing what a security should sell for (i. and to save tax in honest way. humans expectations are neither easily quantifiable nor predictable. The owners of the company have to pay regular interest and principal amount at the end. Stock is ownership in a company. if the investor expects the price to fall. The more shares you 5 . Since the introduction of shares concept. Equities are playing a major role in contribution of capital to the business from the beginning. It is the price at which one person agrees to buy and another agrees to sell. That's not to say that knowing what a security should sell for isn't important--it is. Nowadays many people are interested to invest in financial markets especially on equities to get high returns. large numbers of investors are showing interest to invest in stock market. the more of the company you own. fundamental analysis) becomes less important than knowing what other investors expect it to sell for.

The main objectives of the Project study are: 1) Detailed analysis of Automobile industry which is gearing towards international standards Analyze the impact of qualitative factors on industry’s and company’s prospects 2) Comparative analysis of three tough competitors TATA Motors.own. This is valuable because it fills information gaps so that each individual investor does not need to analyze every stock thereby making the markets more efficient. ownership is called “Equity”. The role of equity analysis is to provide information to the market. The more shares you own the more dividends you receive. •A company does not have to make principal payments Stock/shares play a major role in acquiring capital to the business in return investors are paid dividends to the shares they own. analyzing and interpreting the data to diagnose the problem and react to the opportunity in such a way where 6 . In the financial world. the more dividends you earn when the company makes a profit. Maruti Suzuki and Mahindra and Mahindra through fundamental analysis 3) Suggesting as to which company’s shares would be best for an investor METHODOLOGY Research design or research methodology is the procedure of collecting... •A company does not have to make periodic interest payments to creditors. Advantages of selling stock: •A company can raise more capital than it could borrow. OBJECTIVES OF THE STUDY The objective of this project is to deeply analyze our Indian Automobile Industry for investment purpose by monitoring the growth rate and performance on the basis of historical data. An efficient market relies on information: a lack of information creates inefficiencies that result in stocks being misrepresented (over or under valued).

the study is based on information of last five years. Detailed study of the topic was not possible due to limited size of the project. The sample size for the number of stocks is taken as 3 for fundamental analysis of stocks as fundamental analysis is very exhaustive and requires detailed study Primary Data: Primary data is data which is collected first hand. Maruti Suzuki and Mahindra and Mahindra. 7 . SCOPE OF THE STUDY The scope of the study is identified after and during the study is conducted. The study is restricted to three companies based on Fundamental analysis.the costs can be minimized and the desired level of accuracy can be achieved to arrive at a particular conclusion. The stocks are chosen from the automobile sector. The methodology used in the study for the completion of the project and the fulfillment of the project objectives. Further. • • • • The analysis is made by taking into consideration five companies i.e. Internet etc. For this project the the first hand has been collected from India bulls through personal interview Secondary Data: Secondary data is a data which is collected from secondary source. The project is based on tools like fundamental analysis and ratio analysis. The stocks are chosen in an unbiased manner and each stock is chosen independent of the other stocks chosen. The sample of the stocks for the purpose of collecting secondary data has been selected on the basis of Random Sampling. • The scope is limited to only the fundamental analysis of the chosen stocks LIMITATIONS: • • • This study has been conducted purely to understand Equity analysis for investors. TATA Motors. Fort he purpose of this project secondary data has been collected from News papers. • The scope of the study is limited for a period of five years.

certain risks are essential to understand before venturing into the world of equity.e. provides a method for quantifying risk. If decisions are to lead to benefit maximization. for a period of 45 days. This session discusses the trade-off and. using conventional statistical tools. Two categories of risk borne by the firm's stockholders. which continues to prosper. An economy. Risks In equity investment: Although an equity investment is the most rewarding in terms of returns generated. Market/ Economy Risk: The performance of any company depends on the growth of an economy. business risk and financial risk. These can be described as follows: a. ensures that companies operating in it benefit from its 8 . The Capital Asset Pricing Model (CAPM) is used to demonstrate the risk/return trade-off by relating the required return on the firm's investments to its beta (or market) risk. Suggestions and conclusions are based on the limited data of five years Review of Literature INTRODUCTION The equity analysis relationship is a fundamental concept in not only financial analysis. are discussed and demonstrated.• • There was a constraint with regard to time allocation for the research study i. The session also examines risk reduction via portfolio diversification and what requirements need to be met for firms to experience the benefits of diversification. but in every aspect of life. as is the concept of leverage. The requirement that expected return/benefit be commensurate with risk/cost is known as the "risk/return trade-off" in finance. it is necessary that individuals/institutions consider the combined influence on expected (future) return or benefit as well as on risk/cost.

especially infrastructure. Internal business risk is largely associated with the efficiency with which a company conducts its operations within the broader environment imposed upon it. is at a greater risk of not being able to meet its liabilities and hence going bankrupt. the residual income left for shareholders gets reduced. Industry Risk: All industries undergo some kind of cyclical growth. the rewards from investment are limited. thereby impacting the share price. a heavily leveraged company. Management changes often have a serious impact on policy matters of companies. Business Risk: Business risk is a function of the operating conditions faced by a company and the variability that these conditions inject into operating income and hence expected dividends. 9 . Industry specific government regulations too impact returns from investments made therein. balance of payment positions. It is the team which gives direction to the future course of action that a company will take. borrowing money for business. A slowdown in the economy pinches almost all sectors. e. However. Beyond a specified limit. companies belonging to industries where growth has retarded incur losses or declining gains. it increases default risk.e. an equity shareholder also runs the risk of any downturn in the economy affecting the performance of his company.growth. d. Shareholders get rewarded most during the expansion stage. thereby affecting the returns on shares. i. interest rates. Quality of management is hence paramount. inflation. c. Further. More importantly. Economy related risks are usually reflected in the factors such as GDP growth. Business risk can be classified into two broad categories: external and internal. Financial Risk: Financial risk is associated with the way in which a company finances its activities. b. However. Management Risk: The management is the face of an enterprise. A management which is unable to meet the challenges posed by competition is likely to suffer in performance. External risk is the result of operating conditions imposed upon the company by circumstances beyond its control. services and manufacturing companies. the last few years have been very rewarding for investors in real estate. For instance. creates fixed payment obligations in form of interest that must be sustained. A company. credit growth etc. once the industry reaches a maturity stage.

f. are what constitute systematic risk. g. adversely affects earnings. Hence. caused by fluctuations in the general level of interest rates. share prices of most companies face a downturn as the expected fall in demand reduces their future expected income. Interest Rate Risk: Interest rate risk refers to the uncertainty of future market values and size of future income. h. Hence. employment rate. Exchange Rate Risk: Companies today earn sizeable revenues from outside their parent country. any appreciation in the currency. which results in an increase in the prices of products and a corresponding slowdown in demand. Hence. Macro factors such as domestic as well as international policies. This has implications for all the sectors in the economy. investors cannot hedge or diversify against this risk as it affects all kinds of asset classes and affects the entire economy as such. Unsystematic Risk 10 . Inflation Risk: Rising prices or inflation reduces purchasing power for the common man resulting in a slowdown in the demand in the economy. which results in falling or stagnant share prices. Rising interest rates increase cost of borrowing. Generally. the rate and momentum of inflation and general level of consumer confidence etc. as was recently witnessed with technology companies. an interest rate hike affects share prices of companies cutting across the board. Important Learning Terms • • • • • • • • Risk Systematic risk Unsystematic risk Return Portfolio Beta Leverage Diversification Systematic Risk Systematic Risk. in an inflationary environment. as the name suggests is the risk inherent in the economic system.

So first. Interest rates in the economy may fluctuate due to several factors such as a change in the RBI's monetary policy. However. the 11/9 episode in the United States of America and 13/12 in India. real estate and equities. note that diversifying within the same asset class (buying different equity shares) is not strictly combating unsystematic risk. An example of the above is evenly distributing your portfolio in bank deposits. forex reserves. when the overall interest rates in the economy rise. let us take the example of mutual funds (MFs). the level of the fiscal deficit and the consequent inflation outlook etc. To illustrate how fluctuations in interest rates affect the returns. then the presence of other classes of assets in your portfolio saves you from a total washout. Irrational exuberance with a rising market has left many an investor losing their shirts and in some cases even more sensitive garments. typically such events are temporary in nature and in fact a good fund manager can actually take advantage of such hiccups. one must remember that the diversification must be in the class of asset and not the asset itself. Reserve Bank of India (RBI) bonds. However. Extraneous factors such as energy price fluctuations. In other words. Cash Reserve Ratio (CRR) requirements. For example. However. commodity demand and supply and even capital flows may result in rates fluctuating. interest rates will rise. does this mean that investing in debt instruments is entirely risk-free? Unfortunately. If there is a war. 11 . The best way to combat this risk is by diversification. Understanding Unsystematic Risk The one thing that almost all investors would agree upon is the fact that equity is definitely more risky than debt. the prices of fixed income earning instruments fall and vice versa. the answer is in the negative though the volatility is much less.This is the risk inherent in a particular asset class. That way if a certain unsystematic risk affects let's say the real estate market (say the prices crashes). However. let us examine what kind of risks do debt instruments pose Interest Rate Risk Interest rates and prices of fixed income instruments share an inverse relationship. Then there are the event-based factors that affect interest rates. Adjusting the portfolio to the market rate of returns is called 'marking to market'.

11. What if the company whose fixed deposit you invested in goes bankrupt? There have already been several such cases. Therefore.11. Credit risk can be simply eliminated by investing in sovereign securities --securities issued by the government. the instrument may be down graded.but everyone knows how much time our courts take. the interest rate falls from 10% to 9%. where almost the entire corpus is invested in sovereign securities thereby achieving the same result. Here comes the 'mark to market' concept. This means that if the fund sells all the assets of the scheme and distributes the money on equitable basis to all the unit holders. for retail investors. If the fund sells the units to you at it's current NAV of Rs. Ergo. 10 and its corpus is Rs. Immediately. something has got to be done to protect their interest.000 units at 9%.. Investing in a highly rated instrument is safe but not sufficient.We assume that the current Net Asset Value (NAV) of the MF is Rs. The fund raises its NAV to Rs. Interest rate risk discussed earlier is always prevalent. 1 lakh at the lower rate of 9%. This is injustice to the existing investors. the NAV rises when the interest falls. MFs offer gilt schemes. though the fund will be forced to invest your Rs. it follows that if the investment is held till maturity. 1000 crores.000 units and not 10.000. This will benefit you immensely. it comes into play only when a transaction is undertaken during the pendancy of the fixed income instrument. 10 per unit. 10. you have to be on the lookout for the same. Realise that the entire corpus of the fund stands invested at an average return of 10%. is the credit rating. Fixed income earning instruments get rated for varying degrees of safety. Then there have been cases where the issuer has got rated by different agencies but chooses to indicate only the higher ones. thereafter you wish to invest Rs. In other words. there would be no interest rate risk.Investments such as 12 . 1 lakh in the scheme.000 units at 10% would be identical with the returns on 10. True. they will receive Rs. You will be allotted only 9. Or so we hope. Firstly.000 units. The only factor. Now suppose. Deposits with plantation companies and time-share resorts are more cases in point. Credit Risk This is the risk of default. you will be allotted 10.. Elimination of Risks There is some good news though. However. you have legal remedy. There is simply no risk of default. You will be a partner in sharing the benefit of the higher returns of 10%. which dilutes this risk somewhat. The returns on 9.

In the previous paragraph. To add insult to injury these rates are applicable on the entire corpus and not on additional investment.Public Provident Fund (PPF). Unfortunately. Dividend is an earning on the investment made in shares. which has reared its ugly head in recent times. as a shareholder have is in form of participation that you get in profit made by the company. Monetary Benefits: A. Dividend: An equity shareholder has a right on the profits generated by the company. the rates of PPF over the past three years have been consistently reduced by the authorities from 12% p. we have acquainted ourselves with the kinds of risks inherent in investment instruments. These are examples where both the risks inherent in debt instruments are at a bare minimum Government Action Risk This is a unique kind of risk.a. to 8% p. such principles of investment had not contended with unilateral governmental action. For example. Profits are distributed in part or in full in the form of dividends. there is no escape from this risk --that of our government Measuring Risk So far. The article began with the premise that return is BENEFITS TO SHAREHOLDERS. However. While final dividend is distributed only after closing 13 . the real benefit that you. your liability is limited only to the face value of the shares held by you. just like interest in case of bonds or debentures.a. it is mentioned that the interest rate risk is eliminated by simply holding the instrument till maturity. Relief Bonds etc. 1. merely knowing this much may not be enough to take an informed decision. The benefits distributed by the company to its shareholders can be: 1) Monetary Benefits and 2) Non Monetary Benefits. are normally held till maturity. At the same time. A company can issue dividend in two forms: a) Interim Dividend and b) Final Dividend. Rates on other small saving instruments have also been slashed across the board. Why should you purchase shares of a company? What are benefits that accrue to you as a shareholder? Apart from the right to vote and decide the future course of action that a company takes. However. Relief Bonds have come down to 8%.

The benefit of a rights issue is that existing 14 . Bonus: An issue of bonus shares is the distribution free of cost to the shareholders usually made when a company capitalises on profits made over a period of time. companies at times declare an interim dividend during a financial year. As the companies grow.of financial year. in practice. Companies generally do not distribute all their profits as dividend. Hence. it does not affect the wealth of shareholders. after which the value of each share is Rs 35. a holding of 200 shares of X Ltd. earns a profit of Rs 40 crore and decides to distribute Rs 2 to each shareholder. every existing shareholder of X Ltd would receive one additional share free for each share held by him. Hence if X Ltd. this means an increase in the value of the company usually reflected in its share price. 2. companies give additional shares in a pre-defined ratio. Prima facie. Capital Appreciation: A shareholder also benefits from capital appreciation. if you purchase 200 shares of X Ltd at Rs 20 per share and hold the same for two years. bonuses carry certain latent advantages such as tax benefits. Of course. which results in appreciation in the value of shares. Hence if X Ltd decides to issue bonus shares in a ration of 1:1. an increase in the floating stock of the company. taking the bonus into account. the share price would also ideally fall by 50 percent post bonus. the share price may rise or fall on the bonus announcement. Rather than paying dividends. would entitle you to Rs 400 as dividend. profits are reinvested in the business. A company wishing to increase its subscribed capital by allotment of further shares should first offer them to its existing shareholders. Bonuses and rights issues are two such noticeable benefits. However. This means an increase in net worth. This means that your capital has appreciated by Rs 3000. Rights Issue: A rights issue involves selling of ordinary shares to the existing shareholders of the company. etc. This is a return that you shall earn as a result of the investment made by you by subscribing to the shares of X Ltd. better future growth potential. However. Simply put. depending upon market expectations. Non-Monetary Benefits: Apart from dividends and capital appreciation. investments in shares also fetch some type of non-monetary benefits to a shareholder.

Different ways to overcome risks: Most risks associated with investments in shares can be reduced by using the tool of diversification. this results in an expanded capital base. the process of equity investing itself comes with certain inherent risks. Purchasing shares of different companies and creating a diversified portfolio has proven to be one of the most reliable tools of risk reduction. 15 are reward . which cannot be reduced by strategies such as diversification. diversifying across sectors and industries reaps the real benefits of diversification.shareholders maintain control of the company. the weightage of each company’s share gets reduced. you run the risk of a large magnitude. The benefits of creating a well diversified portfolio can be gauged from the fact that as you add more shares to your portfolio. such as interest rate risk and inflation risk. These risks are called systematic risk as they arise from the system. Industries and businesses. Also. In fact. after which the company is able to perform better. As your portfolio expands to include shares of more companies. The process of Diversification: When you hold shares in a single company. The following factors justify this: 1. . Hence. The same logic can be extended to a sector or an industry. theoretically. Sector specific risks get minimized when shares of other sectors are added to the portfolio. The best example of this can be found in the Indian telecommunications industry. This gets reflected in the appreciation of share value. the company specific risk reduces. Hence any adverse event related to any one company would not expose you to immense risk. so do the profits of companies belonging to them. investors for taking systematic risk for equity investment The case for long-term investment in equities The movement during these fifteen years shows that it is rewarding to stay invested in equities for the long term. to which companies belong. As these risks cannot be diversified. This is because a recession or a downtrend is not seen in all sectors together However all risks cannot be reduced: Though it is possible to reduce risk. As industries grow. investors start reaping the benefit of their investment over a period of time. mature over a period of time.

which means that you own all the returns generated. so there is a concept of risk. over a period of time these factors get negated and returns from stocks present a valid picture. So. The outcome may be to have a Tail or the Head. although you may incur some losses in the short term. if you are looking to invest in equities you must always think long-term. The Risk/Return Trade-off in Financial Analysis It is widely accepted that the major determinant of the required return on the asset (or the rate to be applied to a stream of receipts to capitalize its value) is its degree of risk. 16 . 4. An investor can ill-afford to ignore that India is a fast growing economy and it is widely perceived that this robust growth would continue for many more years to come. Equities are the only investment asset. It is almost certain that the Index of Industrial Production (IIP) would grow at a rate of over 10 per cent in the next few years. Example: The risk averse individual faced with two events each having the same expected outcome will choose the outcome with the lower level of risk. Risk refers to the probability that the return and therefore the value of an asset or security may have alternative outcomes. Risk is the uncertainty (today) surrounding the eventual outcome of an event which will occur in the future. Example: when tossing a coin. The biggest beneficiary of this growth story would be the industries and service sector. This would enhance profit growth of companies and it would get reflected in the upward movement of their share price. the risk/return trade-off states that financial decisions that subject stockholders to more risk must offer a higher expected return. 3.2.In Financial Analysis. the same can happen regarding the expected return on the investments in various sectors. All other investments. This reduces the overall return in investment assets like NSC. excluding PPF and life insurance. three outcomes can be experienced: win. In business. which are exempt from long-term capital gains tax. In a football match. some one is not sure exactly what will be the outcome. lose or draw. While markets undergo cyclical phases. which follow a series of peaks and troughs. are taxed for the gains made. bank deposits etc.

INDUSTRY PROFILE Industry Overview The securities market achieves one of the most important functions of channeling idle resources to productive resources or from less productive resources to more productive resources. Hence in the broader context the people who save and investors who invest focus more towards the 17 .

it consists of a series of channels through which the savings of the community are made available for industrial and commercial enterprises and public authorities. the number of listed stocks. They are typically defined by having transparent pricing. It has grown exponentially as measured in terms of amount raised from the market. financial markets are the credit markets catering to the various needs of the individuals. bank deposits. Wherever a financial transaction takes place. Capital Market The capital market is a market for financial assets which have a long or indefinite maturity. bonds. currencies and derivatives. As a whole. there is no specific place or location to indicate a financial market. it deals with long term securities which have a period of above one year. deposit of money into a bank. bonds. claims and services. Financial market is a broad term describing any marketplace where buyers and sellers participate in the trade of assets such as equities. Generally. market capitalization. equities. This enhances savings and investments in the economy. FINANCIAL MARKETS Finance is the pre-requisite for modern business and financial institutions play a vital role in the economic system. transparency and safety. The Indian Capital Market has come a long way in this process and with a strong regulator it has been able to usher an era of a modern capital market regime. firms and institutions by facilitating buying and selling of financial assets. In a nutshell. and investor population. basic regulations on trading. Hence financial markets are pervasive in nature since financial transactions are themselves very pervasive throughout the economic system. For instance. the two pillars for economic growth. purchase of debentures. Financial markets refer to the institutional arrangements for dealing in financial assets and credit instruments of different types such as currency. granting of loan by term lending institutions. it is deemed to have taken place in the financial market. The past decade in many ways has been remarkable for securities market in India. In the widest sense. etc. It is through financial markets and institutions that the financial system of an economy works. trading volumes and turnover on stock exchanges. The market has witnessed fundamental institutional changes resulting in drastic reduction in transaction costs and significant improvements in efficiency. capital 18 . Generally. issue of equity shares. costs and fees and market forces determining the prices of securities that trade. bills.economy’s abilities to invest and save respectively. sale of shares and so on. cheques.

Hence it is also called as New Issue Market. commercial bills market. Secondary market : Secondary market is a market where existing securities are traded. securities which have already passed through new issue market are traded in this market. The most common underlying assets include 19 . This market consists of all stock exchanges recognized by the government of India. It basically deals with those securities which are issued to the public for the first time.Effective allocation of the mobilized financial resources. The best example could be Initial Public Offering (IPO) where a firm offers shares to the public for the first time. Derivatives Market: Derivatives market is the financial market for derivatives. A derivative is a security whose price is dependent upon or derived from one or more underlying assets. In other words. which are derived from other forms of assets. Generally. The derivative itself is merely a contract between two or more parties. therefore. Its value is determined by fluctuations in the underlying asset. The market. Primary market: Primary market is a market for new issues or new financial claims. In other words. 2. makes available a new block of securities for public subscription.market facilitates raising of capital. such securities are quoted in the stock exchange and it provides a continuous and regular market for buying and selling of securities. Capital market consists of primary market and secondary market. and Treasury bill market.Mobilization of financial resources on a nation-wide scale. it deals with raising of fresh capital by companies either for cash or for consideration other than cash. Money market securities are generally very safe investments which return relatively low interest rate that is most appropriate for temporary cash storage or short term time needs. Money Market Money markets are the markets for short-term. The major functions performed by a capital market are: 1. by directing the same to projects yielding highest yield or to the projects needed to promote balanced economic development. acceptance market. It consists of a number of sub-markets which collectively constitute the money market namely call money market.Securing the foreign capital and know-how to fill up deficit in the required resources for economic growth at a faster rate. 3. financial instruments like futures contracts or options. highly liquid debt securities.

commodity. commodities.Foreign exchange markets are made up of banks. • Options: A financial derivative that represents a contract sold by one party (option writer) to another party (option holder). The important financial derivatives are the following: Equity Analysis Forwards: Forwards are the oldest of all the derivatives. The promised asset may be currency. It is important to realize that the foreign exchange market is not a single exchange. so the buyer would want the stock to go down. but 20 .stocks. A forward contract refers to an agreement between two parties to exchange an agreed quantity of an asset for cash at a certain date in future at a predetermined price specified in that agreement. but not the obligation. and retail forex brokers and investors. interest rates and market indexes. exchange and speculate on currencies. investment management firms. Because the currency markets are large and liquid. Infact. central banks. Equity Analysis Foreign Exchange Market It is a market in which participants are able to buy. hedge funds. bonds. instrument etc. it is the combination of forwards by two counterparties. commercial companies. The contract offers the buyer the right. to buy (call) or sell (put) a security or other financial asset at an agreed-upon price (the strike price) during a certain period of time or on a specific date (exercise date). Call options give the option to buy at certain price. currencies. they are believed to be the most efficient financial markets. It is nothing but a standardized forward contract which is legally enforceable and always traded on an organized exchange. Futures: Future contract is very similar to a forward contract in all respects excepting the fact that it is completely a standardized one. Put options give the option to sell at a certain price. It is arranged to reap the benefits arising from the fluctuations in the market – either currency market or interest rate market or any other market for that matter. sell. so the buyer would want the stock to go up. It is a worldwide decentralized over-the-counter financial market for the trading of currencies. Swaps: It is yet another exciting trading instrument. The forex market is considered to be the largest financial market in the world.

soybeans. The history of Indian capital markets dates back 200 years toward the end of the 18th century when India was under the rule of the East India Company. coffee. Delhi. The development of the capital market in India concentrated around Mumbai where no less than 200 to 250 securities brokers were active during the second half of the 19th century. rubber. Ahmadabad and Kolkata apart from Madras. This was in marked contrast to the initial phase of growth in many of the fast growing economies of East 21 . Hard commodities are typically natural resources that must be mined or extracted (gold. including Mumbai. which were dominated by the state controlled public sector resulting in stagnation of Equity Analysis the economy right up to the early 1990s. Commodities Market It is a physical or virtual marketplace for buying. etc. This resulted in many new companies across different industry segments to come up with newer products and services. the securities markets witnessed a flurry of IPO’s that were launched. etc. selling and trading raw or primary products. whereas soft commodities are agricultural products or livestock (corn.). Bangalore and Pune. However the stock markets in India remained stagnant due to stringent controls on the market economy that allowed only a handful of monopolies to dominate their respective sectors. The corporate sector wasn't allowed into many industry segments. Kanpur.) INDIAN FINANCIAL MARKETS India Financial market is one of the oldest in the world and is considered to be the fastest growing and best among all the markets of the emerging economies. For investors' purposes there are currently about 50 major commodity markets worldwide that facilitate investment trade in nearly 100 primary commodities. The financial market in India today is more developed than many other sectors because it was organized long before with the securities exchanges of Mumbai.is constructed of a global network of computers that connects participants from all parts of the world. Ahmadabad and Kolkata were established as early as the 19th century. By the early 1960s the total number of securities exchanges in India rose to eight. wheat. A remarkable feature of the growth of the Indian economy in recent years has been the role played by its securities markets in assisting and fuelling that growth with money rose within the economy. Today there are 21 regional securities exchanges in India in addition to the centralized NSE (National Stock Exchange) and OTCEI (Over the Counter Exchange of India). pork. Thereafter when the Indian economy began liberalizing and the controls began to be dismantled or eased out. oil. sugar. Commodities are split into two types: hard and soft commodities.

where members of the organization gather to trade company stocks or other securities. The regulating authority for capital markets in India is the SEBI (Securities and Exchange Board of India). either corporation or mutual organization. regulating and controlling business in buying.Asia that witnessed huge doses of FDI (Foreign Direct Investment) spurring growth in their initial days of market decontrol. Many PSUs (Public Sector Undertakings) that decided to offload part of their equity were also helped by the well-organized securities market in India. While the NSE has not just done well to grow and evolve into the virtual backbone of capital markets in India the OTCEI struggled and is yet to show any sign of growth and development. organization or body of individuals whether incorporated or not. It had to take drastic measures to plug many loopholes that were exploited by certain market forces to advance their vested interests. The integration of IT into the capital market infrastructure has been particularly smooth in India due to the country’s world class IT industry. This has pushed up the operational efficiency of the Indian stock market to global standards and as a result the country has been able to capitalize on its high growth and attract foreign capital like never before. The NSE was conceived as the market for trading in the securities of companies from the large-scale sector and the OTCEI for those from the small-scale sector. As per the Securities Contracts Regulation Act. The launch of the NSE (National Stock Exchange) and the OTCEI (Over the Counter Exchange of India) during the mid 1990s by the government of India was meant to usher in an easier and more transparent form of trading in securities. SEBI came into prominence in the 1990s after the capital markets experienced some turbulence. After this initial phase of struggle SEBI has grown in strength as the regulator of India’s capital markets and as one of the country’s most important institutions Stock Exchanges in India Stock Exchanges are an organized marketplace. selling and dealing in securities 22 . or as principals for their own accounts. 1956 a stock exchange is an association. The members may act either as agents for their customers. established for the purpose of assisting. During this phase in India much of the organized sector has been affected by high growth as the financial markets played an all-inclusive role in sustaining financial resource mobilization.

Mangalore 16. Madras 14. List of Stock Exchanges in India Bombay Stock Exchange National Stock Exchange OTC Exchange of India Regional Stock Exchanges 1. Jaipur 11. Ludhiana 12. Coimbatore 7. Madhya Pradesh 13. Guwahati 9. Meerut 17. Delhi 8. The trade on an exchange is only by members and stock broker do have a seat on the exchange. Hyderabad 10. Pune 18. Cochin 6. Ahmedabad 2. Bhubaneswar 4. Magadh 15. The record keeping is central but trade is linked to such physical place because modern markets are computerized. Bangalore 3. Saurashtra Kutch 23 .Stock exchanges facilitate for the issue and redemption of securities and other financial instruments including the payment of income and dividends. Calcutta 5.

In 1956. Earlier it was an Association of Persons (AOP). is also tracked worldwide." 24 . In the past and even now. BSE was known as "The Native Share & Stock Brokers Association. stands for Bombay Stock Exchange. It is the oldest market not only in the country. pursuant to the BSE (Corporatisation and Demutualization) Scheme. BSE obtained a permanent recognition from the Government of India under the Securities Contracts (Regulation) Act. SENSEX. but now it is a demutualised and corporatised entity incorporated under the provisions of the Companies Act. This is recognized worldwide and its index. BSE. In the early days. 2005 notified by the Securities and Exchange Board of India (SEBI)." It was established in the year 1875 and became the first stock exchange in the country to be recognized by the government. 1956.BOMBAY STOCK EXCHANGE A very common name for all traders in the stock market. BSE Vision The vision of the Bombay Stock Exchange is to "Emerge as the premier Indian stock exchange by establishing global benchmarks. it plays a pivotal role in the development of the country's capital market. but also in Asia. 1956.

research & advisory services. loan against shares and mortgage & housing finance.COMPANY PROFILE Introduction Indiabulls is India’s leading Financial. derivatives trading. Indiabulls entered the Real Estate business in the year 2005 with its group of companies. The company employs around 4000 Relationship managers who help the clients to satisfy their customized financial goals. depositary services. 2006).000 which covers from a wide range of financial services and products from securities. Consolidated net worth of the group is around USD 700 million. Indiabulls has over 640 branches all over India. Some of the large 25 . They ensure convenience and reliability in all their products and services. The market capitalization of Indiabulls is around USD 2500 million (29thDecember. Indiabulls and its group companies have attracted USD 500 million of equity capital in Foreign Direct Investment (FDI) since March 2000. The customers of Indiabulls are more than 4. Indiabulls Financial Services Ltd is listed on the National Stock Exchange (NSE). Bombay Stock Exchange (BSE) and Luxembourg Stock Exchange. Large scale projects worth several hundred million dollars are evaluated by them. Real Estate and Power Company with a wide presence throughout India. consumer secured & unsecured credit.50.

In this year: Indiabulls came out with its initial public offer (IPO) in September 2004. F&O. 2000 million for Indiabulls subsidiaries Viz. 26 . Mutual fund. IPO Financing/Distribution and Equity Research. Indiabulls Credit Services Ltd. with the development of an in-house team. and Indiabulls Housing Finance Ltd. Year 2001-03: The service offered by Indiabulls was increased to include Equity.shareholders of Indiabulls are the largest financial institutions of the world such as Fidelity Funds. It also became a market leader in securities brokerage industry. with around 31% share in Online Trading. Farallon Capital and its affiliates committed Rs. The world renowned investment banks like Merrill Lynch and Goldman Sachs increased their shareholding in Indiabulls. The world’s largest hedge fund. Growth of Indiabulls Year 2000-01: One of India’s first trading platforms was set up by Indiabulls Financial Services Ltd. Wholesale Debt. Goldman Sachs. Indiabulls won bids for landmark properties in Mumbai. Morgan Stanley and Farallon Capital. In the same year. Year 2005-06: In this year the company acquired over 115 acres of land in Sonepat for residential home site development. Indiabulls started its Consumer Finance business. Year 2003-04: In this particular year Indiabulls ventured into Distribution and Commodities Trading business. Merrill Lynch. Indiabulls entered the Indian Real Estate market and became the first company to bring FDI in Indian Real Estate. the Steel Tycoon Mr. Year 2004-05: • • • • • This was one of the most important years in the history of Indiabulls.

Year 2006-07: In this year.440 million in it. was benefited with the Farallon Capital agreeing to invest Rs. Indiabulls financial services limited has recently signed a joint venture agreement with sogecap.L N Mittal promoted LNM India Internet venture Ltd. The company also received an “in principle approval” from Government of India for development of multi product SEZ in the state of Maharashtra. was included in the prestigious Morgan Stanley Capital International Index (MSCI). On the asset management front. the company has received formal approval uhby7hbfrom SEBI and is expected to shortly launch its first NFO. Resolved to Amalgamate Indiabulls Credit Services Ltd and demerge Indiabulls Securities Limited.2% stake in Indiabulls Credit Services Ltd. Indiabulls Financial Services Ltd. Indiabulls Financial Services Ltd. Indiabulls Financial Services Ltd Year 2008-09: Several developments across its group companies have propelled indiabulls forward and are expected to continue to power the rise of this conglomerate. Indiabulls Real Estate Business was demerged to become a separate entity called Indiabulls Real Estate Ltd. acquired 8. Noble Realtors is a Company engaged in the business of construction and development of real estate projects. Ltd. 6. The Board of Indiabulls Financial Services Ltd. Indiabulls Financial Services Ltd acquired 100% of the equity share capital of Noble Realtors Pvt. Rajiv Rattan and Saurabh Mittal 27 . Promoters for Indiabulls Sameer Gehlaut.. the insurance arm of Societe Generale (SocGen) for its upcoming life insurance venture. Indiabulls enter in to Public issue for his Indiabulls power Ltd. At the same time it has also signed a Memorandum of understanding with MMTC.

debt.0% stake in the company post the IPO Rajiv Rattan and Saurabh Mittal will have a post issue holding of 11.1% respectively. from Rs 5 bn in FY96.9% as compared to an estimated 52%(including indirect ownership by way of mutual funds) of all households in the US.e. to apply The Team: Indiabulls Securities Ltd.Are the promoters of Indiabulls Financial Services Limited. regulatory reporting. its fortunes are very much dependent on the Performance of the capital markets. 28 . i. The Indian equity markets have grown from strength to strength in the last decade with combined daily volumes of all segments on the BSE and the NSE touching Rs 232 bn in April 2004. derivative and equity markets. This team comprising highly qualified and experienced personnel has been responsible for the overall management of the company and has provided direction in diverse areas of business strategy. However. if one were to compare the percentage of all households in India that are invested in the stock markets. in absolute terms. All the three promoters of the company are engineering graduates while Saurabh Mittal is a management graduate as well. human resources development and product development. main strength lies in its formidable team. While Sameer Gehlaut will have a 23. it is only about 1. Sector Since Indiabulls derives most of its revenues from the brokerage business. Total shareholders in the country are over 20 m (2% of population) and this is the third largest after the US and Japan. This highlights the long-term potential for the sector. operating management.5% and 10.

Senior Vice President Yuv Raj Singh Regional Manager Dashmeet Singh Branch Manager Senior Sales Manager Sujeet Roy Chowdary Support System Vishal Sujeet Roy Chowdary Sales Function Subrot Back Office Executive Ifran Khan Local Compliance Officer Chary RM/SRM Satish Kumar S ARM Raja Dealer Badri Nath 29 .

Transparency and Ethical Behavior.Vision statement: To become the preferred long term financial partner to a wide base of customers whilst optimizing stake holder’s value Mission statement: To establish a base of 1 million satisfied customers by 2010. Clients & Stakeholder groups Indiabulls Group entities in India 30 . We will create this by being a responsible and trustworthy partner Corporate action: An Approach to Business that reflects Responsibility. Respect for Employees.

Ltd Indiabulls Housing Finance Ltd. Indiabulls Finance Co. Pvt. Indiabulls Securities Ltd is listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) and its global depository shares are listed on the Luxembourg Stock Exchange Reasons to choose Indiabulls Securities Ltd: The Indiabulls Financial Services stock is the best performing stock in the MSCI Index – the global benchmark for equity investments A person who bought Indiabulls shares in the IPO at Rs. Ltd.• • • • • • • • • Indiabulls Capital Services Ltd. Indiabulls Securities Ltd. Indiabulls Commodities Pvt. Indiabulls Credit Services Ltd. Indiabulls Insurance Advisors Pvt. about institutional expertise and companies valuable understanding of the financial markets 31 .48) in September 2004 has been rewarded almost 100 times in three and a half years – a feat unparalleled in the history of Indian capital markets Indiabulls Real Estate Limited partnered Farallon Capital Management LLC of the US to bring the first Foreign Direct Investment into real estate Seven Reasons why investing with Indiabulls Securities Limited is smarter 1) Customization: Formulates investment plans based on customer individual requirements 2) Expertise: Brings within customer reach. Indiabulls Power Ltd. Ltd. 19 (US$ 0. Indiabulls Resources Ltd.

5) Personalized service: Helps customer through the entire investment process. Though these businesses currently account for an insignificant portion of overall revenues. with our team of expert investment advisors Online trading potential is huge: Online trading accounted for 5% of overall market in FY04 as compared to an estimated 3% in FY03. Aggressive growth plans: 32 . which we believe is likely to be robust going forward as well. The table below indicates the growth in volumes of the Internet trading segment on the NSE over the last few years. with innovative and efficient services. The growth is indicative of the potential of this segment. prospects are promising. This is primarily driven by increasing penetration of computers. 4) Trust: Enjoys the pedigree of Indiabulls Securities Ltd and share its expertise in financial services.5% in the online trading space. Indiabulls currently has almost 20% market share of volumes in the Internet trading space. To put things in perspective. considering the penetration levels of mutual funds and insurance in the country. convenience of usage and cost advantage. step by step.3) One-stop shop: Caters to all customers’ investment needs under one roof. significant decline in Internet charges.0% as compared to 0. 6) Unbiased & Objective advice: We partner you in your investment process. the offline brokerage on equities is around 1. these are highly profitable business segments. Advisory services: Indiabulls is also into mutual fund and insurance advisory businesses. Though this field is extremely competitive and requires significant research skills.

Indiabulls has set aggressive targets to expand its business in the offline space. Derivatives. Commodities. Insurace. Distribution: Mutual funds. Currency Derivatives. Home loans. The platform provides enhanced trade information and executes orders on an integrated software based trading platform. This includes investments in upgradation of branch network and opening another 75 branches by the end of calendar year 2009 (150 in total). IPO’s. Divisions: Investment Advisory and Broking? Division 33 . Indiabulls financial service offers: ? SME finance ? Mortgage loans ? Commercial vehicle loans ? Farm equipment loans ? Commercial credit loans ? Loan against shares and ? Third part distribution of insurance products. The company has also indicated its intent to acquire strategic stake in other companies towards growing the business inorganically Products provided Power Indiabulls An online trading system designed for the high-volume trader. Broking: Equity.

.Project Syndication Division? Institutional Equity Broking? Division Institutional Debt Broking? Division Retail Offerings: ? Wealth Management Services ? Portfolio Management Services ? Securities Broking-Equities and derivatives ? Depository & Custodial Service & Distribution of financial Products. 1) Equities 2) Commodities 3) Wholesale debts 4) Futures and options 5) Depository services 6) Equity research services 34 . Services: Indiabulls securities provides a wide range of services that include Power Indiabulls: An online trading system designed for the high-volume trader. The platform provides enhanced trade information and executes orders on an integrated software based trading platform. .

8) Depository Services 9) Payment Gateway 10) Other back office support Online Banks Tie-ups for trading: Company having online transaction tie-ups with banks like • • • • HDFC BANK. The Indiabulls Financial Services stock is the best performing stock in the MSCI Index – the global benchmark for equity investments. ICICI BANK. Company Achievements: The Indiabulls Group is one of the top fifteen conglomerates in the country with businesses in several significant sectors.7) Post Trade -Custodial. Indiabulls Financial Services Limited was accorded the highest rating P1+ for short term debt and the highest rating of AAA (SO) by CRISIL for loan receivables securitization while 35 . Indiabulls Real Estate Limited partnered Farallon Capital Management LLC of the US to bring the first Foreign Direct Investment into real estate. IDBI BANK. CITI BANK.

HDFC Securities Ltd. Indiabulls acquired Pyramid Retail including Piramyd Megastores and Trumart. have distributed over Rs. listed in important Indian and overseas markets. ICICI Securities Ltd. ABOUT INDIABULLS GROUP The Indiabulls Group is one of the top fifteen conglomerates in the country with businesses in several significant sectors. their chain of lifestyle and convenience outlets Company competitors • • • • • • Kotak Securities Ltd. Indiainfoline Ltd. In December 2007.25 billion) while group revenues have grown at a cumulative annual rate of over 100% to now reach Rs. Indiabulls Financial Services Limited was accorded the highest rating P1+ for short term debt and the highest rating of AAA (SO) by CRISIL for loan receivables securitisation while 36 . Its companies.Indiabulls Securities Limited is the only broker in India to be assigned CRISIL’s highest broker quality grading of BQ1. 25. The group companies have a market capitalisation of over Rs. 3100 crore (US$ 775 million) and the group profit has surged to over Rs. Religare Securities Ltd. 1200 crore (US$ 300 million). 700 crore (US$ 175 million) as dividend in the year 2008. Birla Money.000 crore (US$ 6.

Indiabulls acquired Pyramid Retail including Piramyd Megastores and Trumart. The challenges facing it were immense – not least of all the mind set 37 . their chain of lifestyle and convenience outlets. a stock brokerage company in Delhi. The idea of leveraging technology for trading stocks led to the creation of Indiabulls Incorporated on 10th January 2000. In December 2007. Its original idea of leveraging technology bore fruit when Indiabulls was accorded permission to conduct online trading on Indian stock exchanges. A person who bought Indiabulls shares in the IPO at Rs. it has grown from just five employees to 21. Rajiv Rattan and Saurabh Mittal acquired Orbis. Indiabulls’ growth has been nothing short of stupendous. Young entrepreneur Sameer Gehlaut established Indiabulls in 2000. The company had achieved the distinction of becoming only the second brokerage firm in India to be granted this consent. The group started its operations from a small office near Hauz Khas bus terminal in Delhi.000 and from one office to 600 across the country The Indiabulls Financial Services stock is the best performing stock in the MSCI Index – the global benchmark for equity investments. 19 (US$ 0.48) in September 2004 has been rewarded almost 100 times in three and a half years – a feat unparalleled in the history of Indian capital markets Indiabulls Real Estate Limited partnered Farallon Capital Management LLC of the US to bring the first Foreign Direct Investment into real estate. Companies History in India In 1999. In less than eight years since the company was first registered.The office had a tin roof and two computers.a Delhi based stock broking company. three IIT-Delhi alumni Sameer Gehlaut. after acquiring orbis Securities.Indiabulls Securities Limited is the only broker in India to be assigned CRISIL’s highest broker quality grading of BQ1. it was converted into a public limited company on 27th February 2004.

mutual fund distribution and equity research. Having overcome this resistance. Indiabulls ventured into insurance distribution and commodity trading. Indiabulls acquired Pyramid Retail In 2007 and marked its presence in the power sector by launching Indiabulls Power Brand Values Indiabulls is amongst the largest non-banking financial services companies in India and enjoys strong brand recognition and customer acceptance. It successfully floated its IPO in September 2004 and in the same year entered the consumer finance segment. the largest commodity trading house in India. Opportunities were opening up in retail and infrastructure as well.At the same time it has also signed a Memorandum of Understanding with MMTC. the new sunrise industry. 38 . Indiabulls Financial Services Limited has recently signed a joint venture agreement with Sogecap. it entered this sector. To cement its position in the Indian business and industry firmament. the Group believes that the bulk of its brand story is yet to be written. But it wasn’t just real estate that was booming. to establish a Commodities Exchange with 26% Ownership held by MMTC. F&O.On the asset management front. In 2004/05. wholesale debt. Indiabulls will feature prominently in it. Recent Developments Several developments across its group companies have propelled Indiabulls forward and are expected to continue to power the rise of this conglomerate. The company attributes its dominant position in the brokerage industry to the preferential status it enjoys with investors Coupled with its forays into various segments. the company later expanded its service portfolio to include equity. Indeed. the company has received formal approval from SEBI and is expected to shortly launch its first NFO. when a case study on India’s youngest brands which have had a profound impact on the economy is crafted. In 2003/04. the insurance arm of Societe Generale (SocGen) for its upcoming life insurance venture.of investors who were called to make the big leap from traditional stock trading to a completely online interface. was the next frontier for Indiabulls. Real estate.

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ANALYSIS OF AUTOMOBILE INDUSTRY Over a period of more than two decades the Indian Automobile industry has been driving its own growth through phases. Determine the condition of the general economy. Most fundamental information focuses on economic. 40 . industry and company conditions in an effort to determine the value of a company s stock. India is 16th in the world in terms of nominal factory output. Fundamental analysis typically focuses on key statistics in company s financial statements to determine if the stock price is correctly valued. Economic analysis is a process whereby strengths and weaknesses of an economy are analyzed. This is the pie.C Approach) a. The automobile sector has been contributing its share to the shining economic performance of India in the recent years.chart showing contributions of different sectors in Indian economy. With comparatively higher rate of economic growth rate index against that of great global powers. Company analysis Fundamental Analysis Fundamental analysis is the study of economic. GDP and Automobile Industry In absolute terms. ECONOMY ANALYSIS Economic analysis is the analysis of forces operating the overall economy a country. Determine the condition of the industry.I. 1. 2. industry and company statistics. Economy analysis b. Industry analysis c. The service sector is growing rapidly in the past few years. India has become a hub of domestic and exports business. Economic analysis is important in order to understand exact condition of an economy. To understand this industry for the purpose of investment we need to analyze it by the following approach: Fundamental Analysis (E. 3. The typical approach to analyzing a company involves three basic steps 1. Determine the condition of the company.

Much of this optimism resulted from renewed interest being shown in India auto industry by reputed overseas car makers. Recession Auto industry in India had been hit hard by ongoing global financial recession.Today. This has contributed largely in making India a prime destination for many international players in the automobile industry who wish to set up their businesses in India. the Indian automobile market continues to perform better than most of the other industries in the economy in coming future. Exports Despite recession. These companies have major plans lined up for India auto industry. Skoda Auto and Mercedes-Benz. The effect of inflation has affected every sector which is related to car manufacturing and production.1 per cent for 2008-09 and it has increased to 8. overall automobile exports registered a growth rate of 13. Foreign Direct Investment The automobile sector in the Indian industry is one of the high performing sectors of the Indian economy. These are few signs of the revolutionized auto industry after recession Inflation The rise in inflation will have adverse impact on the industry that will not only see interest rates getting further hardened but also a drop in demand due to the squeeze in purchasing power. the GDP growth has downgraded it to 7. During April-January 2010. more and more MNC’s coming in India to setup their ventures which clearly shows the scope of expansion. Automatic approval for foreign equity investment up to 100 per cent of manufacture of automobiles and component is permitted. But it is in a good shape now. 41 . automobile sector in India is one of the key sectors of the economy in terms of the employment. The increase in the price of fuel and the steel due to inflation has led to a slower growth rate of the car industry in India. Directly and indirectly it employs more than 10 million people and if we add the number of people employed in the auto-component and auto ancillary industry then the number goes even higher. As the world economy slipped into recession hitting the demand hard and the banking sector takes conservative approach towards lending to corporate sector. Nissan Motors which is a well known Japanese car making company regarded India automobile market as a global car manufacturing hub for future and invested huge amount in our market. Major names among these are General Motors. There are some other automobile companies of world who have shown interest in India auto market.24 percent.6% in 2010 by overcoming the setbacks of recession.

Industry life cycle classification generally groups industries into one of four stages: pioneer. India emerged as Asia's fourth largest exporter of automobiles. and those external to the firm can be classified as opportunities 42 . Commercial Vehicles. successful companies can grow at extraordinary rates. However. the product has not been widely accepted or adopted. Segmentation of Automobile Industry The automobile industry comprises of Heavy vehicles (trucks. Business strategies are developing. Environmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W). South Korea and Thailand. The growth rate of the automobile industry in India is greater than the GDP growth rate of the economy. Following is the segmentation that how much each sector comprises of whole Indian Automobile Industry Industry life cycle The industrial life cycle is a term used for classifying industry life over time. In 2009. buses. The increase in the demand for cars. powered by the increase in the income is the primary growth driver of the automobile industry in India. In the pioneer phase.The Indian automobile sector is far from being saturated. and other vehicles. The Automobile Industry is one of the fastest growing sectors in India. The Indian automobile sector has passed this stage quite successfully. behind Japan. Two-wheelers. The industry is growing rapidly. and Three-wheelers. passenger cars. In 2009. Swot analysis: A scan of the internal and external environment is an important part of the strategic planning process. growth. Indian Automotive Industry is booming with a growth rate of around 15 % annually. maturity and decline. so the automobile sector can be very well be said to be in the growth phase.INDUSTRY ANALYSIS( AUT OMOBI LE ) The automobile industry in India is the ninth largest in the world with an annual production of over 2. and there is high risk of failure. tempos. often at an accelerating rate of sales and earnings growth. leaving ample opportunity for volume growth.3 million units in 2008. tractors). estimated rate of growth of India Auto industry is going to be 9% .

Such an analysis of the strategic environment is referred to as a SWOT analysis. Strengths •Large domestic market •Sustainable labor cost advantage •Competitive auto component vendor base •Government incentives for manufacturing plants •Strong engineering skills in design etc Weaknesses • Low labor productivity ` 43 .(O) or threats (T). SWOT analysis of the Indian automobile sector gives the following points: 1.

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