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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 ,

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.

CONTENTS

INTRODUCTION India is a developing country. Nowadays many people are interested to invest in financial markets especially on equities to get high returns, and to save tax in honest way. Equities are playing a major role in contribution of capital to the business from the beginning. Since the introduction of shares concept, large numbers of investors are showing interest to invest in stock market. In an industry plagued with skepticism and a stock market increasingly difficult to predict and contend with, if one looks hard enough there may still be a genuine aid for the Day Trader and Short Term Investor. The price of a security represents a consensus. It is the price at which one person agrees to buy and another agrees to sell. The price at which an investor is willing to buy or sell depends primarily on his expectations. If he expects the security's price to rise, he will buy it; if the investor expects the price to fall, he will sell it. These simple statements are the cause of a major challenge in forecasting security prices, because they refer to human expectations. As we all know firsthand, humans expectations are neither easily quantifiable nor predictable. If prices are based on investor expectations, then knowing what a security should sell for (i.e., fundamental analysis) becomes less important than knowing what other investors expect it to sell for. That's not to say that knowing what a security should sell for isn't important--it is. 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. Since all the investors in the stock market want to make the maximum profits possible, they just cannot afford to ignore either fundamental or technical analysis NEED OF THE STUDY To start any business capital plays major role. Capital can be acquired in two ways by issuing shares or by taking debt from financial institutions or borrowing money from financial institutions. The owners of the company have to pay regular interest and principal amount at the end. Stock is ownership in a company, with each share of stock representing a tiny piece of ownership. The more shares you own, the more of the company you own. The more shares you
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own, the more dividends you earn when the company makes a profit. In the financial world, ownership is called Equity. Advantages of selling stock: A company can raise more capital than it could borrow... A company does not have to make periodic interest payments to creditors. 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. The more shares you own the more dividends you receive. The role of equity analysis is to provide information to the market. An efficient market relies on information: a lack of information creates inefficiencies that result in stocks being misrepresented (over or under valued). 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. 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. 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 industrys and companys prospects 2) Comparative analysis of three tough competitors TATA Motors, Maruti Suzuki and Mahindra and Mahindra through fundamental analysis 3) Suggesting as to which companys shares would be best for an investor METHODOLOGY Research design or research methodology is the procedure of collecting, analyzing and interpreting the data to diagnose the problem and react to the opportunity in such a way where

the costs can be minimized and the desired level of accuracy can be achieved to arrive at a particular conclusion. The methodology used in the study for the completion of the project and the fulfillment of the project objectives. The sample of the stocks for the purpose of collecting secondary data has been selected on the basis of Random Sampling. The stocks are chosen in an unbiased manner and each stock is chosen independent of the other stocks chosen. The stocks are chosen from the automobile sector. 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. 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. Fort he purpose of this project secondary data has been collected from News papers, Internet etc. SCOPE OF THE STUDY The scope of the study is identified after and during the study is conducted. The project is based on tools like fundamental analysis and ratio analysis. Further, the study is based on information of last five years. The analysis is made by taking into consideration five companies i.e. TATA Motors, Maruti Suzuki and Mahindra and Mahindra. The scope of the study is limited for a period of five years. 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. The study is restricted to three companies based on Fundamental analysis. Detailed study of the topic was not possible due to limited size of the project.

There was a constraint with regard to time allocation for the research study i.e. for a period of 45 days. 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, but in every aspect of life. If decisions are to lead to benefit maximization, it is necessary that individuals/institutions consider the combined influence on expected (future) return or benefit as well as on risk/cost. The requirement that expected return/benefit be commensurate with risk/cost is known as the "risk/return trade-off" in finance. This session discusses the trade-off and, using conventional statistical tools, provides a method for quantifying risk. Two categories of risk borne by the firm's stockholders, business risk and financial risk, are discussed and demonstrated, as is the concept of leverage. The session also examines risk reduction via portfolio diversification and what requirements need to be met for firms to experience the benefits of diversification. 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. Risks In equity investment: Although an equity investment is the most rewarding in terms of returns generated, certain risks are essential to understand before venturing into the world of equity. These can be described as follows: a. Market/ Economy Risk: The performance of any company depends on the growth of an economy. An economy, which continues to prosper, ensures that companies operating in it benefit from its
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growth. However, an equity shareholder also runs the risk of any downturn in the economy affecting the performance of his company. Economy related risks are usually reflected in the factors such as GDP growth, inflation, balance of payment positions, interest rates, credit growth etc. A slowdown in the economy pinches almost all sectors, especially infrastructure, services and manufacturing companies. b. Industry Risk: All industries undergo some kind of cyclical growth. Shareholders get rewarded most during the expansion stage. For instance, the last few years have been very rewarding for investors in real estate. However, once the industry reaches a maturity stage, the rewards from investment are limited. Further, companies belonging to industries where growth has retarded incur losses or declining gains. Industry specific government regulations too impact returns from investments made therein. c. Management Risk: The management is the face of an enterprise. It is the team which gives direction to the future course of action that a company will take. Quality of management is hence paramount. Management changes often have a serious impact on policy matters of companies, thereby impacting the share price. A management which is unable to meet the challenges posed by competition is likely to suffer in performance. d. 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. Business risk can be classified into two broad categories: external and internal. Internal business risk is largely associated with the efficiency with which a company conducts its operations within the broader environment imposed upon it. External risk is the result of operating conditions imposed upon the company by circumstances beyond its control. e. Financial Risk: Financial risk is associated with the way in which a company finances its activities. A company, borrowing money for business, creates fixed payment obligations in form of interest that must be sustained. Beyond a specified limit, the residual income left for shareholders gets reduced, thereby affecting the returns on shares. More importantly, it increases default risk, i.e, a heavily leveraged company, is at a greater risk of not being able to meet its liabilities and hence going bankrupt.

f. Exchange Rate Risk: Companies today earn sizeable revenues from outside their parent country. Hence, any appreciation in the currency, as was recently witnessed with technology companies, adversely affects earnings, which results in falling or stagnant share prices. g. Inflation Risk: Rising prices or inflation reduces purchasing power for the common man resulting in a slowdown in the demand in the economy. This has implications for all the sectors in the economy. Hence, in an inflationary environment, share prices of most companies face a downturn as the expected fall in demand reduces their future expected income. h. Interest Rate Risk: Interest rate risk refers to the uncertainty of future market values and size of future income, caused by fluctuations in the general level of interest rates. Rising interest rates increase cost of borrowing, which results in an increase in the prices of products and a corresponding slowdown in demand. Hence, 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, as the name suggests is the risk inherent in the economic system. Macro factors such as domestic as well as international policies, employment rate, the rate and momentum of inflation and general level of consumer confidence etc. are what constitute systematic risk. Generally, 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
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This is the risk inherent in a particular asset class. The best way to combat this risk is by diversification. However, one must remember that the diversification must be in the class of asset and not the asset itself. An example of the above is evenly distributing your portfolio in bank deposits, Reserve Bank of India (RBI) bonds, real estate and equities. That way if a certain unsystematic risk affects let's say the real estate market (say the prices crashes), then the presence of other classes of assets in your portfolio saves you from a total washout. However, note that diversifying within the same asset class (buying different equity shares) is not strictly combating unsystematic risk.

Understanding Unsystematic Risk The one thing that almost all investors would agree upon is the fact that equity is definitely more risky than debt. Irrational exuberance with a rising market has left many an investor losing their shirts and in some cases even more sensitive garments. However, does this mean that investing in debt instruments is entirely risk-free? Unfortunately, the answer is in the negative though the volatility is much less. So first, 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. In other words, when the overall interest rates in the economy rise, the prices of fixed income earning instruments fall and vice versa. Interest rates in the economy may fluctuate due to several factors such as a change in the RBI's monetary policy, Cash Reserve Ratio (CRR) requirements, forex reserves, the level of the fiscal deficit and the consequent inflation outlook etc. Extraneous factors such as energy price fluctuations, commodity demand and supply and even capital flows may result in rates fluctuating. Then there are the event-based factors that affect interest rates. For example, the 11/9 episode in the United States of America and 13/12 in India. If there is a war, interest rates will rise. However, typically such events are temporary in nature and in fact a good fund manager can actually take advantage of such hiccups. To illustrate how fluctuations in interest rates affect the returns, let us take the example of mutual funds (MFs). Adjusting the portfolio to the market rate of returns is called 'marking to market'.
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We assume that the current Net Asset Value (NAV) of the MF is Rs. 10 and its corpus is Rs. 1000 crores. 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, they will receive Rs. 10 per unit. Now suppose, the interest rate falls from 10% to 9%. Immediately, thereafter you wish to invest Rs. 1 lakh in the scheme. Realise that the entire corpus of the fund stands invested at an average return of 10%. If the fund sells the units to you at it's current NAV of Rs. 10, you will be allotted 10,000 units. This will benefit you immensely. You will be a partner in sharing the benefit of the higher returns of 10%, though the fund will be forced to invest your Rs. 1 lakh at the lower rate of 9%. This is injustice to the existing investors. Therefore, something has got to be done to protect their interest. Here comes the 'mark to market' concept. The fund raises its NAV to Rs. 11.11. You will be allotted only 9,000 units and not 10,000. The returns on 9,000 units at 10% would be identical with the returns on 10,000 units at 9%. In other words, the NAV rises when the interest falls. Credit Risk This is the risk of default. What if the company whose fixed deposit you invested in goes bankrupt? There have already been several such cases. Deposits with plantation companies and time-share resorts are more cases in point. True, you have legal remedy...but everyone knows how much time our courts take. The only factor, which dilutes this risk somewhat, is the credit rating. Fixed income earning instruments get rated for varying degrees of safety. Investing in a highly rated instrument is safe but not sufficient. Firstly, the instrument may be down graded; you have to be on the lookout for the same. Then there have been cases where the issuer has got rated by different agencies but chooses to indicate only the higher ones. Elimination of Risks There is some good news though. Credit risk can be simply eliminated by investing in sovereign securities --securities issued by the government. There is simply no risk of default. Or so we hope, for retail investors, MFs offer gilt schemes, where almost the entire corpus is invested in sovereign securities thereby achieving the same result. Interest rate risk discussed earlier is always prevalent. However, it comes into play only when a transaction is undertaken during the pendancy of the fixed income instrument. Ergo, it follows that if the investment is held till maturity, there would be no interest rate risk.Investments such as
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Public Provident Fund (PPF), Relief Bonds etc. are normally held till maturity. 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, which has reared its ugly head in recent times. In the previous paragraph, it is mentioned that the interest rate risk is eliminated by simply holding the instrument till maturity. However, such principles of investment had not contended with unilateral governmental action. For example, the rates of PPF over the past three years have been consistently reduced by the authorities from 12% p.a. to 8% p.a. To add insult to injury these rates are applicable on the entire corpus and not on additional investment. Relief Bonds have come down to 8%. Rates on other small saving instruments have also been slashed across the board. Unfortunately, there is no escape from this risk --that of our government Measuring Risk So far, we have acquainted ourselves with the kinds of risks inherent in investment instruments. However, merely knowing this much may not be enough to take an informed decision. The article began with the premise that return is BENEFITS TO SHAREHOLDERS; 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, the real benefit that you, as a shareholder have is in form of participation that you get in profit made by the company. At the same time, your liability is limited only to the face value of the shares held by you. The benefits distributed by the company to its shareholders can be: 1) Monetary Benefits and 2) Non Monetary Benefits. 1. Monetary Benefits: A. Dividend: An equity shareholder has a right on the profits generated by the company. Profits are distributed in part or in full in the form of dividends. Dividend is an earning on the investment made in shares, just like interest in case of bonds or debentures. A company can issue dividend in two forms: a) Interim Dividend and b) Final Dividend. While final dividend is distributed only after closing
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of financial year; companies at times declare an interim dividend during a financial year. Hence if X Ltd. earns a profit of Rs 40 crore and decides to distribute Rs 2 to each shareholder, a holding of 200 shares of X Ltd. would entitle you to Rs 400 as dividend. 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. Capital Appreciation: A shareholder also benefits from capital appreciation. Simply put, this means an increase in the value of the company usually reflected in its share price. Companies generally do not distribute all their profits as dividend. As the companies grow, profits are reinvested in the business. This means an increase in net worth, which results in appreciation in the value of shares. Hence, if you purchase 200 shares of X Ltd at Rs 20 per share and hold the same for two years, after which the value of each share is Rs 35. This means that your capital has appreciated by Rs 3000. 2. Non-Monetary Benefits: Apart from dividends and capital appreciation, investments in shares also fetch some type of non-monetary benefits to a shareholder. Bonuses and rights issues are two such noticeable benefits. 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. Rather than paying dividends, companies give additional shares in a pre-defined ratio. Prima facie, it does not affect the wealth of shareholders. However, in practice, bonuses carry certain latent advantages such as tax benefits, better future growth potential, an increase in the floating stock of the company, etc. Hence if X Ltd decides to issue bonus shares in a ration of 1:1, every existing shareholder of X Ltd would receive one additional share free for each share held by him. Of course, taking the bonus into account, the share price would also ideally fall by 50 percent post bonus. However, depending upon market expectations, the share price may rise or fall on the bonus announcement. Rights Issue: A rights issue involves selling of ordinary shares to the existing shareholders of the company. A company wishing to increase its subscribed capital by allotment of further shares should first offer them to its existing shareholders. The benefit of a rights issue is that existing
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shareholders maintain control of the company. Also, this results in an expanded capital base, after which the company is able to perform better. This gets reflected in the appreciation of share value. Different ways to overcome risks: Most risks associated with investments in shares can be reduced by using the tool of diversification. Purchasing shares of different companies and creating a diversified portfolio has proven to be one of the most reliable tools of risk reduction. The process of Diversification: When you hold shares in a single company, you run the risk of a large magnitude. As your portfolio expands to include shares of more companies, the company specific risk reduces. The benefits of creating a well diversified portfolio can be gauged from the fact that as you add more shares to your portfolio, the weightage of each companys share gets reduced. Hence any adverse event related to any one company would not expose you to immense risk. The same logic can be extended to a sector or an industry. In fact, diversifying across sectors and industries reaps the real benefits of diversification. Sector specific risks get minimized when shares of other sectors are added to the portfolio. 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, the process of equity investing itself comes with certain inherent risks, which cannot be reduced by strategies such as diversification. These risks are called systematic risk as they arise from the system, such as interest rate risk and inflation risk. As these risks cannot be diversified, theoretically, 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. The following factors justify this: 1. Industries and businesses, to which companies belong, mature over a period of time. As industries grow, so do the profits of companies belonging to them. The best example of this can be found in the Indian telecommunications industry. Hence, investors start reaping the benefit of their investment over a period of time.
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are reward .

2. While markets undergo cyclical phases, which follow a series of peaks and troughs, over a period of time these factors get negated and returns from stocks present a valid picture. So, although you may incur some losses in the short term, if you are looking to invest in equities you must always think long-term. 3. Equities are the only investment asset, which are exempt from long-term capital gains tax, which means that you own all the returns generated. All other investments, excluding PPF and life insurance, are taxed for the gains made. This reduces the overall return in investment assets like NSC, bank deposits etc. 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. The biggest beneficiary of this growth story would be the industries and service sector. 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. 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 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. 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, some one is not sure exactly what will be the outcome. The outcome may be to have a Tail or the Head, so there is a concept of risk. In a football match, three outcomes can be experienced: win, lose or draw. In business, the same can happen regarding the expected return on the investments in various sectors.In Financial Analysis, the risk/return trade-off states that financial decisions that subject stockholders to more risk must offer a higher expected return. 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.

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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
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economys abilities to invest and save respectively. This enhances savings and investments in the economy, the two pillars for economic growth. 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. The past decade in many ways has been remarkable for securities market in India. It has grown exponentially as measured in terms of amount raised from the market, the number of listed stocks, market capitalization, trading volumes and turnover on stock exchanges, and investor population. The market has witnessed fundamental institutional changes resulting in drastic reduction in transaction costs and significant improvements in efficiency, transparency and safety. FINANCIAL MARKETS Finance is the pre-requisite for modern business and financial institutions play a vital role in the economic system. It is through financial markets and institutions that the financial system of an economy works. Financial markets refer to the institutional arrangements for dealing in financial assets and credit instruments of different types such as currency, cheques, bank deposits, bills, bonds, equities, etc. Financial market is a broad term describing any marketplace where buyers and sellers participate in the trade of assets such as equities, bonds, currencies and derivatives. They are typically defined by having transparent pricing, basic regulations on trading, costs and fees and market forces determining the prices of securities that trade. Generally, there is no specific place or location to indicate a financial market. Wherever a financial transaction takes place, it is deemed to have taken place in the financial market. Hence financial markets are pervasive in nature since financial transactions are themselves very pervasive throughout the economic system. For instance, issue of equity shares, granting of loan by term lending institutions, deposit of money into a bank, purchase of debentures, sale of shares and so on. In a nutshell, financial markets are the credit markets catering to the various needs of the individuals, firms and institutions by facilitating buying and selling of financial assets, claims and services. Capital Market The capital market is a market for financial assets which have a long or indefinite maturity. Generally, it deals with long term securities which have a period of above one year. In the widest sense, 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. As a whole, capital
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market facilitates raising of capital. The major functions performed by a capital market are: 1.Mobilization of financial resources on a nation-wide scale. 2.Securing the foreign capital and know-how to fill up deficit in the required resources for economic growth at a faster rate. 3.Effective allocation of the mobilized financial resources, by directing the same to projects yielding highest yield or to the projects needed to promote balanced economic development.

Capital market consists of primary market and secondary market. Primary market: Primary market is a market for new issues or new financial claims. Hence it is also called as New Issue Market. It basically deals with those securities which are issued to the public for the first time. The market, therefore, makes available a new block of securities for public subscription. In other words, it deals with raising of fresh capital by companies either for cash or for consideration other than cash. The best example could be Initial Public Offering (IPO) where a firm offers shares to the public for the first time. Secondary market : Secondary market is a market where existing securities are traded. In other words, securities which have already passed through new issue market are traded in this market. Generally, such securities are quoted in the stock exchange and it provides a continuous and regular market for buying and selling of securities. This market consists of all stock exchanges recognized by the government of India. Money Market Money markets are the markets for short-term, highly liquid debt securities. 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. It consists of a number of sub-markets which collectively constitute the money market namely call money market, commercial bills market, acceptance market, and Treasury bill market. Derivatives Market: Derivatives market is the financial market for derivatives, financial instruments like futures contracts or options, which are derived from other forms of assets. A derivative is a security whose price is dependent upon or derived from one or more underlying assets. The derivative itself is merely a contract between two or more parties. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include

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stocks, bonds, commodities, currencies, interest rates and market indexes. The important financial derivatives are the following: Equity Analysis Forwards: Forwards are the oldest of all the derivatives. 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. The promised asset may be currency, commodity, instrument etc. Futures: Future contract is very similar to a forward contract in all respects excepting the fact that it is completely a standardized one. It is nothing but a standardized forward contract which is legally enforceable and always traded on an organized exchange. Options: A financial derivative that represents a contract sold by one party (option writer) to another party (option holder). The contract offers the buyer the right, but not the obligation, 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, so the buyer would want the stock to go up. Put options give the option to sell at a certain price, so the buyer would want the stock to go down. Swaps: It is yet another exciting trading instrument. Infact, it is the combination of forwards by two counterparties. 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. Equity Analysis Foreign Exchange Market It is a market in which participants are able to buy, sell, exchange and speculate on currencies.Foreign exchange markets are made up of banks, commercial companies, central banks, investment management firms, hedge funds, and retail forex brokers and investors. The forex market is considered to be the largest financial market in the world. It is a worldwide decentralized over-the-counter financial market for the trading of currencies. Because the currency markets are large and liquid, they are believed to be the most efficient financial markets. It is important to realize that the foreign exchange market is not a single exchange, but
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is constructed of a global network of computers that connects participants from all parts of the world. Commodities Market It is a physical or virtual marketplace for buying, selling and trading raw or primary products. For investors' purposes there are currently about 50 major commodity markets worldwide that facilitate investment trade in nearly 100 primary commodities. Commodities are split into two types: hard and soft commodities. Hard commodities are typically natural resources that must be mined or extracted (gold, rubber, oil, etc.), whereas soft commodities are agricultural products or livestock (corn, wheat, coffee, sugar, soybeans, pork, etc.) 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. 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. 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. 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, 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, including Mumbai, Ahmadabad and Kolkata apart from Madras, Kanpur, Delhi, Bangalore and Pune. 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). 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, which were dominated by the state controlled public sector resulting in stagnation of Equity Analysis the economy right up to the early 1990s. Thereafter when the Indian economy began liberalizing and the controls began to be dismantled or eased out; the securities markets witnessed a flurry of IPOs that were launched. This resulted in many new companies across different industry segments to come up with newer products and services. 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. This was in marked contrast to the initial phase of growth in many of the fast growing economies of East
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Asia that witnessed huge doses of FDI (Foreign Direct Investment) spurring growth in their initial days of market decontrol. 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. Many PSUs (Public Sector Undertakings) that decided to offload part of their equity were also helped by the well-organized securities market in India. 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. 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. 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. The integration of IT into the capital market infrastructure has been particularly smooth in India due to the countrys 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 regulating authority for capital markets in India is the SEBI (Securities and Exchange Board of India). SEBI came into prominence in the 1990s after the capital markets experienced some turbulence. It had to take drastic measures to plug many loopholes that were exploited by certain market forces to advance their vested interests. After this initial phase of struggle SEBI has grown in strength as the regulator of Indias capital markets and as one of the countrys most important institutions

Stock Exchanges in India Stock Exchanges are an organized marketplace, either corporation or mutual organization, where members of the organization gather to trade company stocks or other securities. The members may act either as agents for their customers, or as principals for their own accounts. As per the Securities Contracts Regulation Act, 1956 a stock exchange is an association, organization or body of individuals whether incorporated or not, established for the purpose of assisting, regulating and controlling business in buying, selling and dealing in securities
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Stock exchanges facilitate for the issue and redemption of securities and other financial instruments including the payment of income and dividends. The record keeping is central but trade is linked to such physical place because modern markets are computerized. The trade on an exchange is only by members and stock broker do have a seat on the exchange. List of Stock Exchanges in India Bombay Stock Exchange National Stock Exchange OTC Exchange of India Regional Stock Exchanges

1. Ahmedabad 2. Bangalore 3. Bhubaneswar 4. Calcutta 5. Cochin 6. Coimbatore 7. Delhi 8. Guwahati 9. Hyderabad 10. Jaipur 11. Ludhiana 12. Madhya Pradesh 13. Madras 14. Magadh 15. Mangalore 16. Meerut 17. Pune 18. Saurashtra Kutch

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

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COMPANY PROFILE

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

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shareholders of Indiabulls are the largest financial institutions of the world such as Fidelity Funds, Goldman Sachs, Merrill Lynch, Morgan Stanley and Farallon Capital. Growth of Indiabulls Year 2000-01: One of Indias first trading platforms was set up by Indiabulls Financial Services Ltd. with the development of an in-house team. Year 2001-03: The service offered by Indiabulls was increased to include Equity, F&O, Wholesale Debt, Mutual fund, IPO Financing/Distribution and Equity Research. Year 2003-04: In this particular year Indiabulls ventured into Distribution and Commodities Trading business. Year 2004-05: This was one of the most important years in the history of Indiabulls. In this year: Indiabulls came out with its initial public offer (IPO) in September 2004. Indiabulls started its Consumer Finance business. Indiabulls entered the Indian Real Estate market and became the first company to bring FDI in Indian Real Estate. Indiabulls won bids for landmark properties in Mumbai.

Year 2005-06: In this year the company acquired over 115 acres of land in Sonepat for residential home site development. The world renowned investment banks like Merrill Lynch and Goldman Sachs increased their shareholding in Indiabulls. It also became a market leader in securities brokerage industry, with around 31% share in Online Trading. The worlds largest hedge fund, Farallon Capital and its affiliates committed Rs. 2000 million for Indiabulls subsidiaries Viz. Indiabulls Credit Services Ltd. and Indiabulls Housing Finance Ltd. In the same year, the Steel Tycoon Mr.

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L N Mittal promoted LNM India Internet venture Ltd. acquired 8.2% stake in Indiabulls Credit Services Ltd. Year 2006-07: In this year, Indiabulls Financial Services Ltd. was included in the prestigious Morgan Stanley Capital International Index (MSCI). Indiabulls Financial Services Ltd. was benefited with the Farallon Capital agreeing to invest Rs. 6,440 million in it. The company also received an in principle approval from Government of India for development of multi product SEZ in the state of Maharashtra. Indiabulls Financial Services Ltd acquired 100% of the equity share capital of Noble Realtors Pvt. Ltd. Noble Realtors is a Company engaged in the business of construction and development of real estate projects. Indiabulls Real Estate Business was demerged to become a separate entity called Indiabulls Real Estate Ltd. The Board of Indiabulls Financial Services Ltd., Resolved to Amalgamate Indiabulls Credit Services Ltd and demerge Indiabulls Securities Limited. 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 financial services limited has recently signed a joint venture agreement with sogecap, the insurance arm of Societe Generale (SocGen) for its upcoming life insurance venture. At the same time it has also signed a Memorandum of understanding with MMTC. On the asset management front, the company has received formal approval uhby7hbfrom SEBI and is expected to shortly launch its first NFO. Indiabulls enter in to Public issue for his Indiabulls power Ltd. Promoters for Indiabulls Sameer Gehlaut, Rajiv Rattan and Saurabh Mittal
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Are the promoters of Indiabulls Financial Services Limited. While Sameer Gehlaut will have a 23.0% stake in the company post the IPO Rajiv Rattan and Saurabh Mittal will have a post issue holding of 11.5% and 10.1% respectively. All the three promoters of the company are engineering graduates while Saurabh Mittal is a management graduate as well. Sector Since Indiabulls derives most of its revenues from the brokerage business, its fortunes are very much dependent on the Performance of the capital markets, i.e. debt, derivative and equity markets. 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, from Rs 5 bn in FY96. Total shareholders in the country are over 20 m (2% of population) and this is the third largest after the US and Japan, in absolute terms. However, if one were to compare the percentage of all households in India that are invested in the stock markets, it is only about 1.9% as compared to an estimated 52%(including indirect ownership by way of mutual funds) of all households in the US. This highlights the long-term potential for the sector. to apply

The Team: Indiabulls Securities Ltd, main strength lies in its formidable team. 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, operating management, regulatory reporting, human resources development and product development.

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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

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Vision statement: To become the preferred long term financial partner to a wide base of customers whilst optimizing stake holders value Mission statement: To establish a base of 1 million satisfied customers by 2010. We will create this by being a responsible and trustworthy partner Corporate action: An Approach to Business that reflects Responsibility, Transparency and Ethical Behavior. Respect for Employees, Clients & Stakeholder groups Indiabulls Group entities in India
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Indiabulls Capital Services Ltd. Indiabulls Commodities Pvt. Ltd. Indiabulls Credit Services Ltd. Indiabulls Finance Co. Pvt. Ltd Indiabulls Housing Finance Ltd. Indiabulls Insurance Advisors Pvt. Ltd. Indiabulls Resources Ltd. Indiabulls Securities Ltd. Indiabulls Power Ltd.

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. 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 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, about institutional expertise and companies valuable understanding of the financial markets
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3) One-stop shop: Caters to all customers investment needs under one roof. 4) Trust: Enjoys the pedigree of Indiabulls Securities Ltd and share its expertise in financial services. 5) Personalized service: Helps customer through the entire investment process, step by step, with innovative and efficient services. 6) Unbiased & Objective advice: We partner you in your investment process, 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. Indiabulls currently has almost 20% market share of volumes in the Internet trading space. The table below indicates the growth in volumes of the Internet trading segment on the NSE over the last few years. The growth is indicative of the potential of this segment, which we believe is likely to be robust going forward as well. This is primarily driven by increasing penetration of computers, significant decline in Internet charges, convenience of usage and cost advantage. To put things in perspective, the offline brokerage on equities is around 1.0% as compared to 0.5% in the online trading space. Advisory services: Indiabulls is also into mutual fund and insurance advisory businesses. Though this field is extremely competitive and requires significant research skills, these are highly profitable business segments. Though these businesses currently account for an insignificant portion of overall revenues, considering the penetration levels of mutual funds and insurance in the country, prospects are promising. Aggressive growth plans:

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Indiabulls has set aggressive targets to expand its business in the offline space. This includes investments in upgradation of branch network and opening another 75 branches by the end of calendar year 2009 (150 in total). 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. The platform provides enhanced trade information and executes orders on an integrated software based trading platform. 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. Broking: Equity, Derivatives, Commodities, Currency Derivatives. Distribution: Mutual funds, IPOs, Home loans, Insurace. Divisions: Investment Advisory and Broking? Division

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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. 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. 1) Equities 2) Commodities 3) Wholesale debts 4) Futures and options 5) Depository services 6) Equity research services
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7) Post Trade -Custodial, 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, ICICI BANK, IDBI BANK, CITI BANK.

Company Achievements: The Indiabulls Group is one of the top fifteen conglomerates in the country with businesses in several significant sectors. The Indiabulls Financial Services stock is the best performing stock in the MSCI Index the global benchmark for equity investments. Indiabulls Real Estate Limited partnered Farallon Capital Management LLC of the US to bring the first Foreign Direct Investment into real estate. 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

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Indiabulls Securities Limited is the only broker in India to be assigned CRISILs highest broker quality grading of BQ1. In December 2007, Indiabulls acquired Pyramid Retail including Piramyd Megastores and Trumart, their chain of lifestyle and convenience outlets Company competitors

Kotak Securities Ltd, ICICI Securities Ltd, HDFC Securities Ltd, Religare Securities Ltd, Birla Money, Indiainfoline Ltd.

ABOUT INDIABULLS GROUP The Indiabulls Group is one of the top fifteen conglomerates in the country with businesses in several significant sectors. The group companies have a market capitalisation of over Rs. 25,000 crore (US$ 6.25 billion) while group revenues have grown at a cumulative annual rate of over 100% to now reach Rs. 3100 crore (US$ 775 million) and the group profit has surged to over Rs. 1200 crore (US$ 300 million). Its companies, listed in important Indian and overseas markets, have distributed over Rs. 700 crore (US$ 175 million) as dividend in the year 2008. 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
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Indiabulls Securities Limited is the only broker in India to be assigned CRISILs highest broker quality grading of BQ1. In December 2007, Indiabulls acquired Pyramid Retail including Piramyd Megastores and Trumart, their chain of lifestyle and convenience outlets. Indiabulls growth has been nothing short of stupendous. In less than eight years since the company was first registered, it has grown from just five employees to 21,000 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. A person who bought Indiabulls shares in the IPO at Rs. 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, three IIT-Delhi alumni Sameer Gehlaut, Rajiv Rattan and Saurabh Mittal acquired Orbis,a Delhi based stock broking company. Young entrepreneur Sameer Gehlaut established Indiabulls in 2000, after acquiring orbis Securities, a stock brokerage company in Delhi. The group started its operations from a small office near Hauz Khas bus terminal in Delhi.The office had a tin roof and two computers. The idea of leveraging technology for trading stocks led to the creation of Indiabulls Incorporated on 10th January 2000, it was converted into a public limited company on 27th February 2004. Its original idea of leveraging technology bore fruit when Indiabulls was accorded permission to conduct online trading on Indian stock exchanges. The company had achieved the distinction of becoming only the second brokerage firm in India to be granted this consent. The challenges facing it were immense not least of all the mind set
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of investors who were called to make the big leap from traditional stock trading to a completely online interface. Having overcome this resistance, the company later expanded its service portfolio to include equity, F&O, wholesale debt, mutual fund distribution and equity research. In 2003/04, Indiabulls ventured into insurance distribution and commodity trading. It successfully floated its IPO in September 2004 and in the same year entered the consumer finance segment. Real estate, the new sunrise industry, was the next frontier for Indiabulls. In 2004/05, it entered this sector. But it wasnt just real estate that was booming. Opportunities were opening up in retail and infrastructure as well. To cement its position in the Indian business and industry firmament, 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. 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 Group believes that the bulk of its brand story is yet to be written. Indeed, when a case study on Indias youngest brands which have had a profound impact on the economy is crafted, 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. Indiabulls Financial Services Limited has recently signed a joint venture agreement with Sogecap, the insurance arm of Societe Generale (SocGen) for its upcoming life insurance venture.At the same time it has also signed a Memorandum of Understanding with MMTC, the largest commodity trading house in India, to establish a Commodities Exchange with 26% Ownership held by MMTC.On the asset management front, the company has received formal approval from SEBI and is expected to shortly launch its first NFO.

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

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Today, automobile sector in India is one of the key sectors of the economy in terms of the employment. 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, the GDP growth has downgraded it to 7.1 per cent for 2008-09 and it has increased to 8.6% in 2010 by overcoming the setbacks of recession. Recession Auto industry in India had been hit hard by ongoing global financial recession. But it is in a good shape now. Much of this optimism resulted from renewed interest being shown in India auto industry by reputed overseas car makers. 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. There are some other automobile companies of world who have shown interest in India auto market. Major names among these are General Motors, Skoda Auto and Mercedes-Benz. These companies have major plans lined up for India auto industry. 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 effect of inflation has affected every sector which is related to car manufacturing and production. 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. Foreign Direct Investment The automobile sector in the Indian industry is one of the high performing sectors of the Indian economy. 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. Automatic approval for foreign equity investment up to 100 per cent of manufacture of automobiles and component is permitted. Exports Despite recession, the Indian automobile market continues to perform better than most of the other industries in the economy in coming future; more and more MNCs coming in India to setup their ventures which clearly shows the scope of expansion. During April-January 2010, overall automobile exports registered a growth rate of 13.24 percent.
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INDUSTRY ANALYSIS( AUT OMOBI LE ) The automobile industry in India is the ninth largest in the world with an annual production of over 2.3 million units in 2008. In 2009, India emerged as Asia's fourth largest exporter of automobiles, behind Japan, South Korea and Thailand. The Automobile Industry is one of the fastest growing sectors in India. The increase in the demand for cars, and other vehicles, powered by the increase in the income is the primary growth driver of the automobile industry in India. In 2009, estimated rate of growth of India Auto industry is going to be 9% .The Indian automobile sector is far from being saturated, leaving ample opportunity for volume growth. Segmentation of Automobile Industry The automobile industry comprises of Heavy vehicles (trucks, buses, tempos, tractors); passenger cars; Two-wheelers; Commercial Vehicles; and Three-wheelers. 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. Industry life cycle classification generally groups industries into one of four stages: pioneer, growth, maturity and decline. In the pioneer phase, the product has not been widely accepted or adopted. Business strategies are developing, and there is high risk of failure. However, successful companies can grow at extraordinary rates. The Indian automobile sector has passed this stage quite successfully. The industry is growing rapidly, often at an accelerating rate of sales and earnings growth. Indian Automotive Industry is booming with a growth rate of around 15 % annually. The growth rate of the automobile industry in India is greater than the GDP growth rate of the economy, so the automobile sector can be very well be said to be in the growth phase. Swot analysis: A scan of the internal and external environment is an important part of the strategic planning process. Environmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W), and those external to the firm can be classified as opportunities
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(O) or threats (T). Such an analysis of the strategic environment is referred to as a SWOT analysis. SWOT analysis of the Indian automobile sector gives the following points: 1. 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 `

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