Market to rise further on the back of

    Market SizeProduction of passenger vehicles, commercial vehicles, three wheelers and two wheelers grew at 5.41 per cent in FY17 to 25,316,044 vehicles from 24,016,599 vehicles in FY16.The sales of passenger vehicles, commercial vehicles and two wheelers grew by 9.23 per cent, 4.16 per cent and 6.89 per cent respectively, during the period April-March 2017.India’s electric vehicle (EV) sales increased 37.5 per cent to 22,000 units during FY 2015-16 and are poised to rise further on the back of cheaper energy storage costs and the Government of India’s vision to see six million electric and hybrid vehicles in India by 2020.    InvestmentIn order to keep up with the growing demand, several auto makers have started investing heavily in various segments of the industry during the last few months. The industry has attracted Foreign Direct Investment (FDI) worth US$ 17.40 billion during the period April 2000 to June 2017, according to data released by Department of Industrial Policy and Promotion (DIPP).Some of the major investments and developments in the automobile sector in India are as   follows:1. JSW Energy, a subsidiary of Jindal Group, has signed a Memorandum of Understanding (MoU) with the Gujarat government to set up an electric vehicle-manufacturing company at a cost of Rs 4,000 crore (US$ 613 million) which will have the capacity to produce 2,00,000 electric vehicles every year.2. Tata Motors will invest Rs 4,000 crore (US$ 612 million) in the year 2017 and a major portion will go to passenger vehicles i.e. Rs 2,500 crores (US$ 375 million) and the remaining Rs 1,500 crore ($225 million) will be invested in the business over the next few years.3. Electric car maker Tesla Inc. is likely to introduce its products in India sometime in the summer of 2017.4. Kia Motors is expected to sign a memorandum of understanding (MoU) with the Government of Andhra Pradesh (AP) to set up a factory in Penukonda in Anantapur district and the company will invest around US$ 2 billion on this plant and it will have manufacturing capacity of the 3 lakhs car per annum.5. Several automobile manufacturers, from global majors such as Audi to Indian companies such as Maruti Suzuki and Mahindra & Mahindra, are exploring the possibilities of introducing driverless self-driven cars for India.6. BMW plans to manufacture a local version of below-500 CC motorcycle, the G310R, in TVS Motor’s Hosur plant in Tamil Nadu, for Indian markets.7. Hero MotoCorp Ltd seeks to enhance its participation in the Indian electric vehicle (EV) space by pursuing its internal EV Programme in addition to investing Rs 205 crore (US$ 30.75 million) to acquire around 26-30 per cent stake in Bengaluru-based technology start-up Ather Energy Pvt Ltd.8. Ford Motor Co. plans to invest Rs 1,300 crore (US$ 195 million) to build a global technology and business centre in Chennai, which will be designed as a hub for product development, mobility solutions and business services for India and other markets.Government InitiativesThe Government of India encourages foreign investment in the automobile sector and allows 100 per cent FDI under the automatic route.     Some of the major initiatives taken by the Government of India are1. Government is planning to introduce biofuel vehicles for road and water transportation. India needs to cut fossil fuel imports and look for alternative and cheaper fuels like methanol.2. Government of India extended support to the industry by increasing custom duty on CBUs of commercial vehicles from 10 per cent to 40 per cent and reducing duty on chassis for ambulance manufacturing from 24 per cent to 12.5 per cent.3. The Government of India plans to introduce a new Green Urban Transport Scheme with a central assistance of about Rs 25,000 crore (US$ 3.75 billion), aimed at boosting the growth of urban transport along low carbon path for substantial reduction in pollution, and providing a framework for funding urban mobility projects at National, State and City level with minimum recourse to budgetary support by encouraging innovative financing of projects.4. Government of India aims to make automobiles manufacturing the main driver of ‘Make in India’ initiative, as it expects passenger vehicles market to triple to 9.4 million units by 2026, as highlighted in the Auto Mission Plan (AMP) 2016-26.5. The government has formulated a Scheme for Faster Adoption and Manufacturing of Electric and Hybrid Vehicles in India, under the National Electric Mobility Mission 2020 to encourage the progressive induction of reliable, affordable and efficient electric and hybrid vehicles in the country.MAJOR COMPANIES IN  AUTOMOBILE INDUSTRY:? Mahindra & Mahindra? Ashok Leyland? General motors’ India? Bajaj auto? Force motor? Volkswagen group sales India private limited? Audi Ag? Skoda auto? Fiat automobiles? Premier automobiles limited? Tata motors limited• Tata motors• Jaguar cars and Land Rover    Growth of the IndustryGrowth of the industry is taking place in clusters. The automotive industry is developing in clusters. There are four major clusters in the automotive industry in India. They are in and around New Delhi, Gurgaon and Manesar in North India, Pune, Nasik, Halol and Aurangabad in West India, Chennai, Bangalore and Hosur in South India and Jamshedpur and Kolkata in East India. Of course there are several manufacturing units in many other parts of India but these four clusters are expected to become the main hubs for manufacturing in the automotive industry. The Government of India (GOI) is taking initiatives to develop the automotive clusters. For example, the GOI, in its 11th Five Year Plan (2007–2012), is planning to create the Specialized Education and Training Institute for the automotive industry. It is also taking measures to enhance transportation, communication, and infrastructure facilities in these clusters.    Factors determining the growth of the industry• Fuel economy and demand for greater fuel efficiency is a major factor that affects consumer purchase decision that will bring leading companies across two-wheeler and four-wheeler segment to focus on delivering performance-oriented products.• Sturdy legal and banking infrastructure• Increased affordability, heightened demand in the small car segment and the surging income of the Indian population.• India is the third largest investor base in the world• The Government technology modernization fund is concentrating on establishing India as an automanufacturing hub.• Availability of inexpensive skilled workers• Industry is perusing to elevate sales by knocking on doors of women, youth, rural and luxury segments• Market segmentation and product innovation.     Road Ahead(vision)The automobile industry is supported by various factors such as availability of skilled labour at low cost, robust R&D centres and low cost steel production. The industry also provides great opportunities for investment and direct and indirect employment to skilled and unskilled. The Indian automotive aftermarket is estimated to grow at around 10-15 per cent to reach US$ 16.5 billion by 2021 from around US$ 7 billion in 2016. It has the potential to generate up to US$ 300 billion in annual revenue by 2026, create 65 million additional jobs and contribute over 12 per cent to India’s Gross Domestic Product.According to Mr Guillaume Sicard, president, Nissan India Operations, the income tax rate cut from 10 per cent to 5 per cent for individual tax payers earning under Rs 5 lakh (US$ 7,472) per annum will create a positive sentiment among likely first time buyers for entry level and small cars.Exchange Rate used INR 1 = US$ 0.015 as of January as of 2018.    Demonetisation effect on Auto IndustryAccording to the reports of manufacturers, dealers and bankers ,demonetisation has badly affected the market with demand weakening in Gujarat , Punjab , the National Capital Region.• Used cars sale is also expected to plummet by by 50% leading to the loss of revenue of Rs.3,900 crore.• Footfall at Showroom of Hero MotoCorp has dropped by 15% in the first two days of demonetisation drive• The largereffect is seen in the unorganised used car market, which is driven mostly by cashbased deals10. SWOT Analysis of Automobile Industry       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 • High interest costs and high overheads make the production uncompetitive • Various forms of taxes push up the cost of production • Low investment in Research and Development • Infrastructure bottleneck Opportunities • Commercial vehicles: SC ban on overloading • Heavy thrust on mining and construction activity• Increase in the income level • Cut in excise duties• Rising rural demand.     Threats • Rising input costs • Rising interest rates • Cut throat competitionIndian Automobile Industry – Challenges AheadResearch And Development- In India research and development program is low as compared to other parts of the world.Fluctuations in fuel prices- Fluctuation in prices of the fuel affect the demand for the vehicle. The price of fuel affect the driving habits of consumers and the type of the car they buy. Change in the price of petrol have changed the preference of people to switch to more efficient cars.Poor Infrastructure – Poor roads infrastructure is the biggest issue by far in the Indian automotive industry.Traffic laws are not well enforced and followed leading to one of the highest per capita accident rates in the world.Innovation – The competitiveness of any sector depends on the capacity to innovate and upgrade. It is also significant to understand that labour cost, duties, interest and economies of scale are regarded as the determinant of competitiveness. It also involves core products and technology innovation apart from productive human resource. The automakers will have to look for the policies of the state that encourages innovation.Stiff Competition – There exists a tough competition among the automobile players and all desire to capture a big share of the market. The margins of the manufacturers are squeezed out and which in turn they cut cost to be profitable and competitive.Taxes, Duties and Tariffs – In India the tax laws are supposed to be one of the most complex due to plethora of associated process. High tariff restrict the flow of trade but attracts investment if domestic market has scope of growth.        Objective of the Study     Primary Objective1. To analyse the financial statements of TATA Motors Limited from 2015 to 2017.2. To interpret the analysis and the trends of financial results of TATA Motors Limited.3. To use various ratios to find out the assets and liabilities and financial position of the company.      Secondary Objective1. To standardize financial information for comparison.2. To evaluate current operation and financial information for comparison.3. To compare performance with past performances.    Scope of the Study     The study covers the overall performance of the company. Financial area is the main coverage     of the study. Analysing the ratios of the company is taken into account under the study. Period     of the study is 3 years. (2014-15, 2015-16, 2016-17)                                                Limitations of the StudyUnder this study, a comparative study is not taken. The study did not cover the entire financial management. Except finance area, all the other areas of the business are not covered. Primary Data is not used in the study. The period of the study is restricted to 3 years.