A PROJECT REPORT ON QUANTITATIVE & QUALITATIVE METHODS OF DEMAND FORECASTING OF EMPLOYEES IN AUTOMOBILE SECTOR AT TATA MOTORS, JAIPUR

Submitte b!" Manisha khinchi MBA IV Sem #P$$%&im' S()$$* $+ m'&',eme&tISI . /, RIICO I&0tituti$&'* A%e', G$&e% R$' , Sit'1u%', J'i1u%

PREFACE
Employees demand forecasting provides students with comprehensive, up to date, and integrative information a!out the needs, methods, uses, risks, and future trends in human resource planning" #here are three distinct features of this !ook that offer a significant link to the !usiness relevant approach to human resource planning $theoretical and operational%& '" #his includes a review of relevant political, economical, legal, demographic, and social factors and their impact on human resource planning" #o complement this, many of the e(amples, methods, and processes discussed are applica!le glo!ally" #his focus allows students and teachers to concentrate on developing an understanding of uni)ue *anadian human resource planning challenges and opportunities while developing transfera!le knowledge a!out glo!al issues" +" #he framework of this !ook centers on an accessi!ility approach" ,earning o!-ectives are introduced at the !eginning of each chapter. they outline the goals for study and are reinforced throughout the chapters" Each discusses a concept or theory, which is then illustrated with e(amples, case studies, company reviews, e(ercises, and we! !ased cases" #his e(periential style of the pedagogy reinforces learning for students" /" #he career orientation of this !ook is nota!le" Identification of national human resource certification re)uirements $0e)uired 1rofessional *apa!ilities% assists students in connecting the te(t and course as whole to their future career plans" In addition, the spotlight on strategic 1artners, ethics, small !usiness, current technology, and new human resource directions aims to fulfill human resource2s mandate to !e a !usiness partner"

#he Indian automotive industry, although growing rapidly, is in a state of flu(" #he production *apacities planned !y the new -oint ventures currently e(ceed most pro-ections, and unless import tariffs come down )uickly and the economy grows remarka!ly, a shake out may !e e(pected from the current +3 firms to a!out half a do4en ma-or firms turning out finished products !y the end of the decade" 5owever, if multi national firms decide to use India as a production !ase from which vehicles are e(ported to the rest of the world, more than half a do4en firms may !e a!le to remain profita!le in India" Su4uki has already !egun to use its Maruti -oint venture production to e(port a few thousand cars to the Middle East and Europe" 5owever, the production capacities of other emerging economies such as 6orea and *hina are also predicted to grow significantly in the coming years, so e(ports may also face a highly competitive market situation"

AC3NO4LEDGEMENT
I feel myself privileged at having an opportunity to thank the people who helped me at all Stages of my research work" It is with a deep sense of gratitude that I acknowledge valua!le guidance and timely suggestions offered to me !y M%5 0)'&t'&u ,$0) $Senior Vice 1resident Ne)' S)'%m'" I am inde!ted to all staff and operational people at 7enpact for giving me full support and encouragement" It2s my sheer pleasure to acknowledge who have directly or indirectly guided and cooperated in one way or other and last !ut not least I would like to thank Mr" 0" 6" Agarwal,Mr" amish duggar, Mr" a!hya-eet singh, Mr himanshu shekhawat and Mrs" Medha gupta for their valua!le cooperation" 1ractices, Solutions and #ransitions, 7enpact% and 1ro-ect 7uide M%5 Y$,e0) 8$0)i & M05

M'&i0)' 6)i&()i

E7ECUTIVE SUMMARY #he Indian automo!ile industry is currently e(periencing an unprecedented !oom in demand for all types of vehicles" #his !oom has !een triggered primarily !y two factors& $'% increase in disposa!le incomes and standards of living of middle class Indian families estimated to !e as many as four million in num!er. and $+% the Indian government9s li!erali4ation measures such as rela(ation of the foreign e(change and e)uity regulations, reduction of tariffs on imports, and !anking li!erali4ation that has fueled financing driven purchases" Industry o!servers predict that passenger vehicle sales will triple in five years to a!out one million, and as the market grows and customer9s purchasing a!ilities rise, there will !e greater demand for higher end models which currently constitute only a tiny fraction of the market" #hese trends have encouraged many multinational automakers from 8apan, :" S" A", and Europe to enter the Indian market mainly through -oint ventures with Indian firms" #his paper presents an introduction to the key players in the Indian automotive industry, a summary of the recent developments, and an analysis of the opportunities and challenges facing the various players $Indian and multi national assem!lers and component makers% in the areas of product development, production, and distri!ution" #he commercial vehicle $*V% industry faced challenging times in +33; 3< finance, stricter appraisal norms for financing crisis" reduction

in cargo and passenger traffic, lower freight rates, difficulty in availa!ility of vehicle all on the !ack of the glo!al financial

#he domestic *V sales dropped !y +'"= per cent over the previous year" #he 7oods *arrier $7*% segment witnessed a decline of +> per cent, while 1assenger *arrier $1*% segment witnessed sales drop !y ="' per cent over the same period previous year" #he e(ports too declined !y +="= per cent in +33; 3<" #he profita!ility of the manufacturers came under pressure in +33; 3< in the first half due to high input prices and in the second half due to huge reduction in sales volumes" #he operating profit margin declined to ?"= per cent from <"+ per cent in +33= 3;" #he stimulus packages announced !y the government like a% e(cise duty cut from '> per cent !efore @ecem!er +33; to ; per cent $now rolled !ack to '3 per cent% !% implementation of the fleet moderni4ation program of the State 0oad #ransport :ndertakings AS0#:B under the 8awaharlal Cehru Cation :r!an 0enewal Mission $8CC:0M% and c% accelerated depreciation at the rate of ?3 per cent of the annual allowance for vehicles purchased !etween Septem!er /3, +33; and Septem!er /3, +33< ensured a revival in the sector in +33< '3" Although the e(ports for the industry still have not come out of the woods, the domestic sales managed to revive, with recovery !eing more pronounced post Septem!er +33< with growth rate for *V sales for the period Septem!er @ecem!er +33< standing at <+"D per cent y o y as compared to '<"' per cent for April @ecem!er +33<" #he sector was also helped !y reduction in commodity prices during the first half of EF'3" #he prices of !oth steel and ru!!er reduced !y around +3 per cent, translating into improved margins of the *V industry " Various launches were made during April @ecem!er +33< owing to the revival in the *V demand" In ,ight *ommercial Vehicle $,*V% 7* segment, #ata Motors launched GSuper Ace2 and GAce EH2 under IJ/"? tones su! segment"

In Medium and 5eavy *ommercial Vehicles $M5*V% 7* segment it launched a new range of premium GKorld #ruck2 in the '3 to =? tones" Ashok ,eyland launched its /' toners Multi A(le Vehicle G/''D2" Mahindra and Mahindra launched the 3"? tonne G7io2 in competition to #ata Motors su! one tone GAce2" #he company also launched Ma(i truck *C7 and a mini truck GMa(immo2 during the said period" #hus, the competition level is rising in the *V industry" *A0E 0esearch has developed a detailed statistical model that attempts to forecast the domestic commercial vehicle sales separately for goods and passenger use on the !asis of interaction with the industry and analytical acumen" #he 7* segment sales are forecasted on the !asis of 7@1 growth and there!y the growth in cargo, the e(isting fleet capacity and its utili4ation rate, while the 1* segment sales are forecasted on the !asis of growth in population, the per capita travel depending on the income levels and the split of travel !etween pu!lic and private modes of transport" Lther )ualitative factors like macro economic outlook, government actions, consumer confidence, willingness of vehicle financers to finance purchases, actions of LEMs like launches, aggressiveness, sales push techni)ues, dealer network, etc" have also !een )uantitatively !uilt in demand forecasting model" #ata Motors ,imited is India2s largest automo!ile company, with revenues of 0s" /?D?'">; crores $:S@ ;"; !illion% in +33= 3;" It is the leader in commercial vehicles in each segment, and among the top three in passenger vehicles with winning products in the compact, midsi4e car and utility vehicle segments" #he company is the world2s fourth largest truck manufacturer, and the world2s second largest !us manufacturer" In March +33;, #ata Motors ac)uired Eord2s :6 !ased car !rands 8aguar and ,and 0over $BB* Cews, +33;%" According to 0atan Caval #ata $*hairman of #ata 7roup%, the need for an innovation like Cano has got to do something for the people of India and transport" :navaila!ility and poor )uality of mass transport is a common pro!lem in India"

In a two wheeler, father driving with elder child standing in front and wife !ehind holding a !a!y is norm in this country" #hus, this is a relatively an unsafe mode of transporting a family" #hus, with this in mind #ata Cano was created as a safer form of transport" As one of its o!-ectives is to !ecome an Indian !usiness conglomerate operating in many countries, #ata Cano will !e introduced in Malaysia"

INDE7 N$ 8 I& u0t%! 1%$+i*e *ompany profile Introduction of topic C$&te&t P',e &$

Re0e'%() Met)$ $*$,! @ata analysis and interpretation Eacts and findings Swot *onclusion 0ecommendation M suggestion Bib*i$,%'1)! A&&e9u%e

INDUSTRY PROFILE

AUTOMOBLIE INDUSTRY Hi0t$%! In the year '=D<, a Erench engineer !y the name of Cicolas 8" *ugnot invented the first automo!ile to run on roads" #his automo!ile, in fact, was a self powered, three wheeler, military tractor that made the use of a steam engine" #he range of the automo!ile, however, was very !rief and at the most, it could only run at a stretch for fifteen minutes" In addition, these automo!iles were not fit for the roads as his steam engines made them very heavy and large, and re)uired ample starting time" Lliver Evans was the first to design a steam engine driven automo!ile in the :"S" A Scotsman, 0o!ert Anderson, was the first to invent an electric carriage !etween ';/+ and ';/<" 5owever, #homas @avenport of the :"S"A" and Scotsman 0o!ert @avidson were amongst the first to invent more applica!le automo!iles, making use of non rechargea!le electric !atteries in ';>+" @evelopment of roads made traveling comforta!le and as a result, the short ranged, electric !attery driven automo!iles were no more the !est option for traveling over longer distances" #he Automo!ile Industry finally came of age with 5enry Eord in '<'> for the !ulk production of cars" #his lead to the development of the Industry and it first !egun in the assem!ly lines of his car factory" #he several methods Adopted !y Eord, made the new invention $that is, the car% popular amongst the rich as Kell as the masses" According the history of Automo!ile Industry :S, dominated the automo!ile markets around the glo!e with no nota!le competitors" 5owever, after the end of the Second Korld Kar in '<>?, the Automo!ile Industry of other technologically advanced nations such as 8apan and certain European nations gained momentum and within a very short period, !eginning in the early '<;3s, the :"S Automo!ile Industry was flooded with foreign automo!ile companies, especially those of 8apan and 7ermany

#he current trends of the 7lo!al Automo!ile Industry reveal that in the developed countries the Automo!ile Industries are stagnating as a result of the drooping car markets, whereas the Automo!ile Industry in the developing nations, such as, India and Bra4il, have !een consistently registering higher growth rates every passing year for their flourishing domestic automo!ile markets" INDIAN AUTOMOBILE HISTORY @uring the '<+3s, cars e(hi!ited design refinements such as !alloon tires, 1ressed steel wheels and four wheel !rakes" #he origin of automo!ile is not certain" In this section of automo!ile history, we will only discuss a!out the phases of automo!ile in the development and moderni4ation process since the first car was shipped to India" Ke will start automotive history from this point of time #he automo!ile industry has changed the way people live and work" #he earliest of modern cars was manufactured in the year ';<?" Shortly the first appearance of the car followed in India" As the century turned, three cars were imported in Mum!ai $India%" Kithin decade there were total of '3+? cars in the city" #he dawn of automo!ile actually goes !ack to >333 years when the first wheel was used for transportation in India" In the !eginning of '?th century 1ortuguese arrived in *hina and the interaction of the two cultures led to a variety of new technologies, including the creation of a wheel that turned under its own power" By 'D33s small steam powered engine models was developed, !ut it took another century !efore a full si4ed engine powered vehicle was created"

#he actual horseless carriage was introduced in the year ';</ !y !rothers *harles and Erank @uryea" It was the first internal

com!ustion motor car of America, and it was followed !y 5enry Eord9s first e(perimental car that same Fear" Lne of the highest rated early lu(ury automo!iles was the '<3< 0olls 0oyce Silver 7host that featured a )uiet D cylinder engine, leather interior, folding windscreens and hood, and an aluminum !ody" It was usually driven !y *hauffeurs and emphasis was on comfort and style rather than speed @uring the '<+3s, the cars e(hi!ited design refinements such as !alloon tires, pressed steel wheels, and four wheel !rakes" 7raham 1aige @* 1haeton of '<+< featured an ; cylinder engine and an aluminum !ody" #he '</= 1ontiac @e ,u(e sedan had roomy interior and rear hinged !ack door that suited more to the needs of families" In '</3s, vehicles were less !o(y and more streamlined than their predecessors" #he '<>3s saw features like automatic transmission, sealed !eam headlights, and tu!eless tires" #he year '<?= !rought powerful high performance cars such as Mercedes Ben4 /33S," It was !uilt on compact and styli4ed lines, and was capa!le of +/3 kmh $'>> mph%" In India there are '33 people per vehicle, while this figure is ;+ in *hina" It is e(pected that Indian automo!ile industry will achieve mass motori4ation status !y +3'>" Since the first car rolled out on the streets of Mum!ai $then Bom!ay% in ';<;, the Automo!ile Industry of India has come a long way" @uring its early stages the auto industry was overlooked !y the then 7overnment and the policies were also not favora!le" #he li!erali4ation policy and various ta( reliefs !y the 7ovt" of India in recent years has made remarka!le impacts on Indian Automo!ile Industry" Indian auto industry, which is currently growing at the pace of around '; N per annum, has !ecome a hot destination for glo!al auto players like Volvo, 7eneral Motors and Eord" A well developed transportation system plays a key role in the development of an economy, and India is no e(ception to it" Kith the growth of transportation system the

Automotive Industry of India is also growing at rapid speed, occupying an important place on the 9canvas9 of Indian economy" S&i11et0

#he first automo!ile in India rolled in ';<= in Bom!ay" India is !eing recogni4ed as potential emerging auto market" Eoreign players are adding to their investments in Indian auto industry" Kithin two wheelers, motorcycles contri!ute ;3N of the segment si4e" :nlike the :SA, the Indian passenger vehicle market is dominated !y cars $=<N%" #ata Motors dominates over D3N of the Indian commercial vehicle market" +O/rd of auto component production is consumed directly !y LEMs" India is the largest three wheeler market in the world" India is the largest two wheeler manufacturer in the world" India is the second largest tractor manufacturer in the world" India is the fifth largest commercial vehicle manufacturer in the world" #he num!er one glo!al motorcycle manufacturer is in India" India is the fourth largest car market in Asia crossed the ' million mark" recently

#he origin of automo!ile is not certain" Automo!ile history, we will only discuss a!out the phases of automo!ile in the development and moderni4ation process since the first car was shipped to India" Ke will start automotive history from this point of time" #he automo!ile industry has changed the way people live and work" #he earliest of modern cars was manufactured in the year ';<?" Shortly the first appearance of the car followed in India" As the century turned, three cars were imported in Mum!ai $India%" Kithin decade there were total of '3+? cars in the city" #he dawn of automo!ile actually goes !ack to >333 years when the first wheel was used for transportation in India" In the !eginning of '?th

century 1ortuguese arrived in *hina and the interaction of the two cultures led to a variety of new technologies, including the creation of a wheel that turned under its own power" By 'D33s small steam powered engine models was developed, !ut it took another century !efore a full si4ed engine powered vehicle was created" Se,me&t 3&$:)$: Among the two wheeler segment, motorcycles have ma-or share in the market" 5ero 5onda contri!utes ?3N motorcycles to the market" In it 5onda holds >DN share in scooter and #VS makes ;+N of the mopeds in the country" >3N of the three wheelers are used as goods transport purpose" 1iaggio holds >3N of the market share" Among the passenger transport, Ba-a- is the leader !y making D;N of the three wheelers" *ars dominate the passenger vehicle market !y =<N" Maruti Su4uki has ?+N share in passenger cars and is a complete monopoly in multipurpose vehicles" In utility vehicles Mahindra holds >+N share" In commercial vehicle, #ata Motors dominates the market with more than D3N share" #ata Motors is also the world9s fifth largest medium M heavy commercial vehicle manufacturer" Hi0t$%i('* I& u0t%! De;e*$1me&t #he first motor car on the streets of India was seen in ';<;" Mum!ai had its first ta(ica!s in the early '<33" #hen for the ne(t fifty years, cars were imported to satisfy domestic demand" Between '<'3 and +39s the automo!ile industry made a hum!le !eginning !y setting up assem!ly plants in Mum!ai, *alcutta and *hennai" #he importOassem!ly of vehicles grew consistently after the '<+39s, crossing the /3,333 mark in '</3" In '<>D, 1remier Automo!ile ,td $1A,% earned the distinction of manufacturing the first car in the country !y assem!ling 9@odge @eSoto9 and 91lymouth9 cars at its 6urla plant" 5industan Motors $5M%, which started as a manufacturer of auto components graduated to manufacture cars in '<><"

In '<?+, the 7LI set up a tariff commission to devise regulations to develop an indigenous automo!ile industry in the country" After the commission su!mitted its recommendations, the 7LI asked assem!ly plants, which did not have plans to set up manufacturing facilities, to shut operations" As a result 7eneral Motors, Eord and other assem!lers closed operations in the country" #he year was '<?> and this decision of the government marked a turning point in the history of the Indian car industry" #he 7LI also had a say in what type of vehicle each manufacturer should make" #herefore, each product was safely cocooned in its own segment with no fears of any impending competition" Also, no new entrant was allowed even though they had plans of a full fledged manufacturing program" #he restrictive set of policies was chiefly aimed at !uilding an indigenous auto industry" 5owever, the restrictions on foreign colla!orations led to limitations on import of technology through technical agreements" #he other control imposed on carmakers related to production capacity and distri!ution" #he 7LI control even e(tended to fi(ation of prices for cars and dealer commissions" #his triggered the start of a protracted legal !attle in '<D< !etween some carmakers and 7LI" Simply put, the three decades following the esta!lishment of the passenger car industry in India and leading upto the early '<;3s, proved to !e the 9dark ages9 for the consumer, as his choice throughout this period was limited to two models vi4 Am!assador and 1admini" It was only in '<;?, after the entry of Maruti :dyog, that the car makers were given a free hand to fi( the prices of cars, thus, effectively a!olishing all controls relating to the pricing of the end product" In the early ;39s, a series of li!eral policy changes were announced marking another turning point for the automo!ile industry" #he 7LI entered the car !usiness, with a =>N stake in Maruti :dyog ,td $M:,%, the -oint venture with Su4uki Motors ,td of 8apan" In '<;?, the 7LI announced its famous !road!anding policy which gave new licenses to !road groups of automotive products like two and four wheeled vehicles" #hough a li!eral move, the licensing system was still very much intact"

M:, introduced 9Maruti ;339 in '<;/ providing a complete facelift to the Indian car industry" #he car was launched as a Ppeoples carP with a price tag of 0s>3,333" #his changed the industry9s profile dramatically" Maruti ;33 was well accepted !y middle income families in the country and its sales increased from ',+33 units in EF;> to more than +33,333 units in EF<<" 5owever in EF+333, this figure came down to ';<,';> units, due to rising competition from 5yundai9s 9Santro9, #elco9s Indica and @aewoo9s 9Mati49" M:, e(tended its product range to include vans, multi utility vehicles $M:Vs% and mid si4ed cars" #he company has single handedly driven the sales of cars in the country from >?,333 in EF;> to >3<,<?' cars !y EF+333, cornering around =<"DN market share"Kith increasing competition from new entrants, this market share has plummeted to almost D+N in EF+333" #he de licensing of auto industry in '<</ opened the gates to a virtual flood of international auto makers into the country with an idea to tap the large population !ase of <?3mn people" Also the lifting of )uantitative restrictions on imports !y the recent policy is e(pected to add up to the flurry of foreign cars in to the country" Many companies have entered the car manufacturing sector, to tap the middle and premium end of car industry" #he new entrants are @aewoo $Mati4%, #elco $Indica% and 5yundai $Santro% in upper end of economy car market" 7M, Eord, 1eugeot, Mitsu!ishi, 5onda and Eiat have entered the mid si4ed car segment and Mercedes Ben4 is in the premium end of market" *ar manufacturers like Malyasia !ased 1roton are also in line to hit the Indian ramp"

Su11*! C)'i& $+ Aut$m$bi*e I& u0t%!"

#he supply chain of automotive industry in India is very similar to the supply chain of the automotive industry in Europe and America" #he orders of the industry arise from the !ottom of the supply chain i" e", from the consumers and goes through the automakers and clim!s up until the third tier suppliers" 5owever the products, as channelled in every traditional automotive industry, flow from the top of the supply chain to reach the consumers" Automakers in India are the key to the supply chain and are responsi!le for the products and innovation in the industry" #he description and the role of each of the contri!utors to the supply chain are discussed !elow" #hird #ier Suppliers& #hese companies provide !asic products like ru!!er, glass, steel, plastic and aluminium to the second tier suppliers" Second #ier Suppliers& #hese companies design vehicle systems or !odies for Eirst #ier Suppliers and LEMs" #hey work on designs provided !y the first tier suppliers or LEMs" #hey also provide engineering resources for detailed designs" Some of their services may include welding, fa!rication, shearing, !ending etc" Eirst #ier Suppliers& #hese companies provide ma-or systems directly to assem!lers" #hese companies have glo!al coverage, in order to follow their customers to various locations around the world" #hey design and innovate in order to provide Q!lack !o(R solutions for the re)uirements of their customers" Black !o( solutions are solutions created !y suppliers using their own technology to meet the performance and interface re)uirements set !y assem!lers" Eirst tier suppliers are responsi!le not only for the assem!ly of parts into complete units like dash!oard, !reaks a(el suspension, seats, or cockpit !ut also for the management of second tier suppliers" AutomakersOVehicle ManufacturersOLriginal E)uipment Manufacturers $LEMs%& After researching consumers2 wants and needs, automakers !egin designing models which are tailored to consumers2 demands" #he design process normally takes five years"

#hese companies have manufacturing units where engines are manufactured and parts supplied !y first tier suppliers and second tier suppliers are assem!led" Automakers are the key to the supply chain of the automotive industry" E(amples of these companies are #ata Motors, Maruti Su4uki, #oyota, and 5onda" Innovation, design capa!ility and !randing are the main focus of these companies" @ealers& Lnce the vehicles are ready they are shipped to the regional !ranch and from there, to the authorised dealers of the companies" #he dealers then sell the vehicles to the end customers" 1arts and Accessory& #hese companies provide products like tires, windshields, and air !ags etc" to automakers and dealers or directly to customers" Service 1roviders& Some of the services to the customers include servicing of vehicles, repairing parts, or financing of vehicles" Many dealers provide these services !ut, customers can also choose to go to independent service providers" E91$%t0 "

Mahindra Scorpio 8eep in service with the Italy9s *CSAS" India9s automo!ile e(ports have grown consistently and reached S>"? !illion in +33<, with :nited 6ingdom !eing India9s largest e(port market followed !y Italy, 7ermany, Cetherlands and South Africa"A+=B India9s automo!ile e(ports are e(pected to cross S'+ !illion !y +3'>"A+;B

According to New York Times, India9s strong engineering !ase and e(pertise in the manufacturing of low cost, fuel efficient cars has resulted in the e(pansion of manufacturing facilities of several automo!ile companies like 5yundai Motors, Cissan, #oyota, Volkswagen and Su4uki"A+<B In +33;, 5yundai Motors alone e(ported +>3,333 cars made in India" Cissan Motors plans to e(port +?3,333 vehicles manufactured in its India plant !y +3''" A/3B Similarly, 7eneral Motors announced its plans to e(port a!out ?3,333 cars manufactured in India !y +3''"A/'B In Septem!er +33<, Eord Motors announced its plans to setup a plant in India with an annual capacity of +?3,333 cars for :SS?33 million" #he cars will !e manufactured !oth for the Indian market and for e(port" A/+B #he company said that the plant was a part of its plan to make India the hu! for its glo!al production !usiness" A//B Eiat Motors also announced that it would source more than :SS' !illion worth auto components from India"A/>B In 8uly +3'3, #he Economic #imes reported that 1SA 1eugeot *itroen was planning to re enter the Indian market and open a production plant in Andhra 1radesh with an annual capacity of '33,333 vehicles, investing E:0 =33M in the operation" A/?B 1SA9s intention to utilise this production facility for e(port purposes however remains unclear as of @ecem!er +3'3"

A #ata Safari on display in 1o4nan, 1oland" In +33< India $3"+/m% surpassed *hina $3"'Dm% as Asia9s fourth largest e(porter of cars after 8apan $'"==m%, 6orea $'"'+m% and #hailand $3"+Dm% !y allowing foreign carmakers '33N ownership of factories in India, which *hina does not allow" A>B In recent years, India has emerged as a leading center for the manufacture of small cars" 5yundai, the !iggest e(porter from the country, now ships more than +?3,333 cars annually from India" Apart from shipments to its parent Su4uki, Maruti Su4uki also manufactures small cars for Cissan, which sells them in Europe" Cissan will also e(port small cars from its new Indian assem!ly line" #ata Motors e(ports its passenger vehicles to Asian and African markets, and is in preparation to launch electric vehicles in Europe in +3'3" #he firm is also planning to launch an electric version of its low cost car Cano in Europe and the :"S" Mahindra M Mahindra is preparing to introduce its pickup trucks and small S:V models in the :"S" market" Ba-a- Auto is designing a low cost car for the 0enault Cissan Automotive India, which will market the product worldwide" 0enault Cissan may also -oin domestic commercial vehicle manufacturer Ashok ,eyland in another small car pro-ect"Khile the possi!ilities are impressive, there are challenges that could thwart future growth of the Indian automo!ile industry"

Since the demand for automo!iles in recent years is directly linked to overall economic e(pansion and rising personal incomes, industry growth will slow if the economy weakens INDIA" Cu%%e&t I& u0t%! S'*e0 Fi,u%e0 '& G%$:t) P$te&ti'* India has only '+ motor vehicles per '333 persons, whereas *hina has '3 and Malaysia has a staggering D>'T #hat makes us the /rd most saturated country in the world !ehind the :nited States $=D?% and ,u(em!ourg $D;D%" In comparison, 8apan has ?>/ and the :nited 6ingdom has >+D" Admittedly, the term Qmotor vehiclesR also include two wheelers and not -ust passenger cars, !ut this is also the case for India" Eor Einancial Fear 3D 3=, ==N of India2s total industry volume comprised of two wheelers" #he remaining comprised of ',3=D,>3; passenger cars $'>N%, ++3,'<< utility vehicles and ;/,3<' M1Vs" #his is a huge amount of vehicles, and the '>N figure only stands to grow as many Indians slowly graduate from two wheelers to cars" #he potential is huge considering as India2s 7@1 goes up, the market for motor vehicles will increase tremendously" According to 7lo!al Economics 1aper Co" << !y 7oldman Sachs *hina2s 7@1 would !e e(ceeded 7ermany !y this year, and 8apan !y +3'? while India would do the same !y +3+3 and +3/3 respectively" Emerging markets that are considered Qold newsR in the automotive industry include Bra4il, 0ussia and *hina" #hese markets are e(pected to decline in growth from +3'? onwards, while India is e(pected to continue showing sta!le growth" INDIA" Pe&et%'ti$& P$te&ti'* '& G$;e%&me&t P$*i(ie0" #he Indian automotive industry is seen to !e QfriendlierR as compared to the *hina" According to a 8apanese analyst source, many 8apanese vendors are now looking for an QIndia 1lanR" More and more are turning away from *hina !ecause of cases like the much pu!lici4ed 7M vs SAI* legal case over the *hery UU, allegedly a clone of the *hevrolet Spark"

#he Indian government also has initiatives like the Cational 5ighways @evelopment 1ro-ect $C5@1%, and has committed 0M +=> !illion to the C5@1 under the ''th Eive Fear 1lan" Malaysian companies like :EM and I8M are already in India, working on these highways, roads and flyovers" A clear sign that India is serious a!out improving its country2s transportation" Lf course, the highways are no use without motor vehicles, and for that India has a clear QAutomotive Mission 1lanR that covers the years +33D to +3'D" #his plan was prepared !y the Ministry of 5eavy Industries and 1u!lic Enterprises of the 7overnment of India and outlines automotive industry investments of up to :SS>3 !illion $0M '/? !ilion% over the '3 years" #he plan also focuses on e(prts, with a +? point plan" Khile o!viously re)uiring more consistency and notice period !efore changes are made $manufacturers are asking for a minimum of + years !efore and ma-or alterations are made%, the plan gives investors a lot of confidence" #here will not likely !e any sudden random changes in policies, something that are unfortunately getting familiar with" Erom a Malaysian perspective, the legal system could possi!ly !e easier to understand as Malaysia and India were !oth former British colonies and are still *ommonwealth mem!ers" *ommunication would also !e easier, in English if the MalaysianOIndian accents dont distort discussions and negotiations" ,astly, as is 8apan, Australia and Cew Vealand, India is a right hand drive country whereas *hina is ,5@" #his means less re engineering cost for the new market"

INDIA" T)e Bi, P*'!e%0" Sales Matri( Indian 1assenger *ars for August +33=

Co ' + / > ? D = ; < '3

Model Su4uki Alto Su4uki Kagon 0 5yundai Santro #ata Indica Su4uki Lmni Su4uki Swift Su4uki M;33 Su4uki Ven Estilo #oyota Innova Mahindra Scorpio

Sales '=,;'D '',=>; '',D<< '',/<D =,=</ =,?=D ?,>;3 >,?<D /,<'3 /,>';

@elhi 1rice $lakh% +"?<W/"'/ /"?DW>"3> +"<>W>"?< +"=?W>"?; +">?W+">= >"/DW?"?D +"'DW+"/; /"?+W>"3= ;"'DW''"/? ;"3=W<"?>

,ength /><? /?+3 /?D? /D=? //=3 /D<? ///? /><? >??? >/+?

A!ove are the sales charts for the Indian passenger car market in August +33= alone" As you can see, Maruti Su4uki India dominates the Indian market with their Su4uki !adged cars, and the Maruti Su4uki M;33 is -ust a!out the only car that is priced under 0M+3,333 $0s +"'D lakh is a!out 0M';,?33%" Fet it is not the top selling model,

which shows that the Indian market is maturing the '<;/ Su4uki M;33 is L,@ and no one wants to !e stuck with a stone age car" #hey want something fairly modern, and stylish even, !ut !eing economical in terms of !oth fuel consumption and initial purchase cost plays a huge factor" C$mme%(i'* Ve)i(*e0" India is the fourth largest commercial vehicle market in the world, and it is also the fifth largest manufacturer of commercial vehicles" @uring financial year +33? 3D, commercial vehicle segment grew at /D"<DN" Medium and 5eavy *ommercial Vehicles $M5*Vs% showed a growth of /<"<+N and ,ight *ommercial Vehicles $,*Vs% showed a growth of /+";N"

*ommercial vehicles can !e categori4ed into ,ight *ommercial Vehicles $,*Vs%, Medium *ommercial Vehicles $M*Vs% and 5eavy *ommercial Vehicles $5*Vs% according to the ma(imum load they can carry" ,*Vs gross vehicle weight limit is ="? tonne, whereas M*Vs9 is +? tonne and 5*Vs9 is >< tonne"

I& u0t%! 0t'tu0 i& O(t$be% /<8<" Lnly three decades !ack, Indian car !uyers had -ust two models to choose from" Both were local reproductions of European models that had disappeared from the western markets soon after Korld Kar II" Irrespective of market demand, manufacturing capacity was restricted through government licenses, and !uyers had to wait several months after paying cash up front to get delivery" Imports were discouraged through very high duties, which remain high even now, and foreign made cars were pri4ed possessions of only the most affluent" #he introduction of a tiny hatch!ack in '<;/ !y Maruti Su4uki, -ointly promoted !y the Indian government and 8apanese small car manufacturer Su4uki, was in many ways a defining moment in the development of the Indian automo!ile industry" #hough very small, the Maruti ;33, as it was called, was modern and much more relia!le than its competitors" After a relatively slow start, the car endeared itself to the

growing Indian middle class and remained the !est seller for the ne(t two decades" :ntil recently, it was the most ine(pensively produced car in the world, and today remains popular in the semi ur!an and rural markets of India" More significantly, Maruti Su4uki introduced more efficient manufacturing practices and developed a num!er of local component suppliers" #his industrial eco system with vastly improved capa!ilities eased the entry of several foreign car manufacturers, after industrial licensing was a!andoned in the '<<3s" #he growth of component suppliers also ena!led select domestic automo!ile firms, with no prior e(perience in car manufacturing, to add passenger vehicles to their product range" #hough several foreign manufacturers have struggled to e(pand their foothold, the growing purchasing power of the middle class continues to attract new entrants to the Indian passenger car market"

#his story essentially repeated itself in other segments of the Indian automo!ile market, including commercial vehicles and motorcycles" #hese segments too have evolved from duopolistic inertia to vigorous competition" In place of outdated products, !uyers now have a surfeit of vehicle models to choose from" #he trigger for change has typically !een the introduction of foreign technology and competition" 5owever, instead of !eing overwhelmed, the domestic manufacturers have emerged as market leaders, adapting well through alliances with foreign firms for technology" Fet, withdrawing restrictive industrial licensing and allowing the entry of foreign firms would not have ensured sustained growth for the Indian automo!ile industry" Eor demand growth to endure, the government would also have to ena!le the development of the country2s road network and reduce traffic congestion in its cities" *onsidering the poor state of Indian roads even in the '<<3s, this was an arduous task that re)uired large capital investments"

#he Cational 5ighway @evelopment 1rogram launched in +333 is similar in concept, though smaller in scale, to the Cational 5ighway System in the :"S" #he first leg of the pro-ect linked the four !ig Indian cities of @elhi, 6olkata, *hennai, and Mum!ai with a four lane highway, du!!ed the 7olden Uuadrilateral" #he su!se)uent phases of the program developed the Corth South and East Kest highway corridors and access roads to ma-or seaports" Since its launch, more than +3,333 miles of highways have !een upgraded or are currently !eing developed under the program" Lver the ne(t decade, the government is planning to upgrade another +3,333 miles of highways apart from !uilding more than '3,333 miles of e(pressways" Most of these pro-ects are !eing implemented through private sector participation, with the government a!sor!ing part of the costs for segments where toll collections are unlikely to make the pro-ect commercially via!le" Most Indian cities have grown without even !asic planning of the road network and other infrastructure" As the num!er of car owners started rising, roads in most cities !ecame clogged and pollution levels increased" Kidening of inner city roads and construction of elevated roads over !usy intersections and level crossings have helped the cities to a!sor! the significant increase in vehicle population over the last decade" #he federal government provides a large part of the financing for such pro-ects, under programs like the Cational :r!an 0enewal Mission M'%6et Se,me&t0" P'00e&,e% Ve)i(*e0" Mi *e(*'00 %e'm0 +ue* 0'*e0 ,%$:t)

,ike most other markets, much of the e(citement in India is in the passenger vehicle segment" 0o!ust growth in middle class income levels and easier credit availa!ility have sustained demand growth for passenger cars" Most ma-or glo!al manufacturers are already present in the country, while some of the domestic manufacturers are entering overseas markets" @espite increased competition, Maruti Su4uki, which is now ma-ority owned !y Su4uki Motor *orp, remains the market leader in India with a share of over >?N" Its strength

lies in its wide range of small car models, which form the !ulk of the Indian car market" Maruti Su4uki also has the largest dealer network and its annual manufacturing capacity is now over ' million vehicles" 6orean firm 5yundai and domestic ma-or #ata Motors have !een in a tight race for the second and third places for a while now" 5yundai is now marginally ahead with a market share of '>N as compared to over '+N for #ata Motors" Small hatch!acks dominate 5yundai2s model lineup and the firm has !uilt up a strong !rand reputation over the last several years" #ata Motors has a wider product range, from S:V2s to the world2s cheapest car, the Cano" #ata products are positioned as value for money and run predominantly on diesel, which is nearly a third less e(pensive than gasoline in India !ecause of government su!sidies" #he firm also -ointly owns an assem!ly line with European carmaker Eiat and markets Eiat cars in India"

Mahindra M Mahindra, another large local manufacturer, derives the !ulk of its sales from the S:V segment where it is the market leader" #he firm recently !ought out

European manufacturer 0enault in a passenger car -oint venture, which has not performed well" Several glo!al manufacturers have struggled in India, though they have !een present in the market for more than a decade" 7eneral Motors has seen a revival over the last year, after the firm launched low priced hatch!acks under the *hevrolet !rand" 7M also sells small sedans and S:V2s, !ut volumes remain very low" #he firm sold half of its Indian operations to *hinese automaker SAI* 7roup last year, and the -oint venture is planning to introduce utility vehicles, !esides passenger cars" Eord has !een more successful in the small sedan segment in India" #he company has gained make share recently after the launch of a competitively priced small hatch!ack from its assem!ly line and engine plant near *hennai, in south India"

Le' i&, I& i'& Aut$m$bi*e Fi%m0 M'%6et Fi%m P%$ u(t0 F$%ei,& P'%t&e% V'*ue #i& = Bi**i$&01assenger #ata Motors *ommercial Vehicles 0enault Ba-a- Auto #wo and #hree Kheelers Cissan car Maruti Su4uki 1assenger Vehicles 1assenger Mahindra Mahindra M *ommercial Vehicles, E)uipment, wheelers 5ero 5onda #wo Kheelers 5onda Motor ="< Mum!ai Earm #wo and Cavistar *ommercial Vehicles for ;"= Mum!ai, ,ondon Su4uki Motor ;"; for planned small <"+ and Eiat ''"D Mum!ai, Cew Fork St$(6 Li0ti&,

Mum!ai, ,ondon Eirm% Mum!ai $5olding

Market value data !ased on full capitali4ation as on Septem!er +3, +3'3

#hough their product offerings in the Indian market are limited, 8apanese manufacturers #oyota and 5onda en-oy leadership in their segments" 5onda is a clear leader in the mid si4ed sedan category, while #oyota sells the most minivans" In a !id to e(pand their market share, !oth firms are e(pected to launch small hatch!acks and sedans shortly"

Among European manufacturers, Skoda Auto, the *4ech su!sidiary of Volkswagen, has !uilt a relatively good position in the mid si4ed sedan market" Volkswagen itself has !een a recent entrant in the Indian market and has e(panded its product range !y launching a small hatch!ack and a mid si4ed sedan" Eiat2s record in India has !een patchy and it now relies on the #ata Motors dealer network to sell its products" Khile its venture with Mahindra has not !een successful, Erench automaker 0enault has opened a large assem!ly line, -ointly owned !y its 8apanese associate Cissan" #he 0enault Cissan alliance is e(pected to launch several models in the near future, with Cissan focusing more on the small car segment" ,u(ury passenger cars have seen e(cellent demand growth, especially in recent years" 5owever, the lu(ury segment now accounts for only a!out a percent of the total passenger vehicle market" Mercedes Ben4 and BMK have almost identical market shares while Audi has made rapid gains over the last year" All three manufacturers assem!le cars in India from imported kits, which attract high import ta(es, and hence product prices are higher than other markets" 8aguar and ,and 0over, now owned !y #ata Motors, are gradually e(panding their dealerships in the country" C$mme%(i'* Ve)i(*e0" R'1i e($&$mi( ,%$:t) b$$0t0 em'& #he volume of goods to !e moved across the country and the demand for commercial vehicles to transport the goods are directly related to the pace of overall economic growth" Khen the country has a high population density and personal car ownership is low, demand for passenger transport will also rise faster when the economic growth accelerates" In recent years, as the country emerged as the second fastest growing economy in the world, India has seen a su!stantial increase in demand for trucks, !uses, and other commercial vehicles" #hough India has one of the most e(tensive railway networks in the world, the !ulk of the commercial goods movement is !y road" #he re!uilding of the country2s main highways under the Cational 5ighway @evelopment 1rogram has made road transport easier and more efficient" :nlike in the past when only single a(le trucks were suita!le

for narrow Indian roads, the new highways can easily accommodate large multi a(le tractor trailers" Another factor that pushed up demand for trucks is the su!stantial increase in construction of !uildings and infrastructure" #o ease traffic congestion in cities, the !us transit systems have !een improved and upgraded across the country" #he federal government continues to finance the introduction of modern !uses, comforta!le enough to encourage commuters to switch from personal vehicles in cities" Increased migration of workers to the cities and industrial 4ones has also pushed up demand for long distance !us services" As the smaller towns and villages get connected to the highway system and more migrants move out of the villages, demand for commercial transport services will only increase in the future"

Eor decades, #ata Motors has dominated the commercial vehicles segment and currently controls two thirds of the market" #he firm has the !roadest dealer network and the widest product range of all manufacturers, from small goods carriers to large tractor trailers" #ata Motors has also e(panded its overseas presence over the last decade, mostly through ac)uisitions and -oint ventures" #he firm currently has a truck manufacturing facility in South 6orea and owns a ma-or portion of a !us and coach

manufacturer in Spain" #ata Motors is the ma-ority partner in a venture with Bra4ilian firm Marcopolo to !uild !uses in India" In #hailand, the firm has -oined hands with a local company to assem!le and market pickup trucks" Ashok ,eyland is a distant second in the segment with a nearly '/N market share of all commercial vehicle sales, including small goods carriers" #he firm2s large trucks and !uses are popular, !ut it has had limited success in smaller capacity truck models" Ashok ,eyland is a market leader in !uses and a leading vehicle supplier to the Indian armed forces" #he company has recently tied up with Cissan for manufacturing light commercial vehicles and engines" In the '<<3s, several 8apanese manufacturers entered the Indian market with light commercial vehicles !ut had limited success" Among more recent entrants, Volvo has gained market share in the large truck and !us segment and ac)uired half of a domestic manufacturer of small trucks" 7erman manufacturer MAC owns half of a -oint venture with local firm Eorce Motors, which manufactures a range of commercial vehicles" American manufacturer Cavistar has a -oint venture with Mahindra M Mahindra and has recently launched large trucks in India" T:$>:)ee*e%0" Ru%'* m'%6et0 $++e% +u%t)e% ,%$:t) $11$%tu&it! ,ike most developing markets, two wheelers, such as motorcycles and motor scooters, are the most popular mode of personal transport in India" #wo wheelers are more afforda!le than low cost cars and even used cars" #hey are also cheaper to run and easier than cars to maneuver and park on narrow roads" Since the average road speeds in India are low, the lower passenger safety of two wheelers when compared to cars does not inhi!it !uyers" #hese factors have made India the second largest two wheeler market in the world with annual sales of over '3 million units" #he increasing income levels in semi ur!an and rural areas of the country offers further growth potential for two wheeler manufacturers" 5ero 5onda is the undisputed market leader in the Indian two wheeler market, with a market share of more than >3N" #he firm is particularly strong in the entry level

motorcycle category and its products are positioned as the most fuel efficient" 5onda Motor of 8apan holds a +DN stake in the firm and provides product technology" Ba-a- Auto is the second largest Indian two wheeler manufacturer, with a dominant position in higher priced motorcycles" #he firm once had a near monopolistic control of the motor scooter market, !ut gradually withdrew from the segment as consumers switched to motorcycles" Ba-a- Auto is also the market leader in three wheelers, which are popular as ta(is in India" #VS Motor is the third ma-or player in the two wheeler market"

5onda Motor also has a wholly owned su!sidiary in India, for manufacturing motorcycles and motor scooters" It is the market leader in motor scooters and the fourth largest in motorcycles" 5onda is followed !y fellow 8apanese manufacturers Su4uki and Famaha in the motorcycle segment" 5arley @avidson is a recent entrant in the premium motorcycle market where volumes are very low" Aut$m$bi*e C$m1$&e&t0" Att%'(ti;e 0$u%(e +$% ,*$b'* 'ut$ +i%m0 #he Indian automo!ile component industry and allied !usinesses are among the select success stories in the country2s manufacturing sector, !ut their achievements are not yet widely acknowledged" #he leading Indian component manufacturers have gradually !uilt their design, engineering, and manufacturing competencies over the last couple of decades" #he impressive growth of the domestic automo!ile market has allowed them to scale up their operations" Several of them now e(port to ma-or glo!al car manufacturers and the leading firms are esta!lishing manufacturing operations in overseas markets"

#hough ma-or carmakers !ring along their key suppliers when they enter new markets, local component manufacturers are enlisted as suppliers of smaller parts" As the carmakers !ecome more confident in the capa!ilities of the local parts suppliers, they !egin sourcing components from local suppliers even for their glo!al operations" Several glo!al automo!ile makers have !een present in India for several years now and they have !een sourcing parts from the network of local suppliers for other markets" ,eading glo!al manufacturers including Volkswagen and Eiat have announced their plans to increase component sourcing from India" Out*$$6" E91$%t 1$te&ti'* ' 0 t$ $me0ti( em'& +*$u%i0)

Even after the spectacular growth in recent years, the Indian automo!ile market still has considera!le room to grow" 1assenger car ownership in India is still very low even when compared to other emerging markets" @espite domestic sales of over '3 million units annually, even two wheeler ownership is !elow '33 per ',333 of the population" It is likely that the continued rise in average income levels will sustain demand for personal vehicles while overall economic growth will support the demand for commercial vehicles" Besides the domestic prospects, India also has the opportunity to emerge as a glo!al manufacturing !ase for select product segments" #he !ig domestic market potential will allow carmakers to !uild large assem!ly lines, with sufficient economies of scale" @esign, development, and production costs in India are lower than the developed markets" #he country is also !uilding a reputation in frugal engineering, or !uilding low cost products under tight !udgets" #ogether with the growing maturity of domestic auto component suppliers, these factors are making an attractive automo!ile manufacturing location for the glo!al markets" In recent years, India has emerged as a leading center for the manufacture of small cars" 5yundai, the !iggest e(porter from the country, now ships more than +?3,333 cars annually from India" Apart from shipments to its parent Su4uki, Maruti Su4uki also manufactures small cars for Cissan, which sells them in Europe" Cissan will also e(port small cars from its new Indian assem!ly line" #ata Motors e(ports its passenger vehicles to Asian and African markets, and is planning to launch electric vehicles in Europe this year" #he firm is also planning to launch an electric version of its low cost car Cano in Europe and the :"S" Mahindra M Mahindra is preparing to introduce its pickup trucks and small S:V models in the :"S" market" Ba-a- Auto is designing a low cost car for the Cissan 0enault alliance, which will market the product glo!ally" Cissan 0enault may also -oin domestic commercial vehicle manufacturer Ashok ,eyland in another small car pro-ect"

Khile the potential is impressive, there are challenges that could pull down future growth of the Indian automo!ile industry" Since the demand surge for automo!iles in recent years is directly linked to overall economic growth and rising personal incomes, industry growth will slow if the economy weakens" Also, any delay in the further development of the highway network could slow down domestic demand growth" It is possi!le that the government will favor mass transport systems for the large cities, which may restrict the demand for personal vehicles" Most Indian cities will have a com!ination of metro rail networks and dedicated road corridors for !uses and it is possi!le that a good num!er of commuters will opt for pu!lic transport" It is also likely

that intense competition will erode the profita!ility of manufacturers, especially in the passenger vehicles segment" @espite these challenges, the long term outlook for the automo!ile industry in India remains !right" In most countries, the automo!ile industry historically has !een one of the sectors leading the economic growth and development" Availa!le indicators suggest that it will !e no different in India, which is likely to remain one of the fastest growing economies in the world"

G$* e& 1e%i$ +$% I& i'& 'ut$ i& u0t%! '0 0'*e0 ?$$me @AB *A0 sales has soared /;N with '";+ lakh vehicles !eing sold in Lcto!er this fiscal year" #he growing economy and lower !orrowing costs is likely to make this cheerful gain a trend as this is the fifth consecutive month of perky gains" In this @ussehra @iwali period new cars like Maruti Su4uki2s renewed Kagon 0, 1olo from Volkswagen, Cissan Motor2s Micra, Eord2s Eigo, and an upgraded i'3 from 5yundai motivated the demand, as it has !een considered an auspicious time to make new purchases"

,ast month the total vehicle sales, including commercial vehicles, two wheelers and three wheelers or auto rickshaws, stood at '>"D lakh units, a shade which is higher compared to the previous !est of '/"/ lakh units sold in Septem!er this year" #he auto industry analysts said that this upsurge is likely to continue and there are chances of growth in future" Lne of the auto analysts with Mum!ai !ased Angel Broking Vaishali 8a-oo said& Q0ising incomes and ro!ust economic growth are likely to help auto companies sustain their top line growth helped !y sound volume growth"R Society of Indian Automo!ile Manufacturers $SIAM% has revised its sales pro-ections and now hope the industry to grow around +3N this year" Cevertheless, in contrast to the automo!ile manufacturers, it anticipates sales to slow down during the rest of the year" QKe have witnessed higher >DN growth in Lcto!er on the !ack of strong festive demand, !ut in the coming months the !ase effect could moderate this growth as sales are normally sluggish in the third )uarter as customers prefer to !uy cars in new year,R stated SIAM director general Vishnu Mathur" SIAM now anticipates car and sport utility vehicles sales to grow +' +/N to +"> million vehicles this fiscal, up from an earlier forecast of '+ '/N growth" #he car makers are e(pecting the sales momentum going on in Covem!er too" Maruti2s chief general manager $marketing% Shashank Srivastava said that Q#he overall fundamentals of the industry are strong" Kith interest rates continuing to !e favoura!le and fle(i!le availa!ility of financing, we are e(pecting !umper sales in Covem!er too"R #he two wheeler industry is on high with an all time high monthly sales of ''"+= lakh units, a ?3N growth over Lcto!er +33<, which mainly is helped !y !ig demand for scooters whose sales has dou!led to ',;;,D// units in Lcto!er this fiscal" #he Indian units of 5onda Motor and Su4uki Motorcycles are posting ama4ing gains" C$&t%ibuti$& $+ Aut$m$bi*e I& u0t%! i& I& i'& E($&$m!"

Automotive industry is the key driver of any growing economy" It plays a pivotal role in country9s rapid economic and industrial development" It caters to the re)uirement of e)uipment for !asic industries like steel, non ferrous metals, fertilisers, refineries, petrochemicals, shipping, te(tiles, plastics, glass, ru!!er, capital e)uipments, logistics, paper, cement, sugar, etc" It facilitates the improvement in various infrastructure facilities like power, rail and road transport" @ue to its deep forward and !ackward linkages with almost every segment of the economy, the industry has a strong and positive multiplier effect and thus propels progress of a nation" #he automotive industry comprises of the automo!ile and the auto component sectors" It includes passenger cars. light, medium and heavy commercial vehicles. multi utility vehicles such as -eeps, scooters, motor cycles, three wheelers, tractors, etc. and auto components like engine parts, drive and transmission parts, suspension and !raking parts , electricals, !ody and chassis parts. etc" In India, automotive is one of the largest industries showing impressive growth over the years and has !een significantly making increasing contri!ution to overall industrial development in the country" 1resently, India is the world9s second largest manufacturer of two wheelers, fifth largest manufacturer of commercial vehicles as well as largest manufacturer of tractors" It is the fourth largest passenger car market in Asia as well as a home to the largest motor cycle manufacturer" #he installed capacity of the automo!ile sector has !een <,?>3,333 vehicles, comprising ',?<3,333 four wheelers $including passenger cars% and =,<?3,333 two and three wheelers" #he sector has shown great advances in terms of development, spread, a!sorption of newer technologies and fle(i!ility in the wake of changing !usiness scenario" #he Indian automotive industry has made rapid strides since delicensing and opening up of the sector in '<<'" It has witnessed the entry of several new manufacturers with the state of art technology, thus replacing the monopoly of few manufacturers" At present, there are '? manufacturers of passenger cars and multi utility vehicles, < manufacturers of commercial vehicles, 'D of twoO three wheelers and '> of tractor, !esides ? manufacturers of engines" #he norms for foreign investment and import of technology have also !een li!eralised over the years for manufacture of vehicles" At

present, '33N foreign direct investment $E@I% is permissi!le under the automatic route in this sector, including passenger car segment" #he import of technology for technology upgradation on royalty payment of ?N without any duration limit and lump sum payment of :S@ + million is also allowed under automatic route in this sector" #he Indian automotive industry has already attained a turnover of 0s" ',D?,333 crore $/> !illion :S@% and has provided direct and indirect employment to '"/' crore people in the country" #he growth of Indian middle class, with increasing purchasing power, along with strong macro economic fundamentals have attracted the ma-or auto manufacturers to Indian market" #he market linked e(change rate, well esta!lished financial market, sta!le policy governance work and availa!ility of trained manpower have also shifted new capacities and flow of capital to the auto industry of India" All these have not only enhanced competition in auto companies and resulted in multiple choices for Indian consumers at competitive costs, !ut have also ensured a remarka!le improvement in the industry9s productivity, which is one of the highest in Indian manufacturing sector" #he @epartment of 5eavy Industry, under the Ministry of 5eavy Industries and 1u!lic Enterprises, is the main agency in India for promoting the growth and development of the automotive industry" #he department assists the industry in achievement of its e(pansion plans through policy initiatives, suita!le interventions for restructuring of tariffs and trade, promotion of technological colla!oration and up gradation as well as research and development" #he department is also concerned with the development of the heavy engineering industry, machine tools industry, heavy electrical industry, industrial machinery, etc" #he automo!ile sector recorded growth of '/"?DN in +33D 3=" @uring the year +33= 3; $April @ecem!er%, the industry decelerated at /"><N" #he automo!ile e(ports crossed the :SS ' !illion mark in +33/ 3> and increased to :SS +"=D !illion in +33D 3=" #he industry e(ported '?N of its passenger car production in +33D 3=, '3N of commercial vehicles production, +DN three wheelers and =N two wheelers" Similarly, during the year +33D 3=, the auto component industry continued its high growth path

and emerged as one of the fastest growing sector in Indian engineering industry !y clocking +'N growth in output during the year" #his industry crossed a total turnover of over :S S '? !illion $0s" D>,?33 crore%, with e(ports of :S S +"< !illion $0s" '+,D>/ crore% during the year" Investment in the industry also grew !y over 0s" >?33 crore during the year as the industry continued to invest in capacity enhancements and new greenfield sites to cope with the increasing demand" #he auto component industry2s e(port growth was '?N in +33D 3=" Khile, the total imports was :S S /"/ !illions $0s" '>,D>> crore%" Ln the )uality and productivity front, auto component industry maintained its leadership with more than <?N companies !eing certified as per the ISL <333 system standards and more than =3N of the companies are certified as per the ISLO#S 'D<>< standards" It has also the distinction of having the ma(imum num!er of '' @eming award winning companies" In order to further accelerate and sustain advancements in the auto sector, the department has undertaken several policy measures and incentives" #he most important !eing the announcement of the 9Auto 1olicy9 of +33+, which aims to esta!lish a glo!ally competitive automotive industry in India and dou!le its contri!ution to the economy !y +3'3" #he policy seeks to set out the direction of growth for the sector and promote 0M@ therein so as to ensure continuous technology upgradation as well as !uilding up of !etter designing capacities" It emphasi4es on low emission fuel auto technologies and availa!ility of appropriate auto fuels in order to take auto manufacturing to a self sustaining level" Broadly, the o!-ectives of the auto policy are to& X E(alt the sector as a lever of industrial growth and employment and to achieve a high degree of value addition in the country X Emerge as a glo!al source for auto components X Esta!lish an international hu! for manufacturing small, afforda!le passenger cars and a key center for manufacturing tractors and two wheelers in the world

X Ensure a !alanced transition to open trade at a minimal risk to the Indian economy and local industry X *onduce incessant moderni4ation of the industry and facilitate indigenous design, research and development X Steer India9s software industry into automotive technology X Assist development of vehicles propelled !y alternate energy sources X @evelopment of domestic safety and environmental standards at par with international standards" Another milestone in this field has !een the launching of the Cational Automotive #esting and 0 M@ Infrastructure 1ro-ect $CA#0I1% which aims to create core glo!al competencies in automotive sector and facilitate its integration with the world economy" It seeks to develop 9state of the art9 testing, validation and 0M @ infrastructure in the country with a view to support the growth and development effort of the automotive industry to reach international levels" CA#0I1 envisages setting up of world class and homologation facilities in India with a total investment of 0s" ',='; crore within the three automotive hu!s of the country" #hese are& Manesar in Corthern India. *hennai in Southern India. and 1une and Ahmednagar in Kestern India" #he pro-ect largely aims at& X *reating critically needed automotive testing and validation infrastructure to ena!le the 7overnment to usher in glo!al vehicular safety, emission and performance standards X @eepening of manufacturing in India !y achieving high degree of value addition and enhancing employment potential in the country X Eacilitating convergence of India9s strengths in I# and electronics with automotive engineering

X Enhancing India9s glo!al outreach in this sector !y facilitating development and mass production of high technology driven, afforda!le and glo!ally accepta!le automotive products and !y de !ottlenecking their e(ports and X 0emoving the crippling a!sence of !asic product testing, validation and development infrastructure for automotive industry" Besides, the announcement of 9Automotive Mission 1lan9 for the period of +33D +3'D is a ma-or step taken to make India a glo!al automotive hu!" #he Mission 1lan aims to make India emerge as the destination of choice in the world for design and manufacture of automo!iles and auto components, with output reaching a level of :SS '>? !illion $accounting for more than '3N of the 7@1% and providing additional employment to +? million people !y +3'D" It envisages increase in production of automotive industry from the current level of 0s" 'D<333 crore to reach 0s" D33333 crore !y +3'D" #he Mission seeks to oversee the development of the automotive industry, that is, the present scenario of the sector, its !road role in the growth of national economy, its linkages with other key facets of the economy as well as its future growth prospects" #his is involved in improving the automo!iles in the Indian domestic market, providing world class facilities of automotive testing and certification as well as ensuring a healthy competition among the manufacturers at a level playing field" #he future challenges for the Indian auto industry in achieving the targets defined in the Automotive Mission 1lan would primarily consist of developing a supply !ase in terms of technical and human capa!ilities, achieving economies of scale and lowering manufacturing costs, as well as overcoming infrastructural !ottlenecks" It also involves stimulating domestic demand and e(ploiting e(port and international !usiness opportunities" In all these, the role of the 7overnment is of facilitating infrastructure creation, promoting the country2s capa!ilities, creating a favoura!le and predicta!le !usiness environment, attracting investments and promoting 0M@" Khile, the role of industry is primarily of designing and manufacturing products of world class )uality standards, esta!lishing cost competitiveness, improving productivity of !oth la!our

and capital, achieving scale and 0 M @ enhancing capa!ilities as well as showcasing India2s products in potential markets" All such initiatives indicate that the Indian automotive industry has !een emerging as a sunrise sector of the economy" It is not only meeting the growing domestic demands, !ut also gradually increasing its penetration in the international markets" It has !een continuously restructuring itself and a!sor!ing newer technologies in order to align itself to the glo!al developments and reali4e its potentialities" Endowed with several advantages like low cost and high skill manpower. glo!ally competitive auto ancillary industry. esta!lished testing and 0 M @ centres. production of steel at lowest cost. etc", the industry provide immense investment opportunities" #his has instilled confidence in auto manufacturers to face international competition as well as improve )uality standards of vehicles with safety norms in the wake of rapidly increasing traffic" Various policy incentives including time !ound implementation of Automotive Mission 1lan together with esta!lishment of world class testing, homologation and certification facilities would ensure Indian automotive industry a distinct edge amongst the newly emerging automotive destinations of the world" According to Su4uki Motorcycle India vice president Atul 7upta, QKhile demand for scooters has picked up in the past few months, the festive period witnessed a huge draw of customers" @espite increasing our production our '+?cc Access scooter has a waiting period of over three months"R SIAM has forecast the two wheeler segment to cross the '' million mark this year"

Cotwithstanding, the !ig !oom in retail products the sales of heavy commercial vehicles, which are considered a !arometer of the economy, have slowed down compared with the earlier months" In the month of Lcto!er the truck and !us segment grew '/N to +',;3= units over the same month of last fiscal, !ut much lower than /3,>?/ units sold in Septem!er this fiscal" 5owever, in all the auto industry is e(periencing !oom time"

T)e 'ut$m$ti;e i& u0t%! (%i0i0 $+ /<<A./<8< & It was a part of a glo!al financial downturn" #he crisis affected European and Asian automo!ile manufacturers, !ut it was primarily felt in the American automo!ile manufacturing industry" #he downturn also affected *anada !y virtue of the Automotive 1roducts #rade Agreement" #he automotive industry was weakened !y a su!stantial increase in the prices of automotive fuels linked to the +33/ +33; energy crisis which discouraged purchases of sport utility vehicles $S:Vs% and pickup trucks which have low fuel economy"#he popularity and relatively high profit margins of these vehicles had encouraged the American PBig #hreeP automakers, 7eneral Motors, Eord, and *hrysler to make them their primary focus" Kith fewer fuel efficient models to offer to consumers, sales !egan to slide" By +33;, the situation had turned critical as the credit crunch placed pressure on the prices of raw materials" *ar companies from Asia, Europe, Corth America, and elsewhere have implemented creative marketing strategies to entice reluctant consumers as most e(perienced dou!le digit percentage declines in sales" Ma-or manufacturers, including the Big #hree and #oyota offered su!stantial discounts across their lineups" #he Big #hree faced criticism for their lineups, which were seen to !e irresponsi!le in light of rising fuel prices" Corth American consumers turned to smaller, cheaper, more fuel efficient imported from 8apan and Europe" 5owever, many of the vehicles perceived to !e foreign were actually Ptransplants,P foreign cars manufactured or assem!led in the :nited States, at lower cost than true imports" *iting falling production num!ers, the State Bank of India reduced interest rates on automotive loans in Ee!ruary +33<" Eor the first few months of +33<, #ata Motors conducted a widespread marketing campaign heralding the de!ut of the #ata Cano" Billed as Pthe people9s car,P the manufacturer hopes the low cost will encourage customers to purchase the vehicle despite the ongoing credit crisis"

C$m1'&! 1%$+i*e #TATA M$t$%0-

Hi0t$%! $+ T't' m$t$%0 #ata Motors is a part of the #ata 7roup manages its share holding through #ata Sons" #he company was esta!lished in '<>? as a locomotive manufacturing unit and later e(panded its operations to commercial vehicle sector in '<?> after forming a -oint venture with @aimler Ben4 A7 of 7ermany" @espite the success of its commercial vehicles, #ata reali4ed his company had to diversify and he !egan to look at other products" Based on consumer demand, he decided that !uilding a small car would !e the most practical new venture" So in '<<; it launched #ata Indica, India9s first fully indigenous passenger car" @esigned to !e ine(pensive and simple to !uild and maintain, the Indica !ecame a hit in the Indian market" It was also e(ported to Europe, especially the :6 and Italy"

0atan C #ata has !een the *hairman of #ata Sons, the promoter company of the #ata group, since '<<'" 5e is also the *hairman of the ma-or #ata companies, including #ata Motors, #ata Steel, #ata *onsultancy Services, #ata 1ower, #ata 7lo!al Beverages, #ata *hemicals, Indian 5otels and #ata #eleservices" @uring his tenure, the group2s revenues have grown nearly '+ fold, totalling SD="> !illion in +33< '3" Mr #ata -oined the #ata group in '<D+" After serving in various companies, he was appointed director in charge of the Cational 0adio and Electronics *ompany in '<='" In '<;', he was named *hairman of #ata Industries, the group2s other promoter company, where he was responsi!le for transforming it into a group strategy think tank, and a promoter of new ventures in high technology !usinesses"

I&t%$ u(ti$&" #he #ata group comprises over <3 operating companies in seven !usiness sectors& communications and information technology, engineering, materials, services, energy, consumer products and chemicals" #he group has operations in more than ;3 countries across si( continents, and its companies e(port products and services to ;? countries" #he total revenue of #ata companies, taken together, was SD="> !illion $around 0s/'<,?/> crore% in +33< '3, with ?= per cent of this coming from !usiness outside

India" #ata companies employ around /<?,333 people worldwide" #he #ata name has !een respected in India for '>3 years for its adherence to strong values and !usiness ethics" Every #ata company or enterprise operates independently" Each of these companies has its own !oard of directors and shareholders, to whom it is answera!le" #here are +; pu!licly listed #ata enterprises and they have a com!ined market capitalisation of a!out S<<"?> !illion $as on March /, +3''%, and a shareholder !ase of /"? million" #he ma-or #ata companies are #ata Steel, #ata Motors, #ata *onsultancy Services $#*S%, #ata 1ower, #ata *hemicals, #ata 7lo!al Beverages, Indian 5otels and #ata *ommunications" #ata Motors is among the top five commercial vehicle manufacturers in the world and has recently ac)uired 8aguar and ,and 0over " Eounded !y 8amset-i #ata in ';D;, #ata2s early years were inspired !y the spirit of nationalism" In more recent times, its pioneering spirit has !een showcased !y companies such #ata Motors, which made India2s first indigenously developed car, the Indica, in '<<; and recently unveiled the world2s lowest cost car, the #ata Cano" #ata companies have always !elieved in returning wealth to the society they serve" #wo thirds of the e)uity of #ata Sons, the #ata promoter company, is held !y philanthropic trusts that have created national institutions for science and technology, medical research, social studies and the performing art" #ata companies also e(tend social welfare activities to communities around their industrial units" 7oing forward, #ata is focusing on new technologies and innovation to drive its !usiness in India and internationally" #he Cano car is one e(ample, as is the Eka supercomputer $developed !y another #ata company%, which in +33; was ranked the world2s fourth fastest" #ata Motors is India2s largest automo!ile company, with consolidated revenues of :S@ +3 !illion in +33< '3" It is the leader in commercial vehicles and among the top three in passenger vehicles" #ata Motors has products in the compact, midsi4e car and utility vehicle segments" #he company is the world9s fourth largest truck

manufacturer, the world9s second largest !us manufacturer, and employs +>,333 workers" Since first rolled out in '<?>, #ata Motors has produced and sold over > million vehicles in India Esta!lished in '<>?, when the company !egan manufacturing locomotives, the company manufactured its first commercial vehicle in '<?> in a colla!oration with @aimler Ben4 A7, which ended in '<D<" #ata Motors is a dual listed company traded on !oth the Bom!ay Stock E(change, as well as on the Cew Fork Stock E(change" #ata Motors in +33?, was ranked among the top '3 corporations in India with an annual revenue e(ceeding IC0 /+3 !illion" In +3'3, #ata Motors surpassed 0eliance to win the coveted title of 9India9s most valua!le !rand9 in a annual survey conducted !y Brand Einance and #he Economic #imes" #ata Motors has auto manufacturing and assem!ly plants in 8amshedpur, 1antnagar, ,ucknow, Ahmeda!ad, Sanand, @harwad and 1une in India, as well as in Argentina, South Africa and #hailand" A&&u'* Re0u*t $+ TATA M$t$%0 " /<8< *onsolidated Cet 0evenue grows !y /3"?N in EF'3 over previous year to 0s" <+,?'< crores *onsolidated 1rofit of 0s" +,?=' crores $,oss of 0s"+?3?"+? crores in the previous year% *onsolidated Einancial 0esults for the year ended March /', +3'3

#ata Motors today reported consolidated revenues $net of e(cise% at 0s" <+,?'<"+? crores posting a growth of /3"?N over 0s" =3,;;3"<? crores in the previous year" #here has !een strong volume growth !oth at #ata Motors and at 8aguar ,and 0over" #he *onsolidated 1rofit !efore #a( $1B#% for the year was 0s" /,?++"D> crores compared to a ,oss !efore #a( of 0s" +,'+<"+? crores" #he *onsolidated 1rofit after

ta( $1A#% for the year was 0s" +,?='"3D crores, a significant turnaround from a loss of 0s" +,?3?"+? crores in the previous year" #he consolidated financial performance is not compara!le to the previous year +33; 3< on account of the ac)uisition of 8aguar ,and 0over in 8une +33;" Ln March /3, +3'3, the company has divested its controlling stake $+3N% in #elco *onstruction E)uipment *ompany ,td" #he resultant profit of 0s '3?="<+ crores is included in other income" #ata Motors has reported a Basic Earnings 1er Share $E1S% of 0s" >;"D> in +33< '3 for its consolidated operations in +33< '3 as against a ,oss 1er Share of 0s" ?D";; in +33; 3<" #ata Motors gross revenue for the financial year +33< '3 was 0s" /;,/D>"'3 crores $+33; 3<& 0s" +;,?D;"+' crores%" #he revenues $net of e(cise% at 0s" /?,?</"3? crores representing a growth of /;"<N over 0s"+?,D+<"=/ crores in the previous year" #he 1B# for the year is 0s" +,;+<"?> crores, an increase of '=<"'N over 0s" ',3'/"=D crores previous year" #he 1A# for the year is 0s" +,+>3"3; crores, an increase of '+/"=N over 0s" ',33'"+D previous last year $after e(ceptional item of a loss of 0s";?3";D crores recogni4ed on redemption of preference shares !y #M, 5oldings 1te ,td, Singapore, a wholly owned su!sidiary of the company%

Volume recovery led !y introduction of new products and strong continued growth in the e(isting portfolio, continued focus on cost efficiencies and price increases undertaken !y the company to com!at strengthening commodity prices aided the company to grow reali4ations and deliver dou!le digit operating margin of ''"=>N" Lperating profit $EBI#@A% came in at 0s" >,'=;"+; crores in EF +33< '3 compared with 0s" ',=?+">> crores in the previous year"

Lverall economic recovery, a !enign li)uidity environment along with government stimulus has driven domestic demand revival during the current year" In the domestic market, company2s commercial vehicles sales increased !y >'N to /=/,;>+ units leading to a market share of D>"+N, up from D/";N of last year" #he growth was well supported !y !oth the Medium and 5eavy *ommercial Vehicles and the ,ight *ommercial Vehicles which grew !y /D"?N and >>">N respectively" @uring the year, the company launched and started sales of the 1rima range of glo!ally !enchmarked 5eavy #rucks" A num!er of variants from the Ace family were also introduced" 1assenger Vehicles, including Eiat and 8aguar and ,and 0over vehicles distri!uted in India, grew !y +?"/N in the domestic market to +D3,3+3 units" #he market share for #ata passenger vehicles for the period stood at '+">N" #he company launched the new Indigo Man4a and the Sumo 7rande M6 II during the second half of the year which improved company2s market position in 5+ compared with 5' in these segments" #he company also ramped up the production of the Cano at the plant in :ttarakhand, and delivered /3,=D/ units of Cano during the year" Along with Eiat, the company has a -oint market share of '/"=N in the industry" #he company has planned several new product launches in the near future to defend and improve its market position" Sub0i i'%! Hi,)*i,)t0" Ke are pleased with the performance of the 8aguar ,and 0over !usiness which turned profita!le for the year ended March /', +3'3 reporting a 1rofit !efore #a( of 7B1 /+ million" #he financial results are not compara!le over the previous year where the !usiness was under the company2s ownership for the '3 month period from 8une +, +33; March /', +33<" Kith the positive market reception of the enhanced product range in an improved market environment as well as continued cost reduction efforts, the !usiness was a!le to show sustained )uarter on )uarter improvement towards solid profita!ility in U/ and U> of EF'3" @uring the year the company put in place a long term financing plan

including the drawdown of 7B1 />3 million EIB loan and syndication of inventory financing" Kholesale volumes for EF +33< '3 were '</,<;+ units compared with sale of 'D=,/>; units in the '3 month period 8une23; March23<" Both ,and 0over and 8aguar launched the updated +3'3 Model Fear products $0ange 0over, 0ange 0over Sport, @iscovery >, HE and H6% to critical acclaim with the respective wholesale sales for the year coming in at '>D,?D> units and >=,>'; units" 8aguar ,and 0over retail sales improved favora!ly in the second half of the year, after addressing the effects of the glo!al economic turndown and launching new model year products" #here was strong recovery in the :6 where ,and 0over retail sales were up +?N year on year" #he 8aguar HE improved in the :6 !y +;N year on year" *hina also continued to show significant growth for 8,0 with 8aguar growing !y /;N and ,and 0over ??N year on year" #ata @aewoo *ommercial Vehicles *ompany ,imited, company2s su!sidiary !ased in South 6orea, continued to see improvement in domestic demand while e(ports came under pressure resulting in overall sales decline of >N over the previous year" #ata Motors Einance ,imited, the company2s captive financing su!sidiary reported net profit of 0s" >>"'D crores and improved its C1A performance through !etter collection efficiency" Di;i e& " #he Board of @irectors has recommended a dividend of 0s"'?O per Lrdinary share and 0s"'?"?3 per GA2 Lrdinary share each for the financial year +33< '3 $+33; 3<& 0s"DO for Lrdinary share and 0s" D"?3 for GA2 Lrdinary share%" #he dividend is su!-ect to approval of shareholders. ta( on the dividend will !e !orne !y the *ompany" #he Audited Einancial 0esults for the financial year ended March /', +3'3, are enclosed"

A(Cui0iti$&0" In +33> #ata Motors ac)uired @aewoo9s truck manufacturing unit, now known as #ata @aewoo *ommercial Vehicle, in South 6orea" In +33?, #ata Motors ac)uired +'N of Aragonese 5ispano *arrocera giving it controlling rights of the company" In +33=, Eormed a -oint venture with Marcopolo of Bra4il and introduced low floor !uses in the Indian Market" In +33;, #ata Motors ac)uired British 8aguar ,and 0over $8,0%, which includes the @aimler and ,anchester !rand names" In +3'3, #ata Motors ac)uired ;3N stake in Italy !ased design and engineering company #rili( for a consideration of Y'";? million" #he ac)uisition is in line with the company2s o!-ective to enhance its stylingOdesign capa!ilities to glo!al standards"

E91'&0i$&" #he EI0S# generation #ata Indica V+9s e(cellent fuel economy, powerful engine and aggressive marketing strategy made it one of the !est selling cars in the history of the Indian automo!ile industry"

After years of dominating the commercial vehicle market in India, #ata Motors entered the passenger vehicle market in '<<' !y launching the #ata Sierra, a multi utility vehicle" After the launch of three more vehicles, #ata Estate $'<<+, a stationwagon design !ased on the earlier 9#ataMo!ile9 $'<;<%, a light commercial vehicle%, #ata Sumo $,*V, '<<>% and #ata Safari $'<<;, India9s first sports utility vehicle%" #ata launched the Indica in '<<;, the first fully indigenous passenger car of India" #hough the car was initially planned !y auto analysts, the car9s e(cellent fuel economy, powerful engine and aggressive marketing strategy made it one of the !est selling cars in the history of the Indian automo!ile industry" A newer version of the car, named Indica V+, was a ma-or improvement over the previous version and )uickly !ecame a mass favourite" #ata Motors also successfully e(ported large )uantities of the car to South Africa"#he success of Indica in many ways marked the rise of #ata Motors" T't' D'e:$$ C$mme%(i'* Ve)i(*e #ata Motors aimed to increase its presence worldwide" In +33>, it ac)uired the @aewoo *ommercial Vehicle *ompany of South 6orea" #he reasons !ehind the ac)uisition were&

#he domestic commercial vehicle market is highly cyclical in nature and prone to fluctuations in the domestic economy" #ata Motors has a high domestic e(posure of W<>N in the M5*V segment and W;>N in the light commercial vehicle $,*V% segment" Since the domestic commercial vehicle sales of the company are at the mercy of the structural economic factors, it is increasingly

looking at the international markets" #he company plans to diversify into various markets across the world in !oth M5*V as well as ,*V segments"

#o e(pand the product portfolio #ata Motors recently introduced the +?M# 7VK #ata Covus from @aewoo2s $South 6orea% $#@*V% platform" #ata plans to leverage on the strong presence of #@*V in the heavy tonnage range and introduce products in India at an appropriate time""

#ata remains India9s largest heavy commercial vehicle manufacturer and #ata @aewoo is the +nd largest heavy commercial vehicle manufacturer in South 6orea" #ata Motors has -ointly worked with #ata @aewoo to develop trucks such as Covus and Korld #ruck and !uses namely, 7loBus and StarBus" Hi01'&$ C'%%$(e%' In +33?, sensing an opportunity in the fully !uilt !us segment, #ata Motors ac)uired a +'N stake in 5ispano *arrocera SA, the leading European !us and coach ca!in maker" In +33<, the company picked up the remaining =<N stake in 5ispano *arrocera SA for an undisclosed sum, making it a fully owned su!sidiary" J',u'% C'%0 '& L'& R$;e% After the ac)uisition of the British 8aguar ,and 0over $8,0% !usiness, which also includes the @aimler, ,anchester and 0over !rands #ata Motors !ecame a ma-or player in the international automo!ile market" Ln += March +33;, #ata Motors reached an agreement with Eord to purchase their 8aguar ,and 0over operations for :SS+"/ !illion" #he sale was completed on + 8une +33;" In addition to the !rands, #ata Motors has also gained access to two design centres and two plants in :6" #he key ac)uisition would !e of the intellectual property rights related to the technologies" Sub0i i'%! b%'& 0"

8aguar

#ata commercial trucks

5ispano at the +33; EIAA in Madrid J$i&t ;e&tu%e0

,and 0over

#ata Marco1olo released this low floor !us in India and now it is widely used as pu!lic transport in @elhi, Mum!ai, *hennai, Bangalore, *handigarh and ,ucknow #ata Motors has formed a ?'&>< -oint venture in !us !ody !uilding with Marcopolo of Bra4il" #his -oint venture is to manufacture and assem!le fully !uilt !uses and coaches targeted at developing mass rapid transportation systems" #he -oint venture will

a!sor! technology and e(pertise in chassis and aggregates from #ata Motors, and Marcopolo will provide know how in processes and systems for !ody!uilding and !us !ody design" #ata and Marcopolo have launched a low floor city !us which is widely used !y *hennai , *oim!atore ,@elhi, Mum!ai, ,ucknow and Bengaluru transport corporations" It9s manufacturing facility is !ased in @harwad" #ata Motors also formed a -oint venture with Eiat and gained access to Eiat2s diesel engine technology"A'=B #ata Motors sells Eiat cars in India through a ?3O?3 -oint venture Eiat Automo!iles India ,imited, and is looking to e(tend its relationship with Eiat and Iveco to other segments" #ata has also formed several 8V9s with many small companies in various countries around the world" Im1$%t'&t e;e*$1me&t0" T't' N'&$

In 8anuary +33;, #ata Motors launched #ata Cano, the least e(pensive production car in the world at a!out '+3,333 $:S S/333%"A';B #he city car was unveiled during the Auto E(po +33; e(hi!ition in 1ragati Maidan, Cew @elhi"A'<B #ata has faced controversy over developing the Cano as some environmentalists are concerned that the launch of such a low priced car could lead to mass motori4ation in India with adverse effects on pollution and glo!al warming" #ata has set up a factory in Sanand, 7u-arat and the first Canos are to roll out summer +33<"

#ata Cano Europa has !een developed for sale in developed economies and is to hit markets in +3'3 while the normal Cano should hit markets in South Africa, 6enya and countries in Asia and Africa !y late +33<" A !attery version is also planned" T't' A(e

#ata Ace was India9s first mini truck #ata Ace, India9s first indigenously developed su! one ton mini truck, was launched in May +33?" #he mini truck was a huge success in India with auto analysts claiming that Ace had changed the dynamics of the light commercial vehicle $,*V% market in the country !y creating a new market segment termed the small commercial vehicle $S*V% segment" Ace rapidly emerged as the first choice for transporters and single truck owners for city and rural transport" By Lcto!er +33?, ,*V sales of #ata Motors had grown !y /D"D percent to +;,?/= units due to the rising demand for Ace" #he Ace was !uilt with a load !ody produced !y Autoline Industries" By +33?, Autoline was producing /33 load !odies per day for #ata Motors" #ata Ace Apka 1yaara *hota 5athi" Ace is still a top seller for #M, with ? lakh units sold to date $8une +3'3%" Ace has also !een e(ported to several European, South American and African countries and all electric models are sold through *hrysler9s 7lo!al Electric Motorcars division"

C$m1%e00e 'i% ('%

#ata Lne*A# Motor @evelopment International of Erance has developed the world9s first prototype of a compressed air car, named Lne*A#" In +33=, M@I owner 7uy Cegre was reported to have Pthe !acking of #ataP" It has airtanks that can !e filled in > hours !y plugging the car into a standard electrical plug" In +33; M@I planned to also design a gas station compressor, which would fill the tanks in / minutes #here are no gasoline costs and no fossil fuel emissions from the vehicle when run in town, !ut Pthe compressed air driving the pistons can !e !oosted !y a fuel !urnerP" Lne*A# is a five seat vehicle with a +33 litre $="' cu ft% trunk" Kith full tanks it is said to run at '33 kmOh $D+ mph% for <3 kilometres $?D mi% range in ur!an cycle" #here are severe physical arguments pleading against those figures" In @ecem!er +33< #ata9s vice president of engineering systems confirmed that the limited range and low engine temperatures were causing difficulties" E*e(t%i( ;e)i(*e0

#ata Motors unveiled the electric versions of passenger car #ata Indica and commercial vehicle #ata Ace" Both run on lithium !atteries" #he company has indicated that the electric Indica would !e launched locally in India in a!out +3'3, without disclosing the price" #he vehicle would !e launched in Corway in +33<" #ata Motors9 :6 su!sidiary, #ata Motors European #echnical *entre, has !ought a ?3"/N holding in electric vehicle technology firm Mil-Z!il 7renlandOInnovas-on of Corway for :SS'"</ M, which specialises in the development of innovative solutions for electric vehicles, and plans to launch the electric Indica hatch!ack in Europe ne(t year" Ln '= Sept +3'3 #ata motors presented to the @#* A @elhi #ransport corporationB Eour *C7 Electric 5y!rid lowfloored Star!uses to !e used for commonwealth games" #hese will !e the first Environmentally friendly !uses to !e used for pu!lic transportation in India"

O1e%'ti$&0 #he #ata Safari @i*L0 is one of #ata9s !est selling vehicles in India and also has !een fairly successful in the Mediterranean and Eastern Europe

#ata has tried to revamp all its models in order to satisfy the consumer

#he purchase of 8aguar and ,and 0over is e(pected to help give #ata Motors gain a foothold in the European and American markets

#ata relies on its su!sidiaries for sales outside India" Seen here is the 0ange 0over Sport

#ata Henon is #ata9s !est selling vehicle in Europe"

T't' N'&$ S'*e0 F'** O;e% ADB I& N$; /<8<"

#ata Cano, the *heapest car of the world, is seems to have !een loosing its charm in its domestic market as its sales saw a sharp fall of over ;?N in the month of Covem!er +3'3" #he company managed to sell -ust ?3< units of this car in the country during this month" #he news can !e surprising to many considering the fact that #ata Motors has started selling Cano off the shelves after inaugurating a new manufacturing plant in Sanand in 7u-arat" #he fall in Cano sales came at a time when the auto industry in India is going through a high growth phase and most of the other cars of this segment have !een registering dou!le digit growth figures" As per the data posted on company2s we!site, the sales of #ata Cano have !een witnessing a steep fall since last few months" #he Cano sales have !een falling sharply since last few months" #he sales dipped from a peak of <,333 units in 8uly to ;,'3/ units in August, ?,?+3 units in Septem!er and /,3D? units in Lcto!er" #here has !een more than half a do4e incidents of fire in the #ata Cano model in different parts of the country since its much fanfare launch in March +33<" #hough the company has !een aggressively promoting the safety aspect of the car !ut it seems to have failed in improving the tarnished safety image of the car among the !uyers" Ln the other hand, the company is highly optimistic on the sales front" 0ecently the company spokesman said in a statement that now that the company has !egun open sales, for the first time it is proactively going to those for whom the car is primarily meant" In a !id to improve Cano2s safety image, the company has recently offered some additional safety features to its more than =3,333 Cano customers" T't' i& I& i'

A loaded #ata truck on a 0a-asthan highway" #ata Motors ,imited is India2s largest automo!ile company, with revenues of /?,D?'">; crore $:SS="<' !illion% in +33= 3;" It is the leader in commercial vehicles in each segment, and among the top three in passenger vehicles in India with products in the compact, midsi4e car and utility vehicle segments" #ata vehicles are sold primarily in India, and over > million #ata vehicles have !een produced domestically since the first #ata vehicle was assem!led in '<?>" #he company2s manufacturing !ase in India is spread across 8amshedpur $8harkhand%, 1une $Maharashtra%, ,ucknow $:ttar 1radesh%, 1antnagar $:ttarakhand% and @harwad $6arnataka%" Eollowing a strategic alliance with Eiat in +33?, #ata set up an industrial -oint venture with Eiat 7roup Automo!iles at 0an-angaon $Maharashtra% to produce !oth Eiat and #ata cars and Eiat powertrains" #he company is esta!lishing a new plant at Sanand $7u-arat%" #ata9s dealership, sales, service and spare parts network comprises over /?33 touch points" #ata Motors also distri!utes and markets Eiat !randed cars in India"

S'*e0 & Se%;i(e Net:$%6 #ata Motors has more than +?3 dealerships in more than '<? cities across += states and > :nion #erritories of India "It has the /rd largest Sales and Service Cetwork after Maruti Su4uki and 5yundai" T't'E0 ,*$b'* $1e%'ti$&0

#ata Motors has !een in the process of ac)uiring foreign !rands to increase its glo!al presence" #hrough ac)uisition, #ata has operations in the :6, South 6orea, #hailand and Spain" Among these ac)uisitions is 8aguar ,and 0over, a !usiness comprising two struggling iconic British !rands that was ac)uired from the Eord Motor *ompany in +33;" In +33>, #ata ac)uired the @aewoo *ommercial Vehicles *ompany, South 6orea2s second largest truck maker" #he re!randed #ata @aewoo *ommercial Vehicles *ompany has launched several new products in the 6orean market, while also e(porting these products to several international markets" #oday two thirds of heavy commercial vehicle e(ports out of South 6orea are from #ata @aewoo" In +33?, #ata Motors ac)uired a +'N controlling stake in 5ispano *arrocera, a Spanish !us and coach manufacturer," #ata Motors continued its market area e(pansion through the introduction of new products such as !uses $Star!us M 7lo!us, -ointly developed with su!sidiary 5ispano *arrocera% and trucks $Covus, -ointly developed with su!sidiary #ata @aewoo%" In May, +33< #ata unveiled the #ata Korld #ruck range -ointly developed with #ata @aewoo @e!uting in South 6orea, South Africa, the SAA0* countries and the Middle East !y the end of +33< In +33D, #ata formed a -oint venture with the Bra4il !ased Marcopolo to manufacture fully !uilt !uses and coaches for India and other international markets" #ata Motors has e(panded its production and assem!ly operations to several other countries including South 6orea, #hailand, South Africa and Argentina and is planning to set up plants in #urkey, Indonesia and Eastern Europe" #ata also has franchiseeO-oint venture assem!ly operations in 6enya, Bangladesh, :kraine, 0ussia and Senegal" #ata has dealerships in +D countries across > continents" #hough #ata is present in many countries it has only managed to create a large consumer !ase in the Indian Su!continent, namely India, Bangladesh, Bhutan, Sri ,anka and Cepal" #ata has a growing consumer !ase in Italy, Spain and South Africa" P%$ u(t0" 1assenger cars and utility vehicles

#ata Hover

#ata Aria

#ata Star!us low floor

#ata Cano Europa

#ata Marcopolo !uses in the @elhi B0#" T't' M$t$%0 te()&$*$,! '& e0i,& 0ub0i i'%ie0

#ata has do4ens of technology and design su!sidiaries" #hese include the main ones" Te*($ C$&0t%u(ti$& ECui1me&t #TELCON-

#E,*LC is a -oint venture !etween #ata Motors and 5itachi, which focuses on e(cavators and other construction e)uipment" HV T%'&0mi00i$& #HVTL- '& HV A9*e0 #HVAL5VA, and 5V#, are ;?N su!sidiary companies of #ata Motors engaged in the !usiness of manufacture of gear !o(es and a(les for heavy and medium commercial vehicles, with production facilities and infrastructure !ased at 8amshedpur" T't' Te()&$*$,ie0 Limite #TTL##, provides Engineering and @esign $EM@% solutions to the Automotive Industry" #ata Motors holds ;D"<'N of ##,2s share capital" ##, is !ased in 1une $5in-awadi% and operates in the :S and Europe through its wholly owned su!sidiaries in @etroit and ,ondon respectively" It also has a presence in #hailand" #ata #echnologies is a software service provider in the I# services and B1L space" Its glo!al client list includes Eord, 7eneral Motors, #oyota and 5onda, to name a few" It !ought over the British engineering and design services company, Incat International 1lc for 0s>! in August +33?" Incat speciali4es in engineering M design services and product lifecycle management in the international automotive, aerospace and engineering markets" Kith this ac)uisition, #ata Motors will have closer pro(imity to its glo!al customers and !e a!le to provide a wider range of services" T't' M$t$% Eu%$1e'& Te()&i('* Ce&t%e #ata Motor European #echnical *entre is #ata9s su!sidiary !ased in the :6" It was the -oint developer of the Korld #ruck" LATEST 3EY DEVELOPMENTS" T't' M$t$%0 Limite U&;ei*0 P%$t$t!1e C'% F$% Eu%$1e'& M'%6et>DJ Kednesday, + Mar +3''

@ow 8ones reported that #ata Motors ,imited unveiled a prototype of the first car it has designed for the European market at the 7eneva International Motor Show" *alled the #ata 1i(el, the !ul!ous four seater city car would !e fitted either with a '"+ liter, three cylinder, tur!o charged, diesel engine, or an electric one similar to that !eing used in its Indica Vista EV"

T't' M$t$%0 Limite S'!0 N$ P*'&0 T$ Li0t J',u'% L'& R$;e%>Reute%0 Eriday, +? Ee! +3'' 0euters reported #ata Motors ,imited has no plans to list its 8aguar ,and 0over unit in ,ondon, denying a #V report it had initiated talks with !anks" #he E# Cow television channel had reported on #hursday the 8aguar ,and 0over unit would most likely !e listed in +3'+" Banking sources told 8,0 listing was unlikely in the ne(t '+ months as the company was still in the process of a turnaround" T't' M$t$%0 U&it J',u'%, L'& C)i&' Monday, +' Ee! +3'' 0euters reported that #ata Motors unit 8aguar and ,and 0over is in talks with 7reat Kall Motor *o", ,td" a!out a potential *hina tie up" According to a Senior e(ecutives of 8aguar and ,and 0over the two companies are e(ploring opportunities for a cooperative effort" T't' P$:e% C$m1'&! Lt Pe%1etu'* #hursday, '= Ee! +3'' @ow 8ones reported that #ata 1ower *ompany ,td and #ata Motors ,imited plan to raise up to a com!ined S'"? !illion through perpetual !onds, the Economic #imes reported on #hursday" #ata 1ower is in talks with !ankers to raise up to S' !illion via !onds for e(pansion and ac)uisitions while #ata Motors is planning to raise at least 7B1/?3 million to refinance de!t" A perpetual !ond is a hy!rid de!t instrument with A& T't' M$t$%0 Limite P*'& T$ R'i0e Fu& 0 Vi' B$& 0>DJ R$;e% G%e't A& 4'** M$t$% C$5, Lt 5 E91*$%e0 Tie>Reute%0

e)uity characteristics stemming from the e(tremely long tenor of the note, which aligns the interests of holders of the !ond to e)uity investors" T't' M$t$%0 Limite E0 U&it0 H5V5 T%'&0mi00i$&0, H5V5 A9*e0 T$ Me%,e O1e%'ti$&0>DJ Monday, '> Ee! +3'' @ow 8ones reported that #ata Motors ,imited9s units 5"V" #ransmissions ,td" and 5"V" A(les ,td"9s Boards have approved a merger of the two companies" 5"V" #ransmissions and 5"V" A(les currently operate out of #ata Motors9 factory at 8amshedpur in the eastern state of 8harkhand" #he merged company will !e renamed #M, @rivelines ,td" T't' M$t$%0 Limite E0 U&it Get0 O% e% F$% D<< Bu0e0 F%$m S1'i&>DJ #hursday, += 8an +3'' @ow 8ones reported that #ata Motors ,imited said its wholly owned unit in Spain has received a contract to supply a!out ?33 !uses over the ne(t three years" #ata 5ispano Motors *arrocera SA got the order from Spanish transportation group Avan4a 7roup, India9s !iggest auto maker !y revenue said" It didn9t disclose the contract value" #he unit will supply Intea premium and Intea low entry models for medium and su!ur!an routes, Herus model for long distances, and Area and 5a!it models for ur!an transportation"

T't' M$t$%0 Limite Tie0 U1 4it) U&ite B'&6 $+ I& i' F$% CV +i&'&(e>Bu0i&e00 St'& '%

Business Standard reported that #ata Motors ,imited has tied up with the :nited Bank of India to provide financing schemes on its commercial vehicles" Kith this tie up, the :nited Bank of India will offer loans for #ata Motors9 commercial vehicles to !oth

e(isting and new transport operators up to <3N of the cost of vehicle, for a tenure ranging up to ? years" Co collateral security will !e re)uired on funding up to IC0'3 lakhs for cases done under *redit 7uarantee Eund #rust for Micro and Small Enterprises $*7#SME%" #his facility will !e availa!le at all ',??? !ranches of the !ank and commercial vehicle dealerships of #ata Motors" T't' M$t$%0 Limite E0 S1'&i0) U&it Get0 O% e% T$ Su11*! 8< H!b%i Cit! Bu0e0> DJ Monday, +< Cov +3'3 @ow 8ones reported #ata Motors ,imited9s Spanish unit has got an order from Madrid pu!lic transport company, EM#, to supply '3 *C7 series hy!rid low floor city !uses" #ata 5ispano Motors *arrocera SA will deliver the !uses that run on compressed natural gas in +3'+" #he *ompany didn9t give the financial terms"

T't' M$t$%0 Limite Eriday, +D Cov +3'3

T$ Set U1 Se($&

Li,)t Ve)i(*e0 U&it I& B'&,*' e0)>DJ

@ow 8ones reported that #ata Motors ,imited plans to set up a second factory in Bangladesh in si( months under its esta!lished -oint venture with Bangladesh9s Citol Motors ,td", livemint"com reported, citing A!dul Matlu! Ahmed, *hairman of Citol Ciloy 7roup of Industries"

GB Aut$ I& T'*60 T$ Te'm 4it) T't' M$t$%0 Limite >Reute%0 #hursday, '' Cov +3'3 0euters reported that 7B Auto is negotiating with India9s #ata Motors ,imited to sell its vehicles in the Ara! most populous market"

FLe' i&, t)e Futu%eF '"#ata Motors is India9s largest automo!ile company"

+"It is the largest commercial vehicle manufacturer in India and +nd largest passenger car manufacturer" /"It is the ?th largest medium and heavy commercial vehicle manufacturer in the world" >"#he popular !rands of the company are #ata Indica, #ata Indigo, #ata Sumo and #ata Safari"

Qui(6 F'(t0 "

Eounder Fear of Esta!lishment Industry Business 7roup ,istings M its codes

8amshed-i #ata '<>? Automotive #he #ata 7roup BSE *ode& ?33?=3 CSE *ode& #E,*L M #A#AML#L0S CFSE *ode& ##M

*orporate Lffice

Bom!ay 5ouse +>, 5omi Mody Street Mum!ai >33 33', India #el"& [$<'% $++% ?D?D'D=D

Korks

8amshedpur, 1une, ,ucknow and @harwad

E mail

am\tatamotors"com r!c\telco"co"in $for international in)uiries%

Ke!site

www"tatamotors"com www"tata"comOtata]motors

P*'&t L$('ti$& " '"" J'm0)e 1u% #J)'%6)'& %& Esta!lished in'<>?, the 8amshedpur unit was the company9s first unit and is spread over an area of ;++ acres" It consists of two ma-or divisions #ruck Eactory M Engine Eactory" #he #ruck @ivision !oasts of two assem!ly lines" #he main assem!ly line, measuring ';3m in length has +3 work stations with a vehicle rolling out every ; mins" #he other line is dedicated to special purpose vehicles and for meeting the re)uirements of the Indian Army"

+" Pu&e #M')'%'0)t%'%& It was esta!lished in '<DD and has a 1roduction Engineering @ivision" #o cope with a diverse range of automo!iles, four assem!ly lines have !een esta!lished, one each for M*Vs and 5*Vs, ,*Vs, :tility vehicles and one for 1assenger *ars $Indica and Indigo%" /" Lu(6&$: #Utt'% P%' e0)%&

#his plant was esta!lished in '<<+ to meet the demand for *ommercial Vehicles in the Indian market" #he state of art plant is strongly !acked !y an Engineering 0esearch *entre and Service set up to support with latest technology and cater to the comple(ities of automo!ile manufacturing" #his plant is speciali4ed in the designing and manufacturing of a range of modern !uses which includes ,ow floor, :ltra ,ow floor M *C7 Buses" >5 P'&t&','% #Utt'%'6)'& %& #he plant !egan commercial production in August +33=" #he plant is spread over <?/ acres, of which //= acres is occupied !y the vendor park" #ata Motors plans to shift the entire production of its mini truck Ace and the passenger carrier variant of the vehicle, Magic, to :ttarakhand" #he company is esta!lishing two new plants at @harwad $6arnataka% and Sanand $7u-arat%" Eollowing a strategic alliance with Eiat in +33?, it has set up an industrial -oint venture with Eiat 7roup Automo!iles at 0an-angaon $Maharashtra%" P%$ u(ti$& ('1'(it!& #he segment wise production is as follows ,ocation #ype of vehicle manufactured 1roduction *apacity $,akhO1A% 1une 1assenger *ars $Indica, Indigo, Marina, Indica Vista% +"= ," 1une *ommercial Vehicles $M*Vs and 5*Vs, ,*Vs, :tility vehicles% +"? ," 8amshedpur #rucks M Special 1urpose Vehicles '"3; , ,ucknow Buses 3"D ," 1antnagar $:ttarakhand% Mini #ruck $Ace%, 1assenger *arrier $Magic% +"+?" , As the company under study has multiple locations, hereafter we have limited the scope of study to a single location which is 1assenger *ar Business :nit $1*B:%, 6 Block, 1une"

M'&',eme&t Hie%'%()! +$% PCBU, Pu&e5 Fu&(ti$&'* G%$u10 " #he various functional groups operating in #A#A Motors are & '" HR & #ata Motors has formali4ed selection, evaluation, and payroll processes" #he 50 function of #ata Motors consists of tracking e(isting employee data which includes personal histories, skills, capa!ilities, accomplishments and salary" #he department records !asic selection, training and development, capa!ilities and skills management, compensation planning records and other related activities" +" E&,i&ee%i&, & Re0e'%() Ce&t%e #ERC-" 0esearch provides the much needed inspiration for the !irth of new ideas" #he Engineering 0esearch *entre in 1une was setup in '<DD and is among the finest in the country" #he 0esearch *entre regularly upgrades components and aggregates" #he facilities in E0* includes& ^ Eacility for improving Engine 1erformance ^ 0educing Emissions ^ #est #racks ^ Safety ^ @esigning and Styling /" Te()&i('* & P%$ u(ti;it! Se%;i(e0 #T & PS-" #his group looks after the necessary technical assistance which is re)uired for carrying out smooth production in the plant" #he functions of this group includes setting up new assem!ly lines, seeking prospects for modifications in the current assem!ly lines, preparing standard operating procedure $SL1% and preparing #S 'D<>< documents"

>5 P%$ u(ti$& & #his group carries out production as per the production plan prepared !y production planning and control $11*%" 1assenger *ars produced in 1une plant includes India2s first indigenously !uilt Indian car GIndica2, Indigo, Indigo Marina" All the variants of these cars are produced here" 1roduction is also carried out for the !rand new model from #ata Motors sta!le GIndica Vista2, which has !een developed on a completely new platform" Maintenance group works in co ordination with the production team" Scheduled maintenance of the e)uipments is !eing done" ?" Ve& $% De;e*$1me&t Manufacturing a car re)uires a large no" of small and large ancillaries which cannot !e produced inhouse due to various constraints" 5ence some of these small parts are outsourced to various vendors" #he parts procured from these vendors should !e as per the )uality standards maintained !y #ata Motors" Vendor development group identifies the appropriate vendor and ensures proper )uality standards D" P%$ u(ti$& St%'te,!& #he 1assenger *ar @ivision in 969 !lock e(ecutes the entire process of car manufacture over five shops the engine shop, the transmission shop, press and !ody shops, paint shop and the trim and final assem!ly shop" #he shops are fully automated ensuring that there is minimal chance for error in the manufacturing processes" 1roduction Strategy !eing implemented in #ata Motors is GMake to Stock2" @emand forecast is done !y the marketing team and !ased on this forecast a production plan is prepared and then the production is done in accordance with this production plan" #ata Motors 1assenger *ars unit does not have warehouses in all the cities" #he cars produced are tested thoroughly and after successful completion of the testing are

stored in large free space availa!le in the company premises" Erom here these cars are despatched to the authorised dealers as per their order" Some special purpose vehicles such as utility vehicles for defence, mini am!ulance for hospitals are made as per the order" =" P*'&t L'!$ut& #he plant layout for 1assenger *ar Business :nit is as shown !elow& Lverview of *ar Manufacturing 1rocess& '" Machine Shop $#ransa(le%& E(haust Manifold, Intake Manifold, gear !o( casting, gears are manufactured in the machine shop" 5eat #reatment is also done for 7ears and other parts" #he plant is e)uipped with latest *C* machines" +" Engine Shop& Engine is considered to !e the heart of any automo!ile" Eive *s of engine $*ylinder 5ead, *rank Shaft, *am Shaft, *ylinder Block M *onnecting 0od% are received from the machine shop" *ylinder Block is then washed in washing machine with a cleaning li)uid" #hereafter these parts are assem!led with other engine components" Ln final assem!ly of engine testing is done on engine test !eds, where 01M, 1ower M #or)ue is checked" Cow the engine is ready to !e despatched to final assem!ly line" /" 1ress Shop & Various !ody panels re)uired for making the !ody of a car are made in this shop" *old rolled steel coils are cut into re)uired si4es, this operation is known as !lanking operation" Eleven num!er of skin panels are made in this press shop and rest of the small panel manufactured !y the vendors" #he !lanks which are cut in the !lanking line are stacked on one another" #hese stacks are placed at one end which further

moves on the press line" #he press line consists of hydraulic presses and pick and place ro!ots" #he hydraulic press presses the part into re)uired shape and the pick and place ro!ots lifts the part from one station and places on another station" Lne press line consists of > ? hydraulic presses and the final !ody panel is o!tained at the other end of the press line" >" Keld Shop & #he skin panel from the press shop and other panels from the vendors are welded in the weld shop in order to make the !ody of the car" Mainly spot welding operation is done in the weld shop" Keld shop consists of different su! process areas such as :nder Body Eront $:BE%, :nder Body 0ear $:B0%, :nder Body *omplete $:B*%, Main #ack ,ine, Main 0espot ,ine and Slat conveyor" #he -o! is moved from one station to another with the help of hoist and tackle or !y ,ift and *arry arrangement" ?" 1aint Shop & Erom weld Shop the car !ody is transferred to the paint shop" 5ere the surface cleaning operation is done in order to remove the dust particles and the oil deposition" After this the !ody passes through the *athode Electrode @eposition $*E@% !ath and then the final colour coat is applied to the car !ody as per the production plan" D" #rim cum *hasis Eitting $#*E%& Einal assem!ly of the car is done in #*E" #ransmission set up $gear !o( mounted on Engines% are received from the engine shop and painted !ody is received from the paint shop" Lther accessories such as seats, steering wheel, window glass, wheels, !uffers etc" are fitted in this section" *ompletely !uilt car comes out of the #*E which is ready for testing and inspection"

Qu'*it! M'&',eme&t " #ata Motors has led the Indian automo!ile industry9s anti pollution efforts !y introducing cleaner engines" It is the first Indian company introduce vehicles with Euro I and Euro II norms" #ata Motors is committed to ma(imi4ing customer satisfaction and strives to achieve the goal of e(cellence, !y continual improvement, through ongoing going design and development, manufacture and sale of relia!le, safe, cost effective, )uality products and services of international standards, using environmentally sustaina!le technologies, for improving levels of efficiency and productivity within its premises and ancillaries" #he 1*B: plant in 1une has o!tained ISL <33'&+333 certificate from Bureau Veritas Uuality International BVUI in 8uly +33/" 1*B: of #ata Motors has received the certificate of approval of its )uality management system $UMS% from Bureau Veritas *ertification $BV*%, for compliance with ISL O #S 'D<><&+33+" #S $#echnical Specification% 'D<>< defines the )uality management system re)uirements for the design and development, production, installation and service of automotive related products" And to control the )uality of its cars #A#A Motors applies various stringent measures during the pre manufacturing stage as well as post manufacturing stage" @uring the manufacturing stage regulars )uality audits are held !y the in house auditors in all the shops" All the process sheets, spot plans, control plan etc are displayed near the work place"

In the post manufacturing stage once the vehicle comes out of the assem!ly line it passes through stringent testing standards such as shower test, wheel !alancing etc" Ln successful completion of testing, the car is ready to !e despatched after 1re @elivery Inspection $1@I% E&;i%$&me&t'* M'&',eme&t " #A#A Motors reaffirms its commitment to minimi4e the adverse impacts of its products, operations and services on the environment" It strives to& ^ 0educe the emission levels of vehicles in full compliance of the regulatory norms M proactively work with the industry, 7overnment, other related industries M agencies to !ring in international practices" ^ :se of environmentally sustaina!le technologies M practices for prevention of pollution and the continual improvement in environment performance" ^ *onserve natural resources and energy !y minimi4ing their consumption M wastage" ^ #he unit is cerified with ISL '>33' & '<<D for Environmental Management System $EMS% 4$%6 Me'0u%eme&t " #ata Motors is the first Indian *ompany to introduce the Balance Scorecard System in automotive sector in India" #he scorecard incorporates SU@*M $Safety, Uuality, @elivery, *ost and Morale%" #he implementation of the Balanced Scorecard has ena!led greater focus on different elements of operational performance" @efining, cascading and communicating strategies across the organi4ation have !rought a!out transparency and alignment" Apart from Balance scorecard half yearly review of the employees is done on the !asis of attendance, kai4en at work place etc"

A suggestion scheme is started !y the management wherein any employee irrespective of his cadre can suggest an improvement in the work place and if this suggestion is approved !y the concerned authority the employee gets rewards points" Lnce an employee achieves a specified limit of points he gets a gift voucher" V'*ue E&,i&ee%i&, " *ontinuous efforts are made to reduce the cost of service in #A#A Motors" 0e-ection of input parts received from vendors is very closely monitored in all the departments" #he vendors are penalised if re-ection e(ceeds !eyond the defined limits" Apart from re-ection of regular parts some stations are identified as *#U $*ritical to Uuality% Stage" Special care is taken of the components added on these stations" Any negligence on these stations may lead to a customer claiming replacement of the vehicle" Value Engineering team also works for searching energy efficient alternatives, methods and eco friendly technology, !y adopting effective maintenance M work" #he comsumption of electricity, water, ,17, *ompressed air etc is continuously monitored and steps are taken to reduce the consumption of these resources" M'te%i'* M'&',eme&t " #ata Motors uses SA1 >"D* Material Management $MM% module for& ^ materials planning and control, ^ purchasing, ^ goods receiving, ^ inventory management, ^ invoice verification"

Various spare parts for the machines, and other necessary e)uipments are ordered !y the maintenance and # M 1S departments through central maintenance shop and purchase department" Uuotations are invited from the interested parties and after the negotiations one party is finalised to procure the material" A(Cui0iti$& $+ B%iti0) I($&0"

Ln 8une 3+, +33;, India !ased #ata Motors completed the ac)uisition of the 8aguar and ,and 0over $8,0% units from the :S !ased auto manufacturer Eord Motor *ompany $Eord% for :SS +"/ !illion, on a cash free de!t free !asis" 8,0 was a part of Eord2s 1remier Automotive 7roup $1A7% and were considered to !e British icons" 8aguar was involved in the manufacture of high end lu(ury cars, while ,and 0over manufactured high end S:Vs" Eorming a part of the purchase consideration were 8,02s manufacturing plants, two advanced design centers in the :6, national sales companies spanning across the world, and also licenses of all necessary intellectual property rights" #ata Motors had several ma-or international ac)uisitions to its credit" It had ac)uired #etley, South 6orea !ased @aewoo2s commercial vehicle unit, and Anglo @utch Steel maker *orus" #ata Motors2 long term strategy included

consolidating its position in the domestic Indian market and e(panding its international footprint !y leveraging on in house capa!ilities and products and also through ac)uisitions and strategic colla!orations Analysts were of the view that the ac)uisition of 8aguar and ,and 0over, which had a glo!al presence and a repertoire of well esta!lished !rands, would help #ata Motors !ecome one of the ma-or players in the glo!al automo!ile industry" Ln ac)uiring 8,0, 0attan #ata, *hairman, #ata 7roup, said, QKe are very pleased at the prospect of 8aguar and ,and 0over !eing a significant part of our automotive !usiness" Ke have enormous respect for the two !rands and will endeavor to preserve and !uild on their heritage and competitiveness, keeping their identities intact" It aim to support their growth, while holding true to our principles of allowing the management and employees to !ring their e(perience and e(pertise to !ear on the growth of the !usiness"R Eord had !ought 8aguar for :SS +"? !illion in '<;< and ,and 0over for :SS +"= !illion in +333" 5owever, over the years, the company found that it was failing to derive the desired !enefits from these ac)uisitions" Eord Motors *ompany $Eord% is a leading automaker and the third largest multinational corporation in the automo!ile industry" #he company ac)uired 8aguar from British ,eyland ,imited in '<;< for :SS +"? !illion"After Eord ac)uired 8aguar, adverse economic conditions worldwide in the '<<3s led to tough market conditions and a decrease in the demand for lu(ury cars" #he sales of 8aguar in many markets declined, !ut in some markets like 8apan, 7ermany, and Italy, it still recorded high sales" In March '<<<, Eord esta!lished the 1A7 with Aston Martin, 8aguar, and ,incoln" @uring the year, Volvo was ac)uired for :SS D">? !illion, and it also !ecame a part of the 1A7" F$% Se**0 J',u'% '& L'& R$;e% In Septem!er +33D, after Allan Mulally $Mulally% assumed charge as the 1resident and *EL of Eord, he decided to dismantle the 1A7" In March +33=, Eord sold the Aston

Martin sports car unit for :SS </' million" In 8une +33=, Eord announced that it was considering selling 8,0" T)e De'* Ln March +D, +33;, #ata Motors entered into an agreement with Eord for the purchase of 8aguar and ,and 0over" #ata Motors agreed to pay :SS +"/ !illion in cash for a '33N ac)uisition of the !usinesses of 8,0" As part of the ac)uisition, #ata Motors did not inherit any of the de!t lia!ilities of 8,0 the ac)uisition was totally de!t free" T)e Be&e+it0 #ata Motors was interested in ac)uiring 8,0 as it would reduce the company2s dependence on the Indian market, which accounted for <3N of its sales" #he company was of the view that the ac)uisition would provide it with the opportunity to spread its !usiness across different geographies and across different customer segments Morgan Stanley reported that 8,02s ac)uisition appeared negative for #ata Motors, as it had increased the earnings volatility, given the difficult economic conditions in the key markets of 8,0 including the :S and Europe" Moreover, #ata Motors had to incur a huge capital e(penditure as it planned to invest another :SS ' !illion in 8,0" #his was in addition to the :SS +"/ !illion it had spent on the ac)uisition" #ata Motors had also incurred huge capital e(penditure on the development and launch of the small car Cano and on a -oint venture with Eiat to manufacture some of the company2s vehicles in India and #hailand" I&t%$ u(ti$& $+ t$1i( FORECASTING METHODS & In this section we provide !rief descriptions of forecasting methods and their application" @etailed descriptions are provided in forecasting te(t!ooks such as Makridakis, Kheelwright, and 5yndman $'<<;%"

Eorecasting methods and the relationships !etween them are shown in starting with the primary distinction !etween methods that rely on -udgement and those that re)uire )uantitative data" Met)$ 0 B'0e $& Ju ,me&t & :naided -udgment It is common practice to ask e(perts what will happen" #his is a good procedure to use when ^ e(perts are un!iased ^ large changes are unlikely ^ relationships are well understood !y e(perts $e"g", demand goes up when prices go down% ^ e(perts possess privileged information ^ e(perts receive accurate and well summari4ed feed!ack a!out their forecasts" '" :nfortunately, unaided -udgement is often used when the a!ove conditions do not hold" 7reen and Armstrong $+33?a%, for e(ample, found that e(perts were no !etter than chance when they use their unaided -udgement to forecast decisions made !y people in conflict situations" If this surprises you, think of the ease with which producers of current affairs programmes seem a!le to assem!le plausi!le e(perts who confidently e(press +" Eorecasts on how a situation will turn out, or how things would have turned out had they followed another approach" P%e i(ti$& m'%6et0 "

1rediction markets, also known as !etting markets, information markets, and futures markets have a long history" Between the end of the :S *ivil Kar and Korld Kar II, well organi4ed markets for !etting on presidential elections correctly picked the winner in every case !ut '<'D. also, they were highly successful in identifying those elections that would !e very close $0hode and Strumpf, +33>%" More recently, in the four elections prior to +33>, the Iowa Electronic Markets $IEM% has performed !etter than polls in predicting the margin of victory for the presidential election winner" In the week leading up to the election, these markets predicted vote shares for the @emocratic and 0epu!lican candidates with an average a!solute error of around '"? percentage points" #he final 7allup poll, !y comparison, yielded forecasts that erred !y +"' percentage points $Kolfers and Vit4ewit4, +33>%" @espite numerous attempts since the '</3s, no methods have !een found to !e superior to markets when forecasting prices" 5owever, few people seem to !elieve this as they pay handsomely for advice a!out what to invest in" Some commercial organisations provide internet markets and software that to allow participants to !et !y trading contracts" Markets can !e used to market to predict such things as the percentage of :S households with an 5@#V !y the end of a given time period" *onfidential !etting markets can also !e set up within firms to !et on such things as the sales growth of a new product" Some unpu!lished studies suggest that they can produce accurate sales forecasts when used within companies" 5owever, there are no empirical studies that compare forecasts from prediction markets with those from traditional groups or from other methods" De*1)i " #he @elphi techni)ue was developed at 0AC@ *orporation in the '<?3s to help capture the knowledge of diverse e(perts while avoiding the disadvantages of traditional group meetings" #he latter include !ullying and time wasting" #o forecast with @elphi the administrator should recruit !etween five and twenty suita!le e(perts and poll them for their forecasts and reasons" #he administrator then

provides the e(perts with anonymous summary statistics on the forecasts, and e(perts2 reasons for their forecasts" #he process is repeated until there is little change in forecasts !etween rounds two or three rounds are usually sufficient" #he @elphi forecast is the median or mode of the e(perts2 final forecasts" Software to guide you through the procedure is availa!le at forecastingprinciples"com" 0owe and Kright $+33'% provide evidence on the accuracy of @elphi forecasts" #he forecasts from @elphi groups are su!stantially more accurate than forecasts from unaided -udgement and traditional groups, and are somewhat more accurate than com!ined forecasts from unaided -udgement" St%u(tu%e '&'*$,ie0 " #he outcomes of similar situations from the past $analogies% may help a marketer to forecast the outcome of a new $target% situation" Eor e(ample, the introduction of new products in :S markets can provide analogies for the outcomes of the su!se)uent release of similar products in other countries" 1eople often use analogies to make forecasts, !ut they do not do so in a structured manner" Eor e(ample, they might search for an analogy that suits their prior !eliefs or they might stop searching when they identify one analogy" #he structured analogies method uses a formal process to overcome !iased and inefficient use of information from analogous situations" #o use the structured analogies method, an administrator prepares a description of the target situation and selects e(perts who have knowledge of analogous situations. prefera!ly direct e(perience" #he e(perts identify and descri!e analogous situations, rate their similarity to the target situation, and match the outcomes of their analogies with potential outcomes in the target situation" #he administrator then derives forecasts from the information the e(perts provided on their most similar analogies"

#here has !een little research on forecasting using analogies, !ut results are promising" 7reen and Armstrong $+33?!% found that structured analogies were more accurate than unaided -udgment in forecasting decisions in eight conflicts" Eurther information on structured analogies is availa!le at conflictforecasting"com" G'me t)e$%! " 7ame theory has !een touted in te(t!ooks and research papers as a way to o!tain !etter forecasts in situations involving negotiations or other conflicts" A 7oogle search for Qgame theoryR and QforecastingR or QpredictionR identified '>=,/33 sites" @espite a vast research effort, there is no research that directly tests the forecasting a!ility of game theory" 5owever, 7reen $+33+, +33?% tested the a!ility of game theorists, who were urged to use game theory in predicting the outcome of eight real $!ut disguised% situations" In that study, game theorists were no more accurate than university students" Ju ,me&t'* De($m1$0iti$& " #he !asic idea !ehind -udgemental decomposition is to divide the forecasting pro!lem into parts that are easier to forecast than the whole" Lne then forecasts the parts individually, using methods appropriate to each part" Einally, the parts are com!ined to o!tain a forecast" Lne approach is to !reak the pro!lem down into multiplicative components" Eor e(ample, to forecast sales for a !rand, one can forecast industry sales volume, market share, and selling price per unit" #hen reassem!le the pro!lem !y multiplying the components together" Empirical results indicate that, in general, forecasts from decomposition are more accurate than those from a glo!al approach $Mac7regor +33'%" In particular, decomposition is more accurate where there is much uncertainty a!out the aggregate forecast and where large num!ers $over one million% are involved" Ju ,me&t'* b$$t0t%'11i&, "

8udgmental !ootstrapping converts su!-ective -udgments into structured procedures" E(perts are asked what information they use to make predictions a!out a class of situations" #hey are then asked to make predictions for diverse cases, which can !e real or hypothetical" Eor e(ample, they might forecast ne(t year2s sales for alternative designs for a new product" #he resulting data are then converted to a model !y estimating a regression e)uation relating the -udgmental forecasts to the information used !y the forecasters" #he general proposition seems preposterous" It is that the model of the man will !e more accurate than the man" #he reason is that the model applies the man2s rules more consistently" 8udgemental !ootstrapping models are most useful for repetitive comple( forecasting pro!lems where data on the dependent varia!le are not availa!le $e"g" demand for a new telecommunications device% or data does not vary sufficiently for the estimation of an econometric model" Lnce developed, -udgmental !ootstrapping models provide a low cost procedure for making forecasts" #he review in Armstrong $+33'a% found that -udgmental !ootstrapping was more accurate than unaided -udgment $the normal method for these situations% in ; of the '' comparisons, with two tests showing no difference, and one showing a small loss" #he typical error reduction was a!out DN" 8udgmental !ootstrapping also allows e(perts to see how they are weighting various factors" #his knowledge can help to improve -udgmental forecasting" Eor e(ample, with respect to personnel selection, !ootstrapping might reveal that some factors, such as height, weight or looks, are used, even though they are not relevant for the -o!" Bootstrapping also allows for estimating effects of changing key varia!les when historical data are not sufficient to allow for estimates" E91e%t 0!0tem0 " As the name implies, e(pert systems are structured representations of the rules e(perts use to make predictions or diagnoses" Eor e(ample, Gif local household incomes are in the !ottom )uartile, then do not supply premium !rands2" #he forecast

is implicit in the foregoing conditional action statement& i"e", premium !rands are unlikely to make an accepta!le return in the locale" 0ules are often created from protocols, where!y forecasters talk a!out what they are doing while making forecasts" Khere empirical estimates of relationships from structured analysis such as econometric studies are availa!le, e(pert systems should use that information" E(pert opinion, con-oint analysis, and !ootstrapping can also aid in the development of e(pert systems" E(pert systems forecasting involves identifying forecasting rules used !y e(perts and rules learned from empirical research" Lne should aim for simplicity and completeness in the resulting system, and the system should e(plain forecasts to users" @eveloping an e(pert system is e(pensive and so the method will only !e of interest in situations where many forecasts of a similar kind are re)uired" E(pert systems are feasi!le where pro!lems are sufficiently well structured for rules to !e identified"

*ollopy, Adya, and Armstrong $+33'%, in their review, found that e(pert systems forecasts are more accurate than those from unaided -udgement" #his conclusion, however, was !ased on only a small num!er of studies" Simu*'te i&te%'(ti$& " Simulated interaction is a form of role playing for predicting decisions !y people who are interacting with others" It is especially useful when the situation involves conflict" Eor e(ample, one might wish to forecast how !est to secure an e(clusive distri!ution arrangement with a ma-or supplier" #o use simulated interaction, an administrator prepares a description of the target situation, descri!es the main protagonists2 roles, and provides a list of possi!le decisions" 0ole players adopt a role and read a!out the situation" #hey then improvise realistic interactions with the other role players until they reach a decision. for e(ample

to sign a trial one year e(clusive distri!ution agreement" #he role players2 decisions are used to make the forecast" :sing eight conflict situations, 7reen $+33?% found that forecasts from simulated interactions were su!stantially more accurate than can !e o!tained from unaided -udgement" Simulated interaction can also help to maintain secrecy" Information on simulated interaction is availa!le from conflictforecasting"com" I&te&ti$&0 '& e91e(t'ti$&0 0u%;e!0 " Kith intentions surveys, people are asked how they intend to !ehave in specified situations" In a similar manner, an e(pectations survey asks people how they e(pect to !ehave" E(pectations differ from intentions !ecause people reali4e that unintended things happen" Eor e(ample, if you were asked whether you intended to visit the dentist in the ne(t si( months you might say no" 5owever, you reali4e that a pro!lem might arise that would necessitate such a visit, so your e(pectations would !e that the event had a pro!a!ility greater than 4ero" #his distinction was proposed and tested !y 8uster $'<DD% and its evidence on its importance was summarised !y Morwit4 $+33'%" E(pectations and intentions can !e o!tained using pro!a!ility scales such as 8uster2s eleven point scale" #he scale should have descriptions such as 3 J GCo chance, or almost no chance $' in '33%2 to '3 J G*ertain, or practically certain $<< in '33%2" #o forecast demand using a survey of potential consumers, the administrator should prepare an accurate and comprehensive description of the product and conditions of sale" 5e should select a representative sample of the population of interest and develop )uestions to elicit e(pectations from respondents" Bias in responses should !e assessed if possi!le and the data ad-usted accordingly" #he !ehaviour of the population is forecast !y aggregating the survey responses"

:seful methods have !een developed for selecting samples, o!taining high response rates, compensating for non response !ias, and reducing response error" @illman $+333% provides advice for designing surveys" 0esponse error $where respondent information is not accurately reported% is pro!a!ly the largest component of total error for marketing pro!lems" E(pectations are most likely to !e useful in cases where survey respondents have previously indulged in the !ehaviour of interest, for e(ample visited a theme park" Lther conditions favouring the use of e(pectations surveys are& $'% responses can !e o!tained $+% the !ehaviour is important to the respondent $/% the !ehaviour is planned $>% the plan is reported correctly $?% the respondent is a!le to fulfil the plan $D% the plan is unlikely to change $Morwit4 +33'%" Intentions and e(pectations surveys are especially useful when demand data are not availa!le, such as for new product forecasts" Lne popular type of survey, focus groups, violates five important principles and they should not, therefore, !e used in forecasting" Eirst, focus groups are seldom representative of the population of interest" Second, the responses of each participant are influenced !y the e(pressed opinions of others in the group" #hird, a focus group is a small sample samples for intentions or e(pectations surveys typically include several hundred people whereas a focus group will consist of !etween si( and ten individuals" Eourth, )uestions for the participants are generally not well structured" And fifth, summaries of focus groups responses are often su!-ect to !ias" #here is no evidence to show that focus groups provide useful forecasts"

C$&G$i&t '&'*!0i0 " By surveying consumers a!out their preferences for alternative product designs in a structured way, it is possi!le to infer how different features will influence demand" 1otential customers might !e presented with a series of perhaps +3 pairs of offerings" Eor e(ample, various features of a personal digital assistant such as price, weight, !attery life, screen clarity and memory could !e varied su!stantially such that the features do not correlate with one another" #he potential customer is thus forced to make trade offs among various features !y choosing one of each pair of offerings in a way that is representative of how they would choose in the marketplace" #he resulting data can !e analysed !y regressing respondents2 choices against the product features" #he method, which is similar to !ootstrapping, is called Gcon-oint analysis2 !ecause respondents consider the product features -ointly" In general, the accuracy of forecasts from con-oint analysis is likely to increase with increasing realism of the choices presented to respondents $Kittink and Bergesteun +33'%" #he method is !ased on sound principles, such as using e(perimental design and soliciting independent intentions from a sample of potential customers" :nfortunately however, there do not appear to !e studies that compare con-oint analysis forecasts with forecasts from other reasona!le methods" Met)$ 0 %eCui%i&, Cu'&tit'ti;e 't' E9t%'1$*'ti$& E(trapolation methods use historical data on that which one wishes to forecast" E(ponential smoothing is the most popular and cost effective of the statistical e(trapolation methods" It implements the principle that recent data should !e weighted more heavily and Gsmoothes2 out cyclical fluctuations to forecast the trend" #o use e(ponential smoothing to e(trapolate, the administrator should first clean and deseasonalise the data, and select reasona!le smoothing factors" #he administrator then calculates an average and trend from the data and uses these to derive a forecast $Makridakis, Kheelwright M 5yndman '<<;%"

Statistical e(trapolations are cost effective when forecasts are needed for each of hundreds of inventory items" #hey are also useful where forecasters are !iased or ignorant of the situation $Armstrong +33'!%" Allow for seasonality when using )uarterly, monthly, or daily data" Most firms do this $@alrymple '<;=%" Seasonality ad-ustments led to su!stantial gains in accuracy in the large scale study of time series !y Makridakis et al" $'<;>%" #hey should !e dampened !ecause seasonal ad-ustment programs tend to over ad-ust for seasonality $Miller and Killiams +33>%. this follows the principle of !eing conservative in the face of uncertainty" Software for calculating damped seasonal ad-ustment factors is availa!le at forecastingprinciples"com" 0etail scanner technology provides relia!le and up to date data for e(trapolating sales of e(isting products" As a result, forecast accuracy should improve, especially !ecause error in assessing the current situation is reduced" Cot knowing where you are starting from is often a ma-or source of error in predicting future values" Qu'&tit'ti;e '&'*$,ie0 " E(perts can identify situations that are analogous to a given situation" #hese can !e used to e(trapolate the outcome of a target situation" Eor e(ample, to assess the loss in sales when the patent protection for a drug is removed, one might e(amine the historical pattern of sales for analogous drugs" #o forecast using )uantitative analogies, ask e(perts to identify situations that are analogous to the target situation and for which data are availa!le" If the analogous data provides information a!out the future of the target situation, such as per capita ticket sales for a play that is touring from city to city, forecast !y calculating averages" If not, construct one model using target situation data and another using analogous data" *om!ine the parameters of the models, and forecast with the com!ined model"

Khile @uncan et al" $+33'% provide evidence that accuracy can !e improved !y using data from analogous time series we found no other evidence on the relative accuracy of )uantitative analogies forecasts" Ru*e>b'0e +$%e('0ti&," 0ule !ased forecasting $0BE% is a type of e(pert system that allows one to integrate managers2 knowledge a!out the domain with time series data in a structured and ine(pensive way" Eor e(ample, in many cases a useful guideline is that trends should !e e(trapolated only when they agree with managers2 prior e(pectations" Khen the causal forces are contrary to the trend in the historical series, forecast errors tend to !e large $Armstrong and *ollopy '<</%" Although such pro!lems occur only in a small percentage of cases, their effects are serious" #o apply 0BE, one must first identify features of the series using statistical analysis, inspection, and domain knowledge $including causal forces%" #he rules are then used to ad-ust data, and to estimate short and long range models" 0BE forecasts are a !lend of the short and long range model forecasts" 0BE is most useful when su!stantive domain knowledge is availa!le, patterns are discerna!le in the series, trends are strong, and forecasts are needed for long hori4ons" :nder such conditions, errors for rule !ased forecasts are su!stantially less than those for com!ined forecasts $Armstrong, Adya, and *ollopy +33'%" In cases where the conditions were not met, forecast accuracy is not harmed" Information on rule !ased forecasting is availa!le from the special interest group pages at forecastingprinciples"com" Neu%'* &et0 " Ceural networks are computer intensive methods that use decision processes analogous to those of the human !rain" ,ike the !rain, they have the capa!ility of learning as patterns change and updating their parameter estimates" 5owever, much

data is needed in order to estimate neural network models and to reduce the risk of over fitting the data $Adya and *ollopy '<<;%" #here is some evidence that neural network models can produce forecasts that are more accurate than those from other methods $Adya and *ollopy '<<;%" Khile this is encouraging, our current advice is to avoid neural networks !ecause the method ignores prior knowledge and !ecause the results are difficult to understand" Information on neural networks is availa!le from the special interest group pages on the forecastingprinciples"com site" 0eviews of commercial software are availa!le from the same site" D't' mi&i&, " @ata mining uses sophisticated statistical analyses to identify relationships" It is a popular approach" Eor e(ample, an August +33? 7oogle search using the term Qdata miningR found over seven million sites" Khen we included either QpredictionR or QforecastingR in the search, 7oogle found over ?D3,333 sites" @ata mining ignores theory and prior knowledge in a search for patterns" @espite am!itious claims and much research effort, we are not aware of evidence that data mining techni)ues provide !enefits for forecasting" In their e(tensive search and reanalysis of data from pu!lished research, 6eogh and 6asetty $+33+% found little evidence for that data mining is useful" A large part of this, they said, was due to the fact that few studies have used a proper design to assess data mining" #o find out more a!out data mining, see the data mine"com" C'u0'* m$ e*0 " *ausal models are !ased on prior knowledge and theory" #ime series regression and cross sectional regression are commonly used for estimating model parameters or coefficients" #hese models allow one to e(amine the effects of marketing activity, such as a change in price, as well as key aspects of the market, thus providing information for contingency planning"

#o develop causal models, one needs to select causal varia!les !y using theory and prior knowledge" #he key is to identify important varia!les, the direction of their effects, and any constraints" Lne should aim for a relatively simple model and use all availa!le data to estimate it $Allen and Eildes +33'%" Surprisingly, sophisticated statistical procedures have not led to more accurate forecasts" In fact, crude estimates are often sufficient to provide accurate forecasts when using cross sectional data $@awes and *orrigan '<=>. @ana and @awes +33?%" Statisticians have developed sophisticated procedures for analy4ing how well models fit historical data" Such procedures have, however, !een on little value to forecasters" Measures of fit $such as 0+ or the standard error of the estimate of the model% have little relationship with forecast accuracy and they should therefore !e avoided" Instead, holdout data should !e used to assess the predictive validity of a model" #his conclusion is !ased on findings from many studies with time series data $Armstrong, +33'c%" Statistical fit does relate to forecast accuracy for cross sectional data, although the relationship is tenuous" *ausal models are most useful when $'% strong causal relationships are e(pected, $+% the direction of the relationship is known, $/% causal relationships are known or they can !e estimated, $>% large changes are e(pected to occur in the causal varia!les over the forecast hori4on, and $?% changes in the causal varia!les can !e accurately forecast or controlled, especially with respect to their direction" 0eviews of commercial software that can !e used to develop causal models are provided at the forecastingprinciples"com site" Se,me&t'ti$& " Segmentation involves !reaking a pro!lem down into independent parts, using data for each part to make a forecast, and then com!ining the parts" Eor e(ample, a company could forecast sales of wool carpet separately for each climatic region, and then add the forecasts"

#o forecast using segmentation, one must first identify important causal varia!les that can !e used to define the segments, and their priorities" Eor e(ample, age and pro(imity to a !each are !oth likely to influence demand for surf!oards, !ut the latter varia!le should have the higher priority. therefore, segment !y pro(imity, then age" Eor each varia!le, cut points are determined such that the stronger the relationship with dependent varia!le, the greater the non linearity in the relationship, and the more data that are availa!le the more cut points should !e used" Eorecasts are made for the population of each segment and the !ehaviour of the population within the segment using the !est method or methods given the information availa!le" 1opulation and !ehaviour forecasts are com!ined for each segment and the segment forecasts summed" Khere there is interaction !etween varia!les, the effect of varia!les on demand are non linear, and the effects of some varia!les can dominate others, segmentation has advantages over regression analysis $Armstrong '<;?%" Segmentation is most useful when there are !enefits from compensating errors" #his is likely to occur where the segments are independent and are of roughly e)ual importance, and when information on each segment is good" Segmentation !ased on a priori selection of varia!les offers the possi!ility of improved accuracy at a low risk" @angerfield and Morris $'<<+%, for e(ample, found that !ottom up forecasting, a simple application of segmentation, was more accurate than top down forecasts for =>N of the '<+ monthly time series tested" In some situations changes in segments are dependent on changes in other segments" Eor e(ample, li!eralisation of gam!ling laws in city A might result in decreased gam!ling revenue in already li!eral cities B, *, and @" Efforts at dependent segmentation have gone under the names of microsimulation, world dynamics, and system dynamics" Khile the simulation approach seems reasona!le, the models are comple( and hence there are many opportunities for -udgemental errors and !iases" Armstrong $'<;?% found no evidence that these simulation approaches provide valid forecasts and we have found no reason to change this assessment"

SELECTING METHODS " #o use a new forecasting method, one must at least know a!out it" #he traditional methods of gaining knowledge, such as attending courses, reading te(t!ooks, and using consultants, are !eing augmented !y the Internet" #he latest methods can !e fully disclosed on we! sites and they can !e incorporated into software packages" Eor e(ample, the complete set of rules for rule !ased forecasting is availa!le on the forecastingprinciples"com we!site" C)$$0i&, ' met)$ b'0e $& e;i e&(e *hoosing the !est forecasting method for any particular situation is not a simple task, and sometimes more than one method may !e appropriate" Ke used empirical findings and e(pert opinions to develop the flowchart for selecting methods shown in Eigure /" #he first issue the analyst needs to address is whether the data are sufficient to permit )uantitative analysis" If not, -udgmental procedures are called for" Some cases call for !oth approaches" Eor -udgmental procedures, the first issue is whether the situation involves small or large changes" Eor small changes, where no policy analysis is needed and where one gets good feed!ack such as with the num!er of diners that will come to a restaurant at a given time unaided -udgement can work well" But if the feed!ack is poor, it helps to use many e(perts as with @elphi or prediction markets" Khere the analyst wishes to predict the effects of different policies, he must determine whether predictions from e(perts or from participants such as potential customers would !e most appropriate" If it is inappropriate to ask potential customers for predictions, -udgemental !ootstrapping or decomposition will help to use e(perts2 knowledge effectively" Khere the conditions are met for con-oint analysis, it may !e possi!le to o!tain useful forecasts from surveys of potential customers" Eor cases where large changes are e(pected !ut policy analysis is not re)uired, one should consider e(pectations or intentions surveys"

Khere large changes are e(pected and only a few decision makers are involved, competitors or suppliers for e(ample, simulated interaction is the !est method" If e(perts are a!le think of several analogous situations, structured analogies is also likely to provide useful forecasts" If one has a lot of time series data, the analyst should determine whether there is knowledge a!out what empirical relationships might e(ist, and their magnitudes" Eor e(ample, in most situations there is e(cellent prior knowledge a!out price elasticities $#ellis '<;;%" If empirical knowledge of relationships is availa!le, use causal models" In addition, one should consider using domain knowledge, such as a manager9s knowledge a!out the situation" E(trapolation or neural networks may !e useful in situations where large changes are unlikely" Eor time series situations where one lacks causal knowledge, e(trapolation is appropriate" If there is no prior knowledge a!out relationships, !ut domain knowledge e(ists $such as if a manager knows that sales will increase due to advertising of a price reduction%, use rule !ased forecasting" In situations where one lacks time series data and knowledge a!out relationships, )uantitative analogies are appropriate" In the presence of domain knowledge or where policy analysis is needed, e(pert systems can !e used" #he conditions may not always !e clear" In such cases, one should use two or more relevant methods, and then com!ine the forecasts" C$mbi&i&, +$%e('0t0 " *om!ined forecasts improve accuracy and reduce the likelihood of large errors" In a meta analysis, Armstrong found an average error reduction of a!out '+N across /3 comparisons" #hey are especially useful when the component methods differ su!stantially from one another" Eor e(ample, Blatt!erg and 5och $'<<3% o!tained improved sales forecast !y averaging managers2 -udgmental forecasts and forecasts from a )uantitative model" *onsidera!le research suggests that, lacking well

structured domain knowledge, unweighted averages are typically as accurate as other weighting schemes $Armstrong, +33'd%" 8udgmental and statistical methods should !e integrated" Armstrong and *ollopy $'<<;% summari4e research in this area" Integration is effective when -udgments are collected in a systematic manner and then used as inputs to the )uantitative models, rather than simply used as ad-ustments to the outputs" :nfortunately, the latter procedure is commonly used" In the light of the a!ove guidelines, we now e(amine the needs for the types of marketing forecasts that we identified in Eigure '" FORECASTING MAR3ET SIHE " Market si4e is influenced !y environmental factors such as economic conditions" Eor e(ample, the demand for alcoholic !everages will !e influenced !y such things as the si4e and age distri!ution of the population, distri!ution of disposa!le income, pu!lication of health research findings, laws, culture, and religious !eliefs" #o forecast market si4e, one can use @elphi, intentions or e(pectations, e(trapolation, causal methods, and segmentation" Market forecasts are often !ased on -udgement, particularly for relatively new or rapidly changing markets" 7iven the risk of !ias from unaided -udgement, we recommend using structured methods" Eor e(ample, the @elphi techni)ue could !e used to answer )uestions a!out market si4e such as& GBy what percentage will the wine market grow over the ne(t '3 years_2 or GKhat proportion of households will su!scri!e to movies on demand over telephone or ca!le lines_2 Khen considering forecasts of market si4e, one can use either time series e(trapolation methods or causal methods" #ime series e(trapolation is ine(pensive" *ausal methods such as econometrics, while more e(pensive, are e(pected to !e the most accurate method when large changes are e(pected"

Lrgani4ations should use systematic procedures for scanning the environment to !e sure that they do not overlook varia!les that may have a large impact on their market" 1eriodic !rainstorming with a diverse group of e(perts should !e sufficient to identify which varia!les to track"

FORECASTING DECISION MA3ERSI ACTIONS #he development of a successful marketing strategy sometimes depends upon having good forecasts of the actions and reactions of competitors who might have an influence on market share" Eor e(ample, if you lower your price, will competitors follow_ A variety of -udgmental methods can !e used to forecast competitive actions" #hese include& ^ e(pert opinion $ask e(perts who know a!out this and similar markets%. ^ intentions $ask the competitors how they would respond in a variety of situations%. ^ structured analogies. ^ simulated interaction $formal acting out of the interactions among decision makers for the firm and its competitors%. and ^ e(perimentation $trying the strategy on a small scale and monitoring the results%" It may also !e important to forecast the actions of suppliers, distri!utors, colla!orators, governments, and people within one2s firm in order to develop a successful marketing strategy" Sometimes one may need to forecast the actions of other interest groups, such as Gconcerned minorities"2 Eor e(ample, how would an environmental group react to the introduction of plastic packaging !y a large fast food restaurant chain_ #echni)ues similar to those for forecasting competitors2 actions are likely to !e useful"

*ompany plans typically re)uire the cooperation of many people" An organi4ation may decide to implement a given marketing strategy, !ut will it !e a!le to carry out the plan_ Sometimes an organi4ation fails to implement a plan !ecause of a lack of resources, misunderstanding, opposition !y key stakeholders, or a lack of commitment !y key people" #he need to forecast organi4ational !ehaviour is sometimes overlooked and can !e important" Better forecasting here might lead to more realistic plans and to plans that are easier to implement" Surveys of key decision makers in an organi4ation may help to assess whether a given strategy can !e implemented successfully" Simulated interactions can provide useful forecasts in such situations" It is also important to predict the effects of the various actions" Lne can make such forecasts !y using e(pert -udgment, -udgmental !ootstrapping, or econometric methods"

FORECASTING MAR3ET SHARE If one e(pects the same causal forces and the same types of actions to persist into the future, a simple e(trapolation of market share, such as from a naive no change model, is usually sufficient" Khen large changes are e(pected, one should draw upon methods that incorporate causal reasoning" If the anticipated changes are unusual, -udgmental methods such as @elphi would !e appropriate" If the changes are e(pected to !e large, the causes are well understood, and if one lacks historical data, then -udgmental !ootstrapping can !e used to improve forecasting" #he conditions for using econometric models for forecasting market share are descri!ed !y Brodie et al" $+33'%" Econometric methods should !e used when $'% the effects of current marketing activity are strong relative to the residual effects of previous activity. $+% there are enough data and there is sufficient varia!ility in the data. $/% models can allow for different responses !y different !rands. $>% models can

!e estimated at store level. $?% competitors actions can !e forecast" Methods for predicting competitors2 actions are identified in the previous section" #here are many ways to formulate market share models and much prior research e(ists to help specify them" Eor e(ample, a meta analysis !y #ellis $'<;;% of price elasticities of demand for /D= !randed products, estimated using econometric models, reported a mean value of +"?" 5amilton et al"2s $'<<=% analysis of >3D !rand price elasticities also reported a value of +"?" Estimates can also !e made a!out other measures of market activity, such as advertising elasticity"

FORECASTING DEMAND DIRECTLY " By direct forecasts, we mean those that focus only on the last !o( in our Eigure '" Ke first descri!e methods that rely on -udgment" #he most important application here is to new products" Eollowing that we descri!e methods that can !e used when )uantitative data are availa!le" #he choice of a forecasting method to estimate customer demand for a product depends on what stage it has reached in its life cycle" As a product moves from the concept phase to prototype, test market, introduction, growth, maturation, and declining stages, the relative value of the alternative forecasting methods changes" In general, the movement is from purely -udgmental approaches to )uantitative models" Surveys of consumers2 intentions and e(pectations are often used for new product forecasts" Intentions to purchase new products are complicated !ecause potential customers may not !e sufficiently familiar with the proposed product and !ecause the various features of the product affect one another $e"g", price, )uality and distri!ution channel%" #his suggests the need to prepare a good description of the proposed product" A product description may involve prototypes, visual aids, product clinics or la!oratory tests" #hey can also improve forecasts even when you already have other data $Armstrong, Morwit4, M 6umar +333%"

E(pert opinions are widely used in the concept phase" Eor e(ample, it is common to o!tain forecasts from the sales force" It is important to properly pose the )uestions, ad-ust for !iases in e(perts2 forecasts, and aggregate their responses" #he @elphi method provides a useful way to conduct such surveys" Errors in the description can !e critical" Eor e(ample, one of us was asked to forecast demand for the product of a new electricity retailer" As the retailer descri!ed the proposed product, an important feature was the ease with which customers would !e a!le to swap their account to the new supplier" All they would have to do was to call the toll free num!er and tell the friendly operator their telephone num!er" @espite our concern that this level of ease might not !e achieva!le we proceeded to forecast demand using the electricity company2s description" In the event, the e(isting supplier refused to transfer accounts without onerous proof, and demand was lower than predicted" #his suggests the need to prepare alternative descriptions so as to forecast for possi!le changes" Intentions surveys are most likely to !e useful for short term forecasts and !usiness to !usiness sales" As an alternative to asking potential customers a!out their intentions to purchase, one can ask e(perts to predict how consumers will respond" Eor e(ample, Kotru!a and #hurlow $'<=D% discuss how opinions from mem!ers of the sales force can !e used to forecast demand" Lne could also ask distri!utors or marketing e(ecutives to make forecasts" E(perts may !e a!le to make !etter forecasts if the pro!lem is decomposed in such a way that the parts to !e forecast are !etter known to them than the whole" #hus, if the task was to forecast the sales of high definition television sets rather than making a direct forecast, one could !reak the pro!lem into parts such as G5ow many households will there !e in the :"S" in the forecast year_2 GLf these households, what percentage will make more than S/3,333 per year_2 GLf these households, how many have not purchased a large screen #V in the past year_2 and so on"

#he forecasts are o!tained !y multiplying the components" :nfortunately, e(perts are often su!-ect to !iases when they make forecasts for new products $#ye!-ee '<;=%" Sales people may try to forecast on the low side if their forecasts will !e used to set )uotas" Marketing e(ecutives may forecast high, !elieving that this will gain approval for the pro-ect or motivate the sales force" If possi!le, you should avoid e(perts who would have o!vious reasons to !e !iased" Another strategy is to use a heterogeneous group of e(perts in the hope that their differing !iases tend to cancel one another" *on-oint analysis is widely used !y firms $Kittink and Bergestuen, +33'%" It was used successfully in the design of a new Marriott hotel chain $Kind et al", '<;<%" #he use of the method to forecast new product demand can !e e(pensive !ecause it re)uires large samples of potential customers, the potential customers may !e difficult to locate, and the )uestionnaires are not easy for respondents to complete" 0espondents must also understand the concepts that they are !eing asked to evaluate" E(pert -udgments can !e used in a manner analogous to con-oint analysis" #hat is, e(perts would make predictions a!out situations involving alternative product designs and alternative marketing plans" #hese predictions would then !e related to the situations !y regression analysis" It has advantages as compared to con-oint analysis in that few e(perts are needed $pro!a!ly !etween five and twenty%" In addition, e(pert -udgments can incorporate policy varia!les, such as advertising, that are difficult for consumers to assess" Analogous products can !e used to forecast demand for new products" Lne collects a set of analogous products and e(amines their growth patterns $*laycamp and ,iddy, '<D<%" #he typical pattern can then !e used as a forecast" ,arge errors are typical for new product forecasts" #ull $'<D=% estimated the mean a!solute percentage error for new product sales to !e a!out D? percent" It is not surprising then, that pre test models have gained wide acceptance among !usiness firms" Shocker and 5all $'<;D% provided an evaluation of some of these models

Because of the lack of systematic and un!iased forecast validation studies they could draw no conclusions a!out which methods were most accurate" Lnce a new product is on the market, it is possi!le to use e(trapolation methods" Eor early sales, much attention has !een given to the selection of the proper functional form" #he diffusion literature uses an S shaped curve to predict new product sales" #hat is, growth !uilds up slowly at first, !ecomes rapid if word of mouth is good and if people see the product !eing used !y others" #hen it slows as it approaches a saturation level" A su!stantial literature e(ists on diffusion models" @espite this, the num!er of comparative validation studies is small and the !enefits of choosing the !est functional form are modest $Meade and Islam, +33'%" Khen many demand forecasts are needed, e(trapolation is often preferred" 0elatively simple methods suffice" Sophistication !eyond a modest level does not improve accuracy, !ut it does increase costs and reduce understanding" @ecomposition is appropriate when component series can !e forecast more accurately than the aggregate" UNCERTAINTY In addition to improving accuracy, forecasting is concerned with assessing uncertainty" #his can help manage the risk associated with alternative plans" #raditional error measures, such as the mean s)uare error $MSE%, do not provide a relia!le !asis for comparison of forecasting methods $Armstrong and *ollopy, '<<+%" #he median a!solute percentage error $MdA1E% is more appropriate !ecause it is invariant to scale and is not influenced !y outliers" Khen comparing methods, especially when testing on a small num!er of series, control for degree of difficulty in forecasting !y using the median relative a!solute error

$Md0AE%, which compares the error for a given model against errors for the naive, no change forecast $Armstrong and *ollopy, '<<+%" Statisticians have relied heavily on tests of statistical significance for assessing uncertainty" 5owever, statistical significance is inappropriate for assessing uncertainty in forecasting" Eurthermore, its use has !een attacked as !eing misleading $e"g", see *ohen, '<<>%" It is difficult to find studies in marketing forecasting where statistical significance has made an important contri!ution" Instead of statistical significance, the focus should !e on prediction intervals" *hatfield $+33'% summari4es research on prediction intervals" :nfortunately, prediction intervals are not widely used in practice" #ull2s $'<D=% survey noted that only +?N of 'D respondent companies said they provided confidence intervals with their forecasts" @alrymple $'<;=% found that >;N did not use confidence intervals, and only '3N Gusually2 used them" #he fit of a model to historical data is a poor way to estimate prediction intervals" It typically results in confidence intervals that are too narrow" It is !est to simulate the actual forecasting procedure as closely as possi!le, and use the distri!ution of the resulting e( ante forecasts to assess uncertainty" Eor e(ample, if you need to make forecasts for two years ahead, withhold enough data to !e a!le to have a num!er of two year ahead e( ante forecasts" U&(e%t'i&t! i& Gu ,me&t'* +$%e('0t0 E(perts are typically overconfident $Arkes, +33'%" In McCee2s $'<<+% e(amination of economic forecasts from ++ economists over '' years, the actual values fell outside the range of their prediction intervals a!out >/N of the time" #his occurs even when su!-ects are warned in advance against overconfidence" Eortunately, there are procedures to improve the cali!ration of -udges" Khere possi!le, -udges should !e provided with timely and unam!iguous information on outcomes along with reasons why they were right or wrong" Khen feed!ack is good,

-udges2 confidence intervals are well cali!rated" Eor e(ample, D3N of the times weather forecasters say that there is a D3N chance of rain, it rains" #his suggests that marketing forecasters would do well to seek the standard of feed!ack received !y weather forecasters" In cases where good feed!ack is not possi!le, ask e(perts to write all the reasons why their forecasts might !e wrong $Arkes, +33'%" Alternatively, use the devil2s advocate procedure, where someone is assigned for a short time to raise arguments a!out why the forecast might !e wrong" But, !e warned, !eing a devil2s advocate can !e make you unpopular with your group" Still another way to assess uncertainty is to e(amine the agreement among -udgmental forecasts" Eor e(ample, Ashton $'<;?%, in a study of forecasts of annual advertising sales for #ime maga4ine, found that the agreement among the individual -udgmental forecasts was a good pro(y for uncertainty" U&(e%t'i&t! i& Cu'&tit'ti;e +$%e('0t0 1rediction intervals from )uantitative forecasts tend to !e too narrow even when !ased on e( ante n ahead forecasts" Some empirical studies have shown that the percentage of actual values that fall outside the <?N prediction intervals is su!stantially greater than ?N, and sometimes greater than ?3N $Makridakis et al", '<;=%" Lne reason this occurs is !ecause the estimates ignore various sources of uncertainty" Eor e(ample, discontinuities might occur over the forecast hori4on" In addition, forecast errors in time series are often asymmetric, so this makes it difficult to estimate prediction intervals" Asymmetry of errors is likely to occur when the forecasting model uses an additive trend" #he most sensi!le procedure is to transform the forecast and actual values to logs, then calculate the prediction intervals using logged differences" Interestingly, researchers and practitioners seldom follow this advice $e(cept where the original forecasting model has !een formulated in logs%" Evidence on the issue of asymmetrical errors is provided in Armstrong and *ollopy $+33'%"

,oss functions can also !e asymmetric" Eor e(ample, the cost of a forecast that is too low !y ?3 units may differ from the cost if it is too high !y ?3 units" But this is a pro!lem for the planner, not the forecaster"

GAINING ACCEPTANCE OF FORECASTS Eorecasts that contradict management2s e(pectations have much potential value" 5owever, they may !e ignored $7riffith and Kellman, '<=<%" Lne way to avoid this pro!lem is to gain agreement on what forecasting procedures to use prior to presenting the forecasts" #his may involve making ad-ustments to the forecasting method in order to develop forecasts that will !e used" Another way to gain acceptance of forecasts is to ask decision makers to decide in advance what decisions they will make given different possi!le forecasts" Are the decisions affected !y the forecasts_ 1rior agreements on process and on decisions can greatly enhance the value of forecasts, !ut they are difficult to achieve in many organi4ations" #he use of scenarios can aid this process" Scenarios involve providing information a!out a future situation to a decision maker and asking him to pro-ect himself into the situation and write the stories a!out what he did" #hey should !e written in the past tense" @etailed instructions for writing scenarios are summari4ed in 7regory and @uran $+33'%" Scenarios are effective in getting managers to accept the possi!ility that certain events might occur" #hey should not !e used to make forecasts, however, !ecause they distort one2s assessment of the likelihood that the events will occur" Significant gains have !een made in forecasting for marketing, especially since '<D3" Advances have occurred in the development of methods !ased on -udgment, such as @elphi, simulated interactions, intentions studies, opinions surveys, !ootstrapping, and com!ining" #hey have also occurred for methods !ased on statistical data, such as

e(trapolation, rule !ased forecasting, and econometric methods" Most recently, gains have come from the integration of statistical and -udgmental forecasts" Ge&e%'* 1%i&(i1*e0 " ^ Managers2 domain knowledge should !e incorporated into forecasting methods" ^ Khen making forecasts in highly uncertain situations, !e conservative" Eor e(ample, the trend should !e dampened over the forecast hori4on" ^ *omple( methods have not proven to !e more accurate than relatively simple methods" 7iven their added cost and the reduced understanding among users, highly comple( procedures cannot !e -ustified" ^ Khen possi!le, forecasting methods should use data on actual !ehaviour, rather than -udgments or intentions, to predict !ehaviour" ^ Methods that integrate -udgmental and statistical data and procedures $e"g", rule !ased forecasting% can improve forecast accuracy in many situations" ^ Lverconfidence occurs with )uantitative and -udgmental methods" ^ Khen making forecasts in situations with high uncertainty, use more than one method and com!ine the forecasts, generally using simple averages" ^ Khen using -udgment, rely on structured procedures such as @elphi, simulated interaction, structured analogies, and con-oint analysis" ^ Simulated interaction is useful to predict the decisions in conflict situations, such as in negotiations" ^ In addition to seeking good feed!ack, forecasters should e(plicitly list all the things that might !e wrong a!out their forecast" #his will produce !etter cali!rated prediction intervals"

^ Kith the proliferation of data, causal models play an increasingly important role in forecasting market si4e, market share, and sales" ^ Methods should !e developed primarily on the !asis of theory, not data" Einally, efforts should !e made to ensure forecasts are free of political considerations in a firm" #o help with this, emphasis should !e on gaining agreement a!out the forecasting methods" Also, for important forecasts, decisions on their use should !e made !efore the forecasts are provided" Scenarios are helpful in guiding this process"

Lite%'tu%e Re;ie:

85R'm()'%%'& H'%%i Su11*! C)'i& M'&',eme&t i& Aut$m$bi*e i& u0t%!5 D'te" <8J<8J/<<8 S$u%(e V$*ume" @K S$u%(e I00ue" 8 #he current studies on supply chain management are limited in their analysis of thc linkages !etween firms in related industries" #his study estimates the degree of

linkages !etween automotive parts suppliers and automo!ile manufacturers" Significant linkages are demonstrated !y the high correlation coefficients of the 1OE ratio of auto parts suppliers and auto manufacturers and !y the results of regression analysis" @emand uncertainty in the automo!ile manufacturing industry, resulting from !usiness cycles and une(pected la!or disputes, is one of the ma-or risks facing auto parts suppliers" 0isk assessment, utili4ing information on linkages, is important for demand management and developing profit ma(imi4ing strategies"

/5M(F'

e&, D, A,,%e,'te t%';e*

em'&

+$%e('0ti&, +%$m

i0',,%e,'te

be)';i$%'* m$ e*0, D'te"8LKD ,I00ue Numbe%" D@M, V$* &$5 @D , 1,5 /M>@K, #his paper derives an e(pression for o!taining aggregate $inter4onal% travel forecasts given a pro!it disaggregate demand model and 4onal averages and intra4onal variances of the independent varia!les" It also derives e(pressions for the !iases in aggregate model cali!rations resulting from 4onal homogeneity assumptions in the varia!les" #he conditions under which these !iases are important are discussed" E(pressions are also determined for o!taining consistent, un!iased estimates for !oth aggregate and disaggregate models that take into account nonhomogeneous 4ones and practical data limitations"

@5F%'&6 C)e&, H;i D%e?&e%, Je&&i+e% 35 R!'& '& D';i Sim()i>Le;i, Qu'&ti+!i&, t)e Bu**:)i1 E++e(t i& ' Sim1*e Su11*! C)'i&" T)e Im1'(t $+ F$%e('0ti&,, Le' Time0, '& I&+$%m'ti$&, V$*5 MN, N$5 @ #M'%5, /<<<-, 115 M@N>MM@ #'%ti(*e ($&0i0t0 $+ A 1',e0An important o!servation in supply chain management, known as the !ullwhip effect, suggests that demand varia!ility increases as one moves up a supply chain" In this paper we )uantify this effect for simple, two stage supply chains consisting of a single retailer and a single manufacturer" Lur model includes two of the factors commonly

assumed to cause the !ullwhip effect& demand forecasting and order lead times" Ke e(tend these results to multiple stage supply chains with and without centrali4ed customer demand information and demonstrate that the !ullwhip effect can !e reduced, !ut not completely eliminated, !y centrali4ing demand information"

C)'%!t$&iu6,

45O

C)e&,

M5S5O

3$t'0,

P5O

V'&

O*i& ',

P5O em'&

E&e%,! S!0t5 Re05 Ce&te%, Te9'0 U&i;5, A%*i&,t$&, T7 , A 1%$b'bi*i0ti(

m$ e*, I00ue D'te" N$; 8LLL, INSPEC A((e00i$& Numbe%" NM8@@</, D'te $+ Cu%%e&t Ve%0i$&" <N Au,u0t /<</, ISSN" <AAD>ALD< Re+e%e&(e0 Cite " 8D , V$*ume" 8M , I00ue"M *ustomer demand data are re)uired !y power flow programs to accurately simulate the !ehavior of electric distri!ution systems" At present, economic constraints limit widespread customer monitoring, resulting in a need to forecast these demands for distri!ution system analysis" #he method utili4es demand survey information, including weather conditions, to !uild a pro!a!ilistic demand model that e(presses !oth the random nature of demand and its temperature dependence"

M57i'$*$&, H)'&,, T)e im1'(t $+ +$%e('0ti&, met)$ 0 $& t)e bu**:)i1 e++e(t , Re(ei;e @8 Ju*! /<</O A((e1te @< A1%i* /<<@5 O A;'i*'b*e $&*i&e // Se1tembe% /<<@5 I00ue Numbe%" M@M, V$* &$5 /K #his paper considers the impact of forecasting methods on the !ullwhip effect for a simple replenishment system in which a first order autoregressive process descri!es the customer demand and an order up to inventory policy characteri4es the replenishment decision" A !ullwhip effect measure is derived for the optimal forecasting procedure that minimi4es the mean s)uared forecasting error for the specified demand process" Similar measures are o!tained for the moving average and e(ponential smoothing methods"

D5T)$m'0 R5 4i**em'i&, C)'%*e0 N5 Sm'%t, He&%! F5 S():'%?, A &e: '11%$'() t$ +$%e('0ti&, i&te%mitte&t @AK A fundamental aspect of supply chain management is accurate demand forecasting" Ke address the pro!lem of forecasting intermittent $or irregular% demand, i"e" random demand with a large proportion of 4ero values" #his pattern is characteristic of demand for service parts inventories and capital goods and is difficult to predict" Ke forecast the cumulative distri!ution of demand over a fi(ed lead time using a new type of time series !ootstrap" #o assess accuracy in forecasting an entire distri!ution, we adapt the pro!a!ility integral transformation to intermittent demand" :sing nine large industrial datasets, we show that the !ootstrapping method produces more accurate forecasts of the distri!ution of demand over a fi(ed lead time than do e(ponential smoothing and *roston2s method" N5I&+ie* , D5G5O Hi**, D5C5De1t5 $+ E*e(t%$&5 & E*e(t%5 E&,5, L$u,)b$%$u,) U&i;5 em'& +$%e('0ti&, $+ e*e(t%i(it!, I00ue D'te" Au, 8LLA V$*ume" 8@ I00ue"@ O& 1',e#0-" 888D > 88/< ISSN" <AAD>ALD< Re+e%e&(e0 Cite " L *hanges to the electricity supply industry, in particular the progress towards deregulation, have prompted an increased interest in short term electricity demand forecasting" #rend removal has !een identified as a key element in forecasting, and perhaps the area that can most !enefit from the application of advanced time series analysis" A new approach to trend removal is presented !ased on fi(ed interval, or optimal, smoothing techi)ues" Eorecasts derived in this way are compared with more conventional approaches" 1reliminary results indicate the new method to !e promising and deserving of further development K5B'%'6't, E5E5 '& A*>R'0)e , S5A5, Ri!' ) , *$,i0ti( m$ e* $+ em'& em'& +$% 0e%;i(e 1'%t0 i&;e&t$%ie0 , I&te%&'ti$&'* J$u%&'* $+ F$%e('0ti&,, V$*ume /<, I00ue @, Ju*!>Se1tembe% /<<M, P',e0 @KD>

+$%e('0ti&, I00ue D'te" N$; 8LL/ , V$*ume" K I00ue" M , O& 1',e#0-" 8MA@ > 8MAN

ISSN" <AAD>ALD< , Re+e%e&(e0 Cite " L, INSPEC A((e00i$& Numbe%" M@<K8LA , D'te $+ Cu%%e&t Ve%0i$&" <N Au,u0t /<</ An e(tended logistic model with a varying asymptotic upper !ound for long range peak demand forecasting is descri!ed" #he model has !een applied to a typical fast growing system, the Saudi *onsolidated Electric *ompany" #he forecasts are compared with actual demands and with those o!tained from classical forecasting methods" #he model gave relatively accurate peak demand forecasts compared with other classical methods" #he model with a single load o!servation is capa!le of producing several peak demand forecasts corresponding to different levels of ma(imum temperature and various levels of social activity" #he forecasts produced !y the model were also sta!le irrespective of the length of the e( post simulation period A5J'ime A%%i',' ', Pe%&i**' O*'u00$&, A?%' Se*im$;i(, A%ti+i(i'* &eu%'* &et:$%6 0imu*'t$% +$% SOFC 1e%+$%m'&(e 1%e i(ti$&, J$u%&'* $+ P$:e% S$u%(e0, V$*ume 88/, I00ue 8, /M O(t$be% /<</, P',e0 DM>N< #his paper descri!es the development of a novel modelling tool for evaluation of solid o(ide fuel cell $SLE*% performance" An artificial neural network $ACC% is trained with a reduced amount of data generated !y a validated cell model, and it is then capa!le of learning the generic functional relationship !etween inputs and outputs of the system" #his simulator could !e suita!le for different applications in the fuel cell field, such as, the construction of performance maps and operating point optimisation and analysis" All this is performed with minimum time demand and good accuracy" #his intelligent model together with the operational conditions may provide useful insight into SLE* operating characteristics and improved means of selecting operating conditions, reducing costs and the need for e(tensive e(periments" L5A e* A5 G)$bb'% '& C)%i0 H5 F%ie& , E;'*u'ti$& $+ +$%e('0ti&, met)$ 0 +$% 8 M'%() /<</5 A;'i*'b*e $&*i&e // J'&u'%! /<<@5,

i&te%mitte&t 1'%t0 em'& i& t)e +ie* $+ ';i'ti$&" ' 1%e i(ti;e m$ e*, Re(ei;e 8 Se1tembe% /<<8O %e;i0e V$*ume 8</, I00ue 8D

Lwing to the sporadic nature of demand for aircraft maintenance repair parts, airline operators perceive difficulties in forecasting and are still looking for superior forecasting methods" #his paper deals with techni)ues applica!le to predicting spare parts demand for airline fleets" #he e(perimental results of '/ forecasting methods, including those used !y aviation companies, are e(amined and clarified through statistical analysis" #he general linear model approach is used to e(plain the variation attri!uta!le to different e(perimental factors and their interactions" Actual historical data for hard time and condition monitoring components from an airlines operator are used, in order to compare different forecasting methods when facing intermittent demand"

8<5 J5 S($tt A%m0t%$&,, R$ e%i(6 J5 B%$ ie, S)e*b! H5 M(I&t!%eF$%e('0ti&, met)$ 0 +$% m'%6eti&," Re;ie: $+ em1i%i('* %e0e'%() , I&te%&'ti$&'* J$u%&'* $+ F$%e('0ti&,, V$*ume @, I00ue0 @>M, 8LAK, P',e0 @DD>@KN

#his paper reviews the empirical research on forecasting in marketing" In addition, it presents results from some small scale surveys" Ke offer a framework for discussing forecasts in the area of marketing, and then review the literature in light of that framework" 1articular emphasis is given to a pragmatic interpretation of the literature and findings" 885 H'%%! M'%ti&, A%i0 A5 S!&tet$0, A*eG'& %$ P'%$ i, Yi'&&i0 E5 P$*!()%$&'6i0, Li*i'&e Pi&te*$&, #/<8<- FI&te,%'ti&, t)e 01'%e 1'%t0 0u11*! ()'i&" '& i&te%> i0(i1*i&'%! '(($u&tF, J$u%&'* $+ M'&u+'(tu%i&, Te()&$*$,! M'&',eme&t, V$*5 /8, I00ue" /, 115//N > /MD #his paper aims to su!stantiate the need for additional research into a more holistic and multidisciplinary approach to managing the supporting supply chains that may also capture conte(tual information, also pointing out emerging avenues for further scholarly contri!utions"

8/5 A*e9'& %e D$*,ui'O M'60im P'0)6e;i(), E9te& e em'&

bet'>bi&$mi'* m$ e* +$%

+$%e('0ti&, $+ mu*ti1*e 0*$:>m$;i&, i&;e&t$%! item0 , I&te%&'ti$&'*

J$u%&'* $+ S!0tem0 S(ie&(e , V$*ume @L, I00ue K, /<<A, P',e0 K8@ > K/N #his article considers the pro!lem of modelling the lead time demand for multiple slow moving inventory items in the case when the availa!le demand history is very short, and a large percentage of items has only 4ero records" #he Bayesian approach is used to overcome these pro!lems with the past demand data& it is proposed to use the !eta !inomial model to predict the lead time demand pro!a!ility distri!ution for each item" Eurther, an e(tension of this model is developed which incorporates the prior information regarding the ma(imum e(pected pro!a!ility of demand per period" 1arameter estimation and Bayesian forecasting routines are derived for the new model" #he performance of the proposed techni)ues is evaluated !y a simulation study 8@5 B%u(e P%i e'u9, E91*$%i&, t)e *imit0 t$ +$%m'* t$u%i0m t%e& 0 +$%e('0ti&, met)$ 0 i& ($m1*e9 (%i0i0 0itu'ti$&0, Re(ei;e /<<@, P',e0 MKD>MAK /M M'%() /<<, A((e1te 8M N$;embe% /<</5 , A;'i*'b*e $&*i&e 8L M'%() /<<@5 V$*ume /M, I00ue M, Au,u0t

#he desire to know the future is as old as humanity" #his paper e(amines the issue of forecasting !y comparing forecasts of in!ound tourism made prior to the political and economic crises that engulfed Indonesia from '<<= onwards with actual arrival figures" #he paper finds that current methods of forecasting are not a!le to cope with une(pected crises and other disasters and that alternative methods need to !e e(amined including scenarios, political risk and application of chaos theory" 8M5 Pe, Y$u&, Te()&$*$,i('* ,%$:t) (u%;e0 " A ($m1etiti$& $+ +$%e('0ti&, m$ e*0, De(embe% 8LL@, V$*ume MM, I00ue M, , P',e0 @KD>@AL

In order to determine procedures for appropriate model selection of technological growth curves, numerous time series that were representative of growth !ehavior were collected and categori4ed according to data characteristics" Cine different growth curve models were each fitted onto the various data sets in an attempt to determine which growth curve models achieved the !est forecasts for differing types of growth data" #he analysis of the results gives rise to a new approach for selecting appropriate growth curve models for a given set of data, prior to fitting the models, !ased on the characteristics of the data sets

8D5 Ni,e* Me' e, T$:)i u* I0*'m, F$%e('0ti&, :it) ,%$:t) (u%;e0" A& em1i%i('* ($m1'%i0$&, I&te%&'ti$&'* J$u%&'* $+ F$%e('0ti&,, De(embe% /<<<, V$*ume 88, I00ue /, Ju&e 8LLD, P',e0 8LL>/8D #he primary o!-ective of this paper is to compare the forecasting performance of the increasingly wide range of growth curve models" Seventeen models are used to forecast the development of telecommunications markets, represented !y +? time series descri!ing telephone penetration in '? different countries" Eorecasting performance is measured !y root mean s)uare error and mean a!solute percentage error over the last '3 or '' years of the series, the model parameters having !een fitted over the previous +3 years" Cote is taken of the convergence of the estimation process, the significance of parameters and the plausi!ility of the estimated saturation level" 8N5 J'& G5 De G$$iGe%, R$b J5 H!& m'&, /D !e'%0 $+ time 0e%ie0 +$%e('0ti&,, I&te%&'ti$&'* J$u%&'* $+ F$%e('0ti&,, V$*ume //, I00ue @, /<<N, P',e0 MM@>MK@ Ke review the past +? years of research into time series forecasting" In this silver -u!ilee issue, we naturally highlight results pu!lished in -ournals managed !y the International Institute of Eorecasters $8ournal of Eorecasting '<;+'<;? and International 8ournal of Eorecasting '<;?+33?%" @uring this period, over one third of all papers pu!lished in these -ournals concerned time series forecasting" Ke also review highly influential works on time series forecasting that have !een pu!lished

elsewhere during this period" Enormous progress has !een made in many areas, !ut we find that there are a large num!er of topics in need of further development 8K5 P'&$0 3$&t?'*i0, I e&ti+i('ti$& $+ 6e! 'tt%ibute0, ,'1 '&'*!0i0 '& 0imu*'ti$& te()&iCue0 i& +$%e('0ti&, m'%6et 1$te&ti'* $+ et)i('* 1)'%m'(euti('* 1%$ u(t0, I&te%&'ti$&'* J$u%&'* $+ F$%e('0ti&,, V$*ume A, I00ue /, O(t$be% 8LL/, P',e0 /M@>/ML #his paper descri!es a model used to forecast the potential market share of a new pharmaceutical product" It was developed specifically for Sando4 1harma A7 !ut it can !e applied to other pharmaceutical companies" #he model takes into account the customers9 $i"e" physicians9% decision making process, their attitudesOneeds as well as the product9s clinical profile"

8A5 J'%m$ I*$&e&, J$&i>3%i0ti'& 3'm'%'i&e&, 3'i0u Puum'*'i&e&, S'&&' Su& C;i0t, Hei66i 3P*;iPi&e&, T$:'% 'ut$m'ti( +$%e('0t0 +$% i++u0i$& $+ i&&$;'ti$&0, V$*ume K@, I00ue /, Feb%u'%! /<<N, P',e0 8A/>8LA

#he paper presents an automated framework for forecasting the diffusion of innovations" #he framework utili4es e(isting diffusion information from any market areas or similar products introduced to the markets earlier" #he e(isting data, !e it little, enormous, or not present at all, defines a corresponding decision path in the model, and following the path generates a forecast !y ma(imi4ing the availa!le information

RESEARCH METHODOLOGY Tit*e $+ t)e 0tu !" QMotivational Strategies for attracting and retaining employees in the B1L sectorR Du%'ti$& $+ t)e P%$Ge(t& Semester long ObGe(ti;e0 $+ 0tu !" ObGe(ti;e0& L!-ectives of the study are following& '" #he o!-ective of demand forecasting is to forecast the employees of the company in future and it helps the company in !udgeting it9s human resource and to determine the resources which the company will re)uire to fulfill that demand" 2. Eorecasting demand method can also help the companies to avoid oversupply and undersupply of the human resource" /" #o find out the effectiveness of the system in making decisions" >" Identifying and organi4ing the most important varia!le in )ualitative and )uantitative demand forecasting methods of employees" ?" #o find out whether the system is helpful in improving the individual performance or not"

T!1e $+ %e0e'%()"

0esearch plays an important role in the pro-ect work" #he results of the pro-ect are completely !ased upon the research of the facts and figures collected through the different ways of research" #hat is why it is also called a movement from known to unknown" 0esearch is the original contri!ution to the e(isting stock of knowledge" #his section includes the overall research design, the sampling procedure, the data collection method, the field method, and analysis and procedure" 0esearch is a scientific and systematic search for pertinent information on a specific topic" It is also said to !e the pursuit of truth with the help of study, o!servation, comparison and e(periment" 0esearch methodology is a way to systematically solve the research pro!lem"

Re0e'%() ('& (*'00i+! i& t)%ee ('te,$%ie0" #hese classifications are made according to the o!-ective of the research" In some cases the research will fall into one of these categories, !ut in other cases different phases of the same research pro-ect will fall into different categories" E91*$%'t$%! Re0e'%() De0(%i1ti;e Re0e'%() C'u0'* Re0e'%()

Khen surveying people, e(ploratory research studies would not try to ac)uire a representative sample, !ut rather, seek to interview those who are knowledgea!le and

who might !e a!le to provide insight concerning the relationship among varia!les" *ase studies can include contrasting situations or !enchmarking against an organi4ation known for its e(cellence" E(ploratory research may develop hypotheses, !ut it does not seek to test them" E(ploratory research is characteri4ed !y its fle(i!ility"

E91*$%'t$%! Re0e'%() #hese classifications are made according to the o!-ective of the research" In some cases the research will fall into one of these categories, !ut in other cases different phases of the same research pro-ect will fall into different categories" E(ploratory research has the goal of formulating pro!lems more precisely, clarifying concepts, gathering e(planations, gaining insight, eliminating impractical ideas, and forming hypotheses" E(ploratory research can !e performed using a literature search, surveying certain people a!out their e(periences, focus groups, and case studies" E(ploratory research studies would not try to ac)uire a representative matter, !ut rather, seek to interview those who are knowledgea!le and who might !e a!le to provide insight concerning the relationship among varia!les" *ase studies can include contrasting situations or !enchmarking against an organi4ation known for its e(cellence" E(ploratory research may develop hypotheses, !ut it does not seek to test them" E(ploratory research is characteri4ed !y its fle(i!ility"

S'm1*e 0i?e& ?3

S'm1*e e0i,&

Simple random sampling techni)ue was used to gather data from the respondents, !ecause of which respondents diverged from every age group, gender, organi4ation, marital status etc" !ut were restricted only to low and middle level employees, where the attrition is highest" #he )uestionnaire was intricately designed to tap the demographic varia!les including age, education, gender, marital status, and tenure of the respondents" It also gathered information a!out the factors responsi!le for attrition, the factors that can !e employed to retain the employees in a B1L, their overall level of satisfaction, motivation, involvement and life interest and work compati!ility"

S($1e"> #he scope of study should include the following& #he scope of the repot is to find out the related areas in which this can !e used" #he repots is helpful in finding the satisfactory level towards forecast of the employees in a !etter way in the organi4ations" Managing the proper and effective demand forecasting methods for the employees. developing employees into future supervision. increasing commitment to organi4ational goals" It also helps in determining the various factors which can affect the whole process of forecasting the employees"

Limit'ti$&0 O+ t)e Stu !">

#he Study might !e limited !y following factors& #ime constraint will affect study !ecause of this lacking in deep understanding of the research pro!lem" Secondary data can2t provide accurate result" #he primary data, collected in form of )uestionnaire and interview, might have inherent limitations of !iasness and casual response" ,ack of proper information and e(perience also !ecause hurdle in the research on the topic"

DATA ANALYSIS

AND

INTERPRETATION

'" 50 practices in automo!ile industry are satisfactory&

Re01$&0e Strongly agree Agree @isagree Strongly @isagree T$t'*

N$5$+ %e01$& e&t += '; / + D<

1e%(e&t',e ?> /D D > 8<<

I&te%1%et'ti$&& A!out ?>N of the employees strongly agree that 50 practices in automo!ile industry is satisfactory" Lnly a!out >N of the employees are strongly disagree with its 50 practices" Kith this we infers that Automo!ile industry provides good 50 practices"

+" By @emand Eorecasting we understand &

/" Eorecasting is done !ased upon&

Re01$&0e 1ast data taste M trends T$t'*

N$5 $+ Re01$&0e ++ +; D<

1e%(e&t',e >> ?D 8<<

Interpretation& Erom the a!ove graph we conclude that generally the forecasting is done !ased on the present and prevailing trend and taste and only >>N of forecasting is done !ased on past data or records of the company"

>" type of demand forecasting method you like most&

Re01$&0e Uuantitative Uualitative

N$5 $+ %e01$& e&t0 = >

Pe%(e&t',e '> ;

Both Cone of the a!ove T$t'*

/; ' D<

=D + 8<<

?" #he techni)ue which you use is enough to forecaste the right type of employee&

Re01$&0e Fes Co T$t'*

N$5 $+ Re01$& e&t /; '+ D<

Pe%(e&t',e =D +> 8<<

Interpretation& A!out =DN of the respondents thinks that the techni)ue which they use is effective and appropriate in forecasting a!out the right type of employee re)uired !y the company"

D" #he techni)ue which you use has ever shown any type of failure in forecasting&

Re01$&0e Fes

N$5 $+ Re01$& e&t '=

Pe%(e&t',e />

Co T$t'*

// D<

DD 8<<

Interpretation& A!out DDN of the respondents !elieves that QCoR the techni)ue which they use does not showed any failure while />N !elieves that Fes it has shown failure in some e(ceptional circumstances due to internal or e(ternal factors"

=" Fou always review your techni)ues from time to time&

Re01$&0e Fes Co T$t'*

N$5 $+ Re01$& e&t >? ? D<

Pe%(e&t',e <3 '3 8<<

Interpretation& According to <3N of the respondents the techni)ues which they use for demand forecasting are reviewed from time to time !ased on the re)uired condition"

;" @emand forecasting of employees depend only on the internal factors"

Re01$&0e FES Co T$t'*

N$5 $+ Re01$& '&t0 /< '' D<

Pe%(e&t',e =; ++ 8<<

<" Eactors affecting demand forecasting in #ata automo!ile are&

Re01$&0e0 E(ternal Environment Lrganisation @ecision Kork Eactor All A!ove T$t'*

N$5 $+ Re01$& e&t > '> '+ +3 D<

Pe%(e&t',e ; +; +> >3 8<<

Interpretation& Erom the a!ove graph we conclude that there is a mi( kind of response a!out the factors that influence demand forecasting !ut ma(imum of the respondents !elieve that all the factors whether it is internal or e(ternal affects the forecasting" '3" #he duration of demand forecasting of employes in #ata Motors is&

Re01$&0e / years + years ' years D month T$t'*

N$5 $+ Re01$& e&t0 ; > /> > D<

Pe%(e&t',e 'D ; D; ; 8<<

Interpretation& Erom the a!ove graph we interpretate that generally the demand forecasting of employees is done after ' year"

''" #he e(penditure done on demand forecasting of employees in #ata motors is&

Re01$&0e

N$5 $+ Re01$& e&t0

Pe%(e&t',e

,ess than ?333

'>

+;

More than ?333 T$t'*

/D D<

=+ 8<<

'+" @emand forecasting is in the favour of employees&

Re01$&0e Strongly agree Agreed disagreed Strongly @isagreed T$t'*

N$5 $+ Re01$& e&t0 'D +> D > D<

Pe%(e&t',e /+ >; '+ ; 8<<

Interpretation& >;N of the respondents agreed that yes forecasting done is in favour of the employees" And a!out /+N of them strongly agree with this statement"

'/" @emand forecasting of employees in automo!ile industry shows&

Re01$&0e Employee attrition Employee retention Employee performance appraisal Cone of the a!ove T$t'*

N$5 $+ Re01$& e&t0 '; '? '+ ? D<

Pe%(e&t',e /D /3 +> '3 8<<

Interpretation& A!out /DN of employees !elieve that forecasting is done due to employee attrition while /3N !elieve that it is done for the sake of employee retention" #hus we conclude that there may !e many reasons of doing demand forecasting "

'>" #he percent of the @emand Eorecasting methods of employees which are helpful for competitive advantage&

Re01$&0e '33N =?N

N$5 $+ %e01$& e&t '= +/

B /> >D

?3N 3N T$t'*

'3 3 D<

+3 3 8<<

'?" @emand Eorecasting methods are '33N successful in all condition&

Re01$&0e Fes Co T$t'*

N$5 $+ %e01$& e&t '+ /; D<

B +> =D 8<<

Interpretation& A!out =DN of the employees !elieves that the forecasting done is successful in all conditions while '+N !elieve that it is not successful !ecause there may !e many conditions which can !e !eyond our control"