ACKNOWLEDGEMENT

It is usual sense of routine that I acknowledge my sincere gratitude and appreciation to the people who directly and indirectly helped me in completion of this project. I am indebted to so many persons that a complete acknowledgement would be encyclopedic. For the successful and timely completion of the project report, I convey my sincere feeling of gratitude towards all those who have been with me throughout. I take this opportunity as privilege to express my deep sense of gratitude to Prof. Apoorva Palkar Director Sinhgad Institute of Management & Computer Application, Pune for their continuous encouragement, invaluable guidance and help for completing the present research work. They have been a source of Inspiration to me and I am indebted to them for initiating me in the field of research. I am deeply indebted to Mr shalab my project guide, Sinhgad Institute of Management & Computer Application, Pune without her help completion of the project was highly impossible I express my gratitude to Mr. Mayur Tiwari sir , who takes all the decision regarding equity analysis. He gave me opportunity to pursue my internship from the organization. Without his help, successful completion of the project was not possible. My profound sense of obligation goes to Mr. vikash ,branch manager who helped during the course of my project. He was of great help to me in every aspect and enlivened me to win the problem that I faced during this project. I am also thankful to Ms. Suniti Gupta (assistant manager) for her supports at ground level work she make me understand so many task and activities related to stocksS I would like to acknowledge all my family members & friends for their help and support. At last I convey my sincere thanks to all the staff of Arihant capital markets ltd,. Jaipur and my co Summer Trainees for their helping hand that I always found extended to me whenever I needed.

Thanks and regards, Shrikant Taparia

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LIST OF TABLES Table No.

Table No. 1 Table No. 2 Table No. 3 Table No. 4 Table No. 5 Table No. 6 Table No. 7 Table No. 8 Table No. 9 Table No. 10 Table No. 11 Table No. 12

Title of the Table Industry specific index Return on investment Net profit ratio Earning per share Dividend per share Dividend payout ratio P/E Ratio P/B Ratio Debt- equity Ratio Interest coverage Ratio Current Ratio Quick Ratio

Page No. 46 54 55 56 57 58 59 60 61 62 63 64

LIST OF FIGURES Figure No.

Figure No. 1 Figure No. 2 Figure No. 3 Figure No. 4 Figure No. 5 Figure No. 6 Figure No. 7 Figure No. 8 Figure No. 9 Figure No. 10 Figure No. 11 Figure No. 12 Figure No. 13 Figure No. 14

Title of the Figure India GDP growth rate Contribution of various sectors to GDP Industry specific index Return on investment Net profit ratio Earning per share Dividend per share Dividend payout ratio P/E Ratio P/B Ratio Debt- equity Ratio Interest coverage Ratio Current Ratio Quick Ratio

Page No. 37 38 46 54 55 56 57 58 59 60 61 62 63 64

CHAPTER- 1

1. Introduction

1.1 EXECUTIVE SUMMARY A detailed analysis of Automobile industry has been covered in respect of past growth and performance. Under this project to better understand the Industry I have used Fundamental tools to make it more authentic and meaningful at arihant capital market ltd which provide various financial services.. he automobile industry, one of the core sectors, has undergone metamorphosis with the advent of new business and manufacturing practices in the light of liberalization and globalization. The sector seems to be optimistic of posting strong sales in the couple of years in the view of a reasonable surge in demand. The Indian automobile market is gearing towards international standards to meet the needs of the global automobile giants and become a global hub An economy-industry-company (E.I.C) approach has been followed under Fundamental Analysis which covers effect of Recession, the impact of inflation, FDIs, Export, and GDP etc. on Automobile Industry. The Industry Analysis has been done with the help of SWOT analysis . For Company Analysis as a part of Fundamental tool we have undergone with the comparative analysis of TATA Motors the leading company and Maruti Suzuki Indias largest Car manufacturer along with the help of ratio analysis for indentifying investment opportunity in automobile sectors equity . The fundamental aspect consists of financial analysis of these companies. At the end conclusion and recommendations have been specified so as to make the project work more meaningful and purposeful

1.2 Basic Theoretical concpt of Title

FUNDAMENTAL ANALYSIS
Fundamental analysis is a method of forecasting the future price movements of a financial instrument based on economic, political, environmental and other relevant factors and statistics that will affect the basic supply and demand of whatever underlies the financial instrument. It is the study of economic, industry and company conditions in an effort to determine the value of a companys stock. Fundamental analysis typically focuses on key statistics in companys financial statements to determine if the stock price is correctly valued. The term simply refers to the analysis of the economic well-being of a financial entity as opposed to only its price movements. Fundamental analysis is the cornerstone of investing. The basic philosophy underlying the fundamental analysis is that if an investor invests re.1 in buying a share of a company, how much expected returns from this investment he has. The fundamental analysis is to appraise the intrinsic value of a security. It insists that no one should purchase or sell a share on the basis of tips and rumors. The fundamental approach calls upon the investors to make his buy or sell decision on the basis of a detailed analysis of the information about the company, about the industry, and the economy. It is also known as topdown approach. This approach attempts to study the economic scenario, industry position and the company expectations and is also known as economic-industry-company approach (EIC approach). Thus the EIC approach involves three steps: 1. Economic analysis 2. Industry analysis 3. Company analysis

. ECONOMIC ANALYSIS The level of economic activity has an impact on investment in many ways. If the economy grows rapidly, the industry can also be expected to show rapid growth and vice versa. When the level of economic activity is low, stock prices are low, and when the level of economic activity is high, stock prices are high reflecting the prosperous outlook for sales and profits of the firms. The analysis of macro economic environment is essential to understand the behavior of the stock prices. The commonly analyzed macro economic factors are as follows: Gross Domestic Product (GDP): GDP indicates the rate of growth of the economy. It represents the aggregate value of the goods and services produced in the economy. It consists of personal consumption expenditure, gross private domestic investment and government expenditure on goods and services and net exports of goods and services. The growth rate of economy points out the prospects for the industrial sector and the return investors can expect from investment in shares. The higher growth rate is more favorable to the stock market. Savings and investment: It is obvious that growth requires investment which in turn requires substantial amount of domestic savings. Stock market is a channel through which the savings are made available to the corporate bodies. Savings are distributed over various assets like equity shares, deposits, mutual funds, real estate and bullion. The savings and investment patterns of the public affect the stock to a great extent Inflation: Along with the growth of GDP, if the inflation rate also increases, then the real growth would be very little. The effects of inflation on capital markets are numerous. An increase in the expected rate of inflation is expected to cause a nominal rise in interest rates. Also, it increases uncertainty of future business and investment decisions. As inflation increases, it results in extra costs to businesses, thereby squeezing their profit margins and leading to real declines in profitability. industrial and agricultural sector. A wide network of communication system is a must for the growth of the economy. Regular supply of power without any power cut would boost the production. Banking and financial sectors also should be sound enough to provide adequate support to the industry. Good infrastructure facilities affect the stock market favorably.

. INDUSTRY ANALYSIS An industry is a group of firms that have similar technological structure of production and produce similar products and Industry analysis is a type of business research that focuses on the status of an industry or an industrial sector (a broad industry classification, like "manufacturing"). Irrespective of specific economic situations, some industries might be expected to perform better, and share prices in these industries may not decline as much as in other industries. This identification of economic and industry specific factors influencing share prices will help investors to identify the shares that fit individual expectations

Industry Life Cycle: The industry life cycle theory is generally attributed to Julius Grodensky. The life cycle of the industry is separated into four well defined stages

Pioneering stage: The prospective demand for the product is promising in this stage and the technology of the product is low. The demand for the product attracts many producers to produce the particular product. There would be severe competition and only fittest companies survive this stage. The producers try to develop brand name, differentiate the product and create a product image. In this situation, it is difficult to select companies for investment because the survival rate is unknown.

Rapid growth stage: This stage starts with the appearance of surviving firms from the pioneering stage. The companies that have withstood the competition grow strongly in market share and financial performance. The technology of the production would have improved resulting in low cost of production and good quality products. The companies have stable growth rate in this stage and they declare dividend to the shareholders. It is advisable to invest in the shares of these companies.

Maturity and stabilization stage: the growth rate tends to moderate and the rate of growth would be more or less equal to the industrial growth rate or the gross domestic product growth rate. Symptoms of obsolescence may appear in the technology. To keep going, technological innovations in the production process and products should be introduced. The investors have to closely monitor the events that take place in the maturity stage of the industry.

Decline stage: demand for the particular product and the earnings of the companies in the industry decline. It is better to avoid investing in the shares of the low growth industry even in the boom period. Investment in the shares of these types of companies leads to erosion of capital. Growth of the industry: The historical performance of the industry in terms of growth and profitability should be analyzed. The past variability in return and growth in reaction to macro economic factors provide an insight into the future. Nature of competition: Nature of competition is an essential factor that determines the demand for the particular product, its profitability and the price of the concerned company scrips. The companies' ability to withstand the local as well as the multinational competition counts much. If too many firms are present in the organized sector, the competition would be severe. The competition would lead to a decline in the price of the product. The investor before investing in the scrip of a company should analyze the market share of the particular company's product and should compare it with the top five companies.

SWOT analysis: SWOT analysis represents the strength, weakness, opportunity and threat for an industry. Every investor should carry out a SWOT analysis for the chosen industry. Take for instance, increase in demand for the industrys product becomes its strength, presence of numerous players in the market, i.e. competition becomes the threat to a particular company. The progress in R & D in that industry is an opportunity and entry of multinationals in the industry is a threat. In this way the factors are to be arranged and analyzed.

. COMPANY ANALYSIS In the company analysis the investor assimilates the several bits of information related to the company and evaluates the present and future values of the stock. The risk and return associated with the purchase of the stock is analyzed to take better investment decisions. The present and future values are affected by a number of factors.

Financial analysis: The best source of financial information about a company is its own financial statements. This is a primary source of information for evaluating the investment prospects in the particular companys stock. Financial statement analysis is the study of a companys financial statement from various viewpoints. The statement gives the historical and current information about the companys operations. Historical financial statement helps to predict the future and the current information aids to analyze the present status of the company. The two main statements used in the analysis are Balance sheet and Profit and Loss Account. The balance sheet is one of the financial statements that companies prepare every year for their shareholders. It is like a financial snapshot, the company's financial situation at a moment in time. It is prepared at the year end, listing the company's current assets and liabilities. It helps to study the capital structure of the company. It is better for the investor to avoid a company with excessive debt component in its capital structure.

From the balance sheet, liquidity position of the company can also be assessed with the information on current assets and current liabilities.

Ratio analysis: Ratio is a relationship between two figures expressed mathematically. Financial ratios provide numerical relationship between two relevant financial data. Financial ratios are calculated from the balance sheet and profit and loss account. The relationship can be either expressed as a percent or as a quotient. Ratios summarize the data for easy understanding, comparison and interpretations.

10

Ratios for investment purposes can be classified into profitability ratios, turnover ratios, and leverage ratios. Profitability ratios are the most popular ratios since investors prefer to measure the present profit performance and use this information to forecast the future strength of the company. The most often used profitability ratios are return on assets, price earnings multiplier, price to book value, price to cash flow, and price to sales, dividend yield, return on equity, present value of cash flows, and profit margins. a) Return on Investment (ROI) ROI is the return on capital invested in business, i.e., if an investment Rs 1 crore in men, machines, land and material is made to generate Rs. 25 lakhs of net profit, then the ROI is 25%. The computation of return on investment is as follows: Return on Investment (ROI) = (Net profit/Equity investments) x 100 As this ratio reveals how well the resources of a firm are being used, higher the ratio, better are the results. The return on shareholders investment should be compared with the return of other similar firms in the same industry. The inert-firm comparison of this ratio determines whether the investments in the firm are attractive or not as the investors would like to invest only where the return is higher. . b) Earnings per Share (EPS) This ratio determines what the company is earning for every share. For many investors, earnings are the most important tool. EPS is calculated by dividing the earnings (net profit) by the total number of equity shares. The computation of EPS is as follows: Earnings per share = Net profit/Number of shares outstanding The EPS is a good measure of profitability and when compared with EPS of similar other companies, it gives a view of the comparative earnings or earnings power of a firm. EPS calculated for a number of years indicates whether or not earning power of the company has increased.

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c) Dividend per Share (DPS) The extent of payment of dividend to the shareholders is measured in the form of dividend per share. The dividend per share gives the amount of cash flow from the company to the owners and is calculated as follows: Dividend per share = Total dividend payment / Number of shares outstanding The payment of dividend can have several interpretations to the shareholder. The distribution of dividend could be thought of as the distribution of excess profits/abnormal profits by the company. On the other hand, it could also be negatively interpreted as lack of investment opportunities. In all, dividend payout gives the extent of inflows to the shareholders from the company. d) Dividend Payout Ratio From the profits of each company a cash flow called dividend is distributed among its shareholders. This is the continuous stream of cash flow to the owners of shares, apart from the price differentials (capital gains) in the market. The return to the shareholders, in the form of dividend, out of the company's profit is measured through the payout ratio. The payout ratio is computed as follows: Payout Ratio = (Dividend per share / Earnings per share) * 100 The percentage of payout ratio can also be used to compute the percentage of retained earnings. The profits available for distribution are either paid as dividends or retained internally for business growth opportunities. Hence, when dividends are not declared, the entire profit is ploughed back into the business for its future investments. e) Price/Earnings Ratio (P/E) The P/E multiplier or the price earnings ratio relates the current market price of the share to the earnings per share. This is computed as follows: Price/earnings ratio = Current market price / Earnings per share This ratio is calculated to make an estimate of appreciation in the value of a share of a company and is widely used by investors to decide whether or not to buy shares in a particular company. Many investors prefer to buy the company's shares at a low P/E ratio since the general interpretation is that the market is undervaluing the share and there will be a correction in the

12

market price sooner or later. A very high P/E ratio on the other hand implies that the company's shares are overvalued and the investor can benefit by selling the shares at this high market price. f) Debt-to-Equity Ratio Debt-Equity ratio is used to measure the claims of outsiders and the owners against the firms assets. Debt-to-equity ratio = Outsiders Funds / Shareholders Funds The debt-equity ratio is calculated to measure the extent to which debt financing has been used in a business. It indicates the proportionate claims of owners and the outsiders against the firms assets. The purpose is to get an idea of the cushion available to outsiders on the liquidation of the firm.

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1.3 OBJECTIVES OF THE Project

The objective of this project is to analyze our Indian Automobile Industry for investment purpose by monitoring the growth rate and performance on the basis of historical data by fundamental analysis Comparative analysis of two tough competitors TATA Motors and Maruti Suzuki through ratio analysis for investment in stock Suggesting as to which companys shares would be best for an investor to Invest The predictability of the value of the given equity under the given circumstances Analyze the impact of Economic factors on industrys and companys

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1.4 SCOPE OF THE STUDY

The scope of the study is identified after and during the study is conducted. The project is based on tools like fundamental analysis and ratio analysis. Further, the study is based on information of last five years. The analysis is made by taking into consideration two companies i.e. TATA andMotors and Maruti Suzuki

The scope of the study is limited for a period of five years.

The scope is limited to only the fundamental analysis of the chosen stocks

15

CHAPTER- 2

16

2. Company introduction
Arihant Capital Markets Limited, an ISO 9001:2008 Certified Company, is one of the leading financial services companies in India. company provide a gamut of products and services including securities and commodities broking, investment planning, financial planning, wealth management and merchant banking to a substantial and diversified clientele that includes individuals, corporations and financial institutions.

company are committed to giving our customers the best services and holdg to core values which always place our client's interests first. These values are reflected in our Business Principles, which emphasize integrity, commitment to excellence, innovation and teamwork. We have presence in 110 cities with over 620 offices across the nation. Clients turn to Arihant for its complete platform of financial services combined with excellent execution. We have a dedicated institutional team, which caters to mutual fund houses, insurance companies and almost all the banks active in the capital market segment.

Our goal is to create wealth for our retail and corporate customers through sound financial advice and appropriate investment strategies.

2.1 Company history

Arihant Capital Markets Limited was established in 1994 by Mr. Ashok Kumar Jain, a Chartered Accountant. Arihant has followed a consistent growth path and has established itself as one of the leading broking houses of the country with the support and confidence of its clients, investors, employees and associates. We pride ourselves on our independence and continuous service since inception.

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18

Since inception, Arihant is dedicated to creating wealth for clients and over a period of time we have built a reputation for quality service. We have also refined ourselves as an investment advisor and are poised to provide complete investment management solutions to our valued clientele.

2.2 Company associations

Arihant Capital Markets Limited is listed on the Bombay Stock Exchange since 1993 and since then the company has grown in leaps and bounds. We are members of the leading stock exchanges of India:

National Stock Exchange (NSE) Bombay Stock Exchange Limited (BSE)

We are a depository participant with:

National Securities Depositories Limited (NSDL) Central Depository Services Ltd. (CDSL)

We are members of leading commodities and currency exchanges in India:

National Commodities Exchange (NCDEX) Multi Commodities Exchange (MCX) MCX Stock Exchange Ltd (MCX-SX) NSE FX (Currency Derivatives segment of NSE)

We are AMFI Certified Mutual Fund Distributor, are registered with the SEBI for Portfolio Management Services (PMS) and are a Category - I Merchant Banker.

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2.3 Vision ,Mission and objective

Vision
Giving the best services to the customer Holding to core values which place clients interest first Success is defined by the success of our clients

Mission Provide our clients everything they need to do Client-centric approach Research based advice \

Objectives of the company

Provide integrated financial solution Meeting all the investment needs of the customers To achieve high levels of satisfaction of client To make financial product understandable and accessible to all Growth of customer

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2.4 Product and services

Arihant has developed a diverse and robust portfolio of financial services to help our customers manage their money in the way that benefits them most.

Broking
Arihant is one of the leading providers of broking services to individuals and institutions in the equity, derivatives and commodities segment in India. We proactively deliver the full depth and breadth of our broking services to clients through a network of more than 300 branches and franchises across India.

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Excellent research support, state-of-the-art tools, smart risk management, capital requirements, excellent order routing and efficient operational practices are key components of our offerings. We provide superior pre- and post-trading services to clients through robust technical architecture.

Distribution
With the objective of meeting all the investment needs of our clients, we provide distribution services of mutual funds and IPOs. We are an AMFI registered mutual fund distributor and are also registered with all the AMCs in India to sell the schemes offered by them. Our distribution network is backed by in-depth & comprehensive research and a strong team for marketing and sales support. We have a dedicated team exclusively for research on mutual funds and IPO. We provide monthly publications on mutual fund activity and fund recommendations and also furnish reports on New Fund Offers (NFO) and forthcoming IPOs recommendations. Our recommendations are objective and unbiased. For us, the clients growth is the top priority. Consistent delivery of high quality advice on mutual funds and IPO investment has established us as a competent and reliable distributor across the country. We are also amongst the few investment firms that offer the facility to invest in mutual funds and IPO online, giving our clients freedom from paperwork and making investing convenient for them.

Depository
Our Depository business helps us in providing integrated financial solutions to our clients. It is led by a team of professionals and the latest technological expertise, dedicated exclusively for the depository services. This creates a seamless transaction platform for clients to execute trades through Arihant Broking Business and settle them through Arihant Depository Services.
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Wealth management
Our wealth management business provides tailored, impartial and regulated financial planning advice on life, retirement and investment products. Our services to high net worth individuals and corporate clients include:

Asset management Stock broking Wealth structuring Financial planning.

Our Disciplined investment process

Arihant has a philosophy of investing in quality businesses with a strong management at reasonable prices. We follow both a bottom-up approach and top-down approach to investing with an intensive research process for screening potential investments. Top

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Research
Our research team supplements our broking, wealth management and distribution business. Our research team comprises expert investment professionals for fundamental and technical research covering equity, derivatives, mutual funds and IPOs. We draw upon our experience and depth of resources, to provide the financial and strategic advice necessary for successful asset management. From day one, our focus has been to offer investors a platform to make informed investment decisions based on thorough research and discipline. We have therefore established a research team to offer complete support and the right guidance to our clients. Our research is used only for our personal and institutional clients. Our research extends into every corner of our equities business, supplying invaluable analysis, information, and advice to our clients. We employ a disciplined and rigorous research process. Starting with a top down analysis, we look closely at the megatrends and industry drivers that create opportunities for innovative companies. We identify and affiliate ourselves with the fastest growing and fundamentally strong companies and provide our investors with the best investment opportunities.

Merchant banking and investment banking

We deliver high-quality strategic advice and creative financing solutions to corporates with the help of qualified professionals who have a combined experience of over 50 years in investment banking, corporate advisory and corporate finance. The primary activities of Merchant Banking Business are:

Capital Market Services Corporate Finance Strategic Services The comprehensive experience and knowledge of our team enables us to offer a host of financial services covering capital raising, mergers and acquisitions, advisory, debt syndication, qualified institutional placements, private placements, financial restructuring among others.

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Products
Equities and Derivatives Get excellent research tools, investment advice, fast trading and excellent execution service.

Mutual Funds Give your portfolio an instant shot of diversification. Access hundreds of mutual funds at Arihant.

Commodities Get the right advice and a service that will empower your trades. Arihant commodities - diversity with simplicity.

IPO Invest in the primary market to maximise your returns with an easy and quick service.

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2.5 Any other relevant information

Features and benefits

When you open a trading account with Arihant, you can be sure of getting the best. We ensure ease and convenience from opening of the account, to accessing research to execution and settlement of your trades. Our trading accounts are designed to meet the individual needs of investors and to provide you an edge in the markets.

Multiple exchanges: Access to NSE and BSE shares and derivative trading Excellent research support: Benefit from comprehensive actionable research to help you make smart investment decisions

Information on fingertips: Get daily market news, perspectives and analysis, latest market happenings and their impact and live market commentary

Advice: Get investment advice based on a whole range of investment options Efficient execution and settlement: Online, on the phone or in person no matter how you choose to trade with Arihant, we ensure speedy execution and timely settlement of trades

Balance and positions: Get easy access to all your accounts. Get a combined view of your trading account and balances, track your portfolio and all your capital gains and losses throughout the year online 24/7

Cash management: At Arihant making deposits, withdrawals and cheque writing is simple, fast and efficient. Get convenience of depositing funds the way you prefer electronically, by cheque or by wire*

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/w EPDw UJNDM0

Quarterly Results

Arihant Capital Markets Ltd.

Quarterly Results Rupees in Million

Particulars Audited / UnAudited Net Sales Total Expenditure PBIDT (Excl OI) Other Income Operating Profit Interest Exceptional Items PBDT Depreciation

Jun 2010 1.00 142.10 99.04 43.06 6.12 49.18 1.32 -0.05 47.82 3.62

Mar 2010 1.00 112.09 94.91 17.18 6.61 23.79 2.04 0.02 21.77 3.43

Dec 2009 1.00 126.73 98.89 27.84 5.57 33.40 2.03 -0.08 31.29 3.22

Sep 2009 1.00 129.10 103.33 25.77 6.51 32.28 2.49 0 29.69 3.14

Jun 2009 1.00 119.58 94.58 25.00 6.19 31.19 1.18 0 30.01 3.07

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Profit Before Tax Tax Provisions and contingencies Profit After Tax Extraordinary Items Prior Period Expenses Other Adjustments Net Profit Equity Capital Face Value (IN RS) Reserves Calculated EPS Calculated EPS (Annualised) No of Public Share Holdings

44.20 10.07

18.34 14.72

28.07 9.20

26.55 9.30

26.94 9.40

34.13 0 0 0 34.13 65.07 10

3.62 0 0 0 3.62 65.07 10

18.87 0 0 0 18.87 65.07 10

17.25 0 0 0 17.25 65.07 10 0

17.53 0 0 0 17.53 65.07 10

5.25

0.56

2.90

2.65

2.69

20.98

2.23

11.60

10.60

10.78

1657971.00 1657971.00 1657971.00 1657971.00 1657971.00

% of Public Share

25.48

25.48

25.48

25.48

25.48

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Holdings

PBIDTM% (Excl OI) PBIDTM% PBDTM% PBTM% PATM%

30.30 34.61 33.65 31.10 24.02 Notes

15.33 21.22 19.42 16.36 3.23 Notes

21.97 26.36 24.69 22.15 14.89 Notes

19.96 25.00 23.00 20.57 13.36 Notes

20.91 26.08 25.10 22.53 14.66 Notes

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CHAPTER- 3

30

3. RESEARCH METHODOLOGY

Research design or research methodology is the procedure of collecting, analyzing and interpreting the data to diagnose the problem and react to the opportunity in such a way where the costs can be minimized and the desired level of accuracy can be achieved to arrive at a particular conclusion. The methodology used in the study for the completion of the project and the fulfillment of the project objectives

3.1 Research Design

Research Duration
The research was conducted over duration of two month from 16May to 15 July2010.

Nature of Study:
The nature of the study is descriptive research

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3.2 SAMPLING DESIGN

Sampling method:
In this research probability sampling is used and in probability sampling I have used simple random sampling. The stocks are chosen in an unbiased manner and each stock is chosen independent of the other stocks chosen. The stocks are chosen from the automobile sector.

Sampling unit:
Sampling Unit indicates the people or subject that is selected for particular research. The stocks of automobile is sampling unit

Sample SizeSample size indicates the number of respondents that are selected for particular research. A sample size of 2 stocks from automobile sectors

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3.3 SOURCES OF DATA

The next step is to gather information. There are two types of data. They are: PRIMARY DATA SECONDARY DATA

Primary data: Primary data is collected mainly through Personal Interview, observation, but in my project there is hardly use of any primary data

Secondary Data: The data was collected through Internet, Newspaper & Annual report of the company. Secondary data can be collected quickly and inexpensively, compared to primary data. Secondary data is already available and can be obtained much faster and at a fraction of the cost of collecting them again. Secondary data can be used as the source of information to solve the problem they must be relevant, accurate, and sufficient. The major sources of secondary data are; News Paper Internet, Company websites Annual report of the company

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3.4 LIMITATIONS This study has been conducted purely to understand Equity analysis for investors.

The study is restricted to two companies based on Fundamental analysis.

The study is limited to the companies having equities.

Detailed study of the topic was not possible due to limited size of the project.

There was a constraint with regard to time allocation for the research study i.e. for a period of 60 days.

Suggestions and conclusions are based on the limited data of five years

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CHAPTER- 4

35

4. DATA ANALYSIS AND INTERPRETATION Fundamental Analysis of Automobile Industry

Fundamental analysis is an effort to determine the intrinsic value of a companys stock Three steps of fundamental analysis A. economic analysis B. industry analysis C. company analysis

A. Economic analysis
Economic analysis is the analysis of forces operating the overall economy a country. Economic anlysis is a process whereby strengthsand weaknesses of an economy are analyzed. Economic analysis is important in orderto understand exact condition of an economy 1. GDP and Automobile industry:

India is 16th in the world in terms of nominal factory output

The per capita Income is near about Rs38,000

more than 10 million people employed in this industry and if we add the number of people employed in the auto-component and auto ancillary industry then the number goes even higher

April-August 2010 was 33.88 percent indicating a marginal moderation in the growth rate in passenger car

The market value of Automobile Industry is more than US$8 bl.and Contribution in Indian GDP is near about 5%

It is expected that the Automobile Industry in India would be the 7th largest automobile market within the year 2016

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As the world economy slipped into recession hitting the demand hard and the banking sector takes conservative approach towards lending to corporate sector, the GDP growth has downgraded it to 7.1 per cent for 2008-09 and it has increased to 8.6% in 2010 by overcoming the setbacks of recession.

Year 2010 2009 2008

Mar 8.60 5.80 8.50

Jun 8.80 6.00 7.80

Sep

Dec

8.60 7.50

6.50 6.10

INDIAS SECOND QUARTER GDP RISES TO 8.8%

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2.Recession
All the major auto companies enjoyed the high growth ride till the mid 2008. But at the end of the year, industry had to face the hard truth and witnessed the fall in sales compared to last year. In December 2008, overall production fell by 22 % over the same month last year. Global recession has hit the Indian auto industry, India is strong and growing industry but the impact of recession is evident now on industry as sales & growth of automobile companies have declined. Passenger Vehicles segment registered negative growth. One of its supporting facts is that the sales in December 2008 for passenger vehicles fell by 13.86% over December 2007 Two Wheelers registered minor growth of 1.85 % during April December 2008. However, Two Wheelers sales recorded 15.43 percent fall in December 2008 over the same month last year. Although the sector was hit by economic slowdown, overall production (passenger vehicles, commercial vehicles, two wheelers and three wheelers) increased from 10.85 million vehicles in 2007-08 to 11.17 million vehicles in 2008-09. Passenger vehicles increased marginally from 1.77 million to 1.83 million while two-wheelers increased from 8.02 million to 8.41 million. Total number of vehicles sold including passenger vehicles, commercial vehicles, two-wheelers and three-wheelers in 2008-09 was 9.72 million as compared to 9.65 million in 2007-08

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3.Inflation

Despite of negative inflation these days (-.21% on 22-Aug-09) we saw an increasing trend of sales in auto sector. A moderate amount of inflation is important for the proper growth of an economy like India because it attracts more private investment.

The fall in wholesale prices from a year earlier is mainly due to a statistical base effect and doesnt suggest contraction in demand, the Reserve Bank of India said few week back, while revising its inflation forecast for the FY through March to around 5% from 4%.

In last FY despite of skyrocketing oil prices (crude oil price has already up to $130 compared to $20 per barrel five years back), Indian automobile Industry was not as much affected and experts think that Indian automobile industry will continue to grow this year despite all obstacles- oil price hike, higher interest rates. However, the effect of inflation has affected every sector which is related to car manufacturing and production. The increase in the price of fuel and the steel due to inflation has led to a slower growth rate of the car industry in India. The effect of inflation has taken the rise in the price rate of the cars by 3-4% which in turn suffices the need to meet the rise in price of the raw materials to build a car. The car market and the car industry witnessed a fall of 8-9%.

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4.Foreign direct investment

In India FDI up to 100 percent, has been permitted under automatic route to this sector

which has led to a turnover of USD 12 billion in the Indian auto industry and USD 3 billion in the auto parts industry.

manufacturing costs in India are 25 to 30 per cent lower than their western counterparts FDI inflows in Automobile Industry 2008-09 was Rs.5,212 Cr an increase of 47.25% compare to 2007- 08, while in April-May 2009 it was around Rs.497 Cr

5.Export

Society of Indian Automobile Manufacturers (SIAM), automobile sales (including passenger vehicles, commercial vehicles, two-wheelers and three-wheelers) in theoverseas markets increased to 1.53 million units in 2008-09 from 1.23 million units in 2007-08.

Export of passenger vehicles increased from 218,401 in 2007-08 to 335,739 units in 2008-09. There is a continuous increase in the export of automobiles since the financial year 2005 except for the decline in the export of commercial vehichles in the financial year 2008- 09, which may be attributed to the global economic recession.

Despite recession, the Indian automobile market continues to perform better than most of the other industries in the economy in coming future, more and more MNCs coming in India to setup their ventures which clearly shows the scope of expansion

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B.) INDUSTRY ANALYSIS(AUTOMOBI LE)

The current trends of the global automobile industry reveal that in the developed countries the automobile industries are stagnating as a result of drooping markets, whereas the automobile industry in the developing nations, have been consistently registering higher growth rates every passing year for their domestic flourishing domestic automobile markets. Being one of the fastest growing sectors in the world its dynamic growth phases are explained by the nature of competition, Product Life Cycle and consumer demand.

The industry is at the crossroads with global mergers and relocation of production centers to emerging developing countries. In 2009, rate of growth of India Auto industry is 9% .The Indian automobile sector is far from being saturated, leaving ample opportunity for volume growth.

Segmentation of Automobile Industry The automobile industry comprises of Heavy vehicles (trucks, buses, tempos, tractors); passenger cars; Two-wheelers; Commercial Vehicles; and Three-wheelers. Industrial Analysis of any industry can be done based on the following headings: 1. Industrial Life Cycle 2. SWOT Analysis 3.Industry Specific Index

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1.) Industrial Life Cycle The industrial life cycle is a term used for classifying industry vitality over time. Industry life cycle classification generally groups industries into one of four stages: pioneer, growth, maturity and decline.

In the pioneer phase, the product has not been widely accepted or adopted. Business strategies are developing, and there is high risk of failure. However, successful companies can grow at extraordinary rates. The Indian automobile sector has passed this stage quite successfully.

In the growth phase, the product market has been established and there is at least some historical guide to ground demand estimates. The industry is growing rapidly, often at an accelerating rate of sales and earnings growth. Indian Automotive Industry is booming with a growth rate of around 15 % annually. The cumulative growth of the Passenger Vehicles segment during April 2007 March 2008 was 12.17 percent. Passenger Cars grew by 11.79 percent, Utility Vehicles by 10.57 percent and Multi Purpose Vehicles by 21.39 percent in this period. The Commercial Vehicles segment grew marginally at 4.07 percent. While Medium & Heavy Commercial Vehicles declined by 1.66 percent, Light Commercial Vehicles recorded a growth of 12.29 percent. Three Wheelers sales fell by 9.71 percent with sales of Goods Carriers declining drastically by 20.49 percent and Passenger Carriers declined by 2.13 percent during AprilMarch 2008 compared to the last year. Two Wheelers registered a negative growth rate of 7.92 % during this period, with motorcycles and electric two wheelers segments declining by 11.90 percent and 44.93% respect. However, Scooters and Mopeds segment grew by 11.64% and 16.63% respect. The growth rate of the automobile industry in India is greater than the GDP growth rate of the economy, so the automobile sector can be very well be said to be in the growth phase.

As the product matures, growth slows as penetration reaches practical limits. Companies began to focus on market share rather than growth. Industry demand tends to follow the
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overall economy, but the scope of growth of the automobile sector is very much possible in India due to the increasing income of the middle class and their income as well as standard of living.

percent and 44.93% respect. However, Scooters and Mopeds segment grew by 11.64% and 16.63% respect. The growth rate of the automobile industry in India is greater than the GDP growth rate of the economy, so the automobile sector can be very well be said to be in the growth phase. As the product matures, growth slows as penetration reaches practical limits. Companies began to focus on market share rather than growth. Industry demand tends to follow the overall economy, but the scope of growth of the automobile sector is very much possible in India due to the increasing income of the middle class and their income as well as standard of living.

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2). Swot analysis: A scan of the internal and external environment is an important part of the strategic planning process. Environmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats (T). Such an analysis of the strategic environment is referred to as a SWOT analysis. SWOT analysis of the Indian automobile sector gives the following points: Strengths Large domestic market Sustainable labour cost advantage Competitive auto component vendor base Government incentives for manufacturing plants Strong engineering skills in design etc

Weaknesses

Low labour productivity High interest costs and high overheads make the production uncompetitive Various forms of taxes push up the cost of production Low investment in Research and Development Infrastructure bottleneck

Opportunities Increasing challenges in consumer demands, technology development, and globalization. Heavy thrust on mining and construction activity Increase in the income level Cut in excise duties

.Threats Ignorance of Research & development Rising interest rates Cut throat competition
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3. Industry specific index Industry specific index also called as sectoral index are those indices, which represent a specific industry sector. All stocks in a sectoral index belong to that sector only. Hence an index like the BSE auto index is made of auto stocks. Sectoral Indices are very useful in tracking the movement and performance of particular sector

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Above is the Indian Auto Industry Index(BSE) shows the ups and downs over the period of 5 years. Intially in 2003 when major giants got listed on stock exchange TATA Motors, Maruti Suzuki, etc. indian auto industry start picking up growth slowly in the first end of 1st quarter index reaches to its highest in his history. Than we saw a steady fall in the index and in the mid 2006 reaches to years lowest point it again start booming and than year on year we saw a up and down movement in the index as lots of new players came in Indian market with foreign colaboration but when 2008 came with global slowdown it brings the demand of automobile so low that index reaches to its lowest in past 5year . Most of the company even shut down their manufacturing units for more than a week, production came down because of less demand in the economy. Also no further launches were made in mid or late 2008 and postponed to next year. We have also saw a fall in FDIs in automobile Industry. But in the beginning of 2009 right from 1st quarter auto industry again start regaining and we
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saw a tremondous growth in auto industry which never seen before not in india but all over the world.

The demand of 2 and 4 Wheelers start increasing rapidly which also force auto industry to employ more workers to meet demand and with in the 2nd quarter of FY2009-10 Auto index reaches to its highest ever crossed mark of 6000. And this growth of industry will be carry further as festive season still to come, so there is a lot of scope to growth in this industry

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C. COMPANY ANALYSIS

The company analysis shows the long-term strenght of the company that what is the financial position of the company in the market, what is the investment opportunities in the selected companies, ,, what are the policies of government towards the company and how the stake of the company divested among different groups of people. Here, I have taken two companies namely TATA Motors and , Maruti Suzuki for the purpose of fundamental analysis

Tata Motors
Tata Motors Limited is India's largest automobile company, with consolidated revenues of Rs. 92,519 crores (USD 20 billion) in 2009-10. It is the leader in commercial vehicles in each segment, and among the top three in passenger vehicles with winning products in the compact, midsize car and utility vehicle segments. The company is the world's fourth largest truck manufacturer, and the world's second largest bus manufacturer.

Maruti suzuki
Maruti Suzuki is a subsidiary of Suzuki Motor Corporation Japan. More than half the numbers of cars sold in India wear Maruti Suzuki badge. They offer a full range of cars from entry level Maruti 800 & Alto to stylish hatchback Ritz, A star, Swift, Wagon R, Estillo and sedans Dzire, SX4 and Sports Utility Vehicle Grand Vitara. Since inception, it has produced and sold over 7.5 million vehicles in India and exported over 500,000 units to Europe and other countries. Its turnover for the fiscal 2008-09 stood at Rs. 203,583 Million & Profit after Tax at Rs. 12,187 Million

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TATA MOTORS Profit & Loss account Profit & Loss account of Tata Motors Mar '05 Income Sales Turnover 20,262.61 Excise Duty 3,063.44 Net Sales 17,199.17 Other Income 403.98 Stock Adjustments 144.00 Total Income 17,747.15 Expenditure Raw Materials 12,245.28 Power & Fuel Cost 237.81 Employee Cost 1,039.34 Other Manufacturing Exp 592.64 Selling and Admin Exp 890.21 Miscellaneous Expenses 620.27 Preoperativ Exp Capitalised -282.43 Total Expenses 15,343.12 Operating Profit 2,000.05 PBDIT 2,404.03 Interest 234.30 PBDT 2,169.73 Depreciation 450.16 Other Written Off 67.12 Profit Before Tax 1,652.45 Extra-ordinary items -1.54 PBT (Post Extra-ord Items) 1,650.91 Tax 415.50 Reported Net Profit 1,236.95 Total Value Addition 3,097.84 Preference Dividend 0.00 Equity Dividend 452.19 Corporate Dividend Tax 63.42 Per share data (annualised) Shares in issue (lakhs) 3,617.52 Earning Per Share (Rs) 34.19 Equity Dividend (%) 125.00 Book Value (Rs) 113.65

Mar '06 23,490.55 3,401.92 20,088.63 852.41 256.91 21,197.95 14,633.02 258.51 1,143.13 671.31 1,061.07 740.99 -308.85 18,199.18 2,146.36 2,998.77 350.24 2,648.53 520.94 73.78 2,053.81 0.00 2,053.81 524.93 1,528.88 3,566.16 0.00 497.94 69.84 3,828.34 39.94 130.00 143.94

Mar '07 31,089.69 4,425.44 26,664.25 1,114.38 349.68 28,128.31 19,879.56 327.41 1,367.83 872.95 1,505.23 1,051.49 -577.05 24,427.42 2,586.51 3,700.89 455.75 3,245.14 586.29 85.02 2,573.83 -0.07 2,573.76 660.37 1,913.46 4,547.86 0.00 578.07 98.25 3,853.74 49.65 150.00 177.59

Mar '08 33,123.54 4,355.63 28,767.91 734.17 -40.48 29,461.60 20,891.33 325.19 1,544.57 904.95 2,197.49 964.78 -1,131.40 25,696.91 3,030.52 3,764.69 471.56 3,293.13 652.31 64.35 2,576.47 0.00 2,576.47 547.55 2,028.92 4,805.58 0.00 578.43 81.25 3,855.04 52.63 150.00 202.70

Mar '09 28,538.20 2,877.53 25,660.67 921.29 -238.04 26,343.92 18,801.37 304.94 1,551.39 866.65 1,652.31 1,438.89 -916.02 23,699.53 1,723.10 2,644.39 704.92 1,939.47 874.54 51.17 1,013.76 15.29 1,029.05 12.50 1,001.26 4,898.16 0.00 311.61 34.09 5,140.08 19.48 60.00 240.64

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Balance sheet of TATA Motors

Mar '05 Sources of funds Total Share Capital 361.79 Equity Share Capital 361.79 Share Application Money 0.00 Reserves 3,749.60 Revaluation Reserves 0.00 Networth 4,111.39 Secured Loans 489.81 Unsecured Loans 2,005.61 Total Debt 2,495.42 Total Liabilities 6,606.81 Application of funds Gross Block 6,611.95 Less: Accum. Dep 3,454.28 Net Block 3,157.67 Capital Work in Progress 538.84 Investments 2,912.06 Inventories 1,601.36 Sundry Debtors 811.32 Cash and Bank Balance 345.26 Total Current Assets 2,757.94 Loans and Advances 2,831.16 Fixed Deposits 1,659.78 Total CA, Loans & Advances 7,248.88 Deffered Credit 0.00 Current Liabilities 6,142.74 Provisions 1,126.06 Total CL & Provisions 7,268.80 Net Current Assets -19.92 Total Assets 6,606.81 Contingent Liabilities 1,450.32 Book Value (Rs) 113.65

Mar '06 382.87 382.87 0.00 5,127.81 26.39 5,537.07 822.76 2,114.08 2,936.84 8,473.91 7,971.55 4,401.51 3,570.04 951.19 2,015.15 2,012.24 715.78 327.66 3,055.68 5,964.61 791.77 9,812.06 0.00 6,673.61 1,215.04 7,888.65 1,923.41 8,473.91 2,185.63 143.94

Mar '07 385.41 385.41 0.00 6,458.39 25.95 6,869.75 2,022.04 1,987.10 4,009.14 10,878.89 8,775.80 4,894.54 3,881.26 2,513.32 2,477.00 2,500.95 782.18 535.78 ,818.91 6,208.53 290.98 10,318.42 0.00 6,956.88 1,364.32 8,321.20 1,997.22 10,878.89 5,196.07 177.59

Mar '08 385.54 385.54 0.00 7,428.45 25.51 7,839.50 2,461.99 3,818.53 6,280.52 14,120.02 10,830.83 5,443.52 5,387.31 5,064.96 4,910.27 2,421.83 1,130.73 750.14 4,302.70 4,831.36 1,647.17 10,781.23 0.00 10,040.37 1,989.43 12,029.80 -1,248.57 14,120.02 5,590.83 202.70

Mar '09 514.05 514.05 0.00 11,855.15 25.07 12,394.27 5,251.65 7,913.91 13,165.56 25,559.83 13,905.17 6,259.90 7,645.27 6,954.04 12,968.13 2,229.81 1,555.20 638.17 4,423.18 5,909.75 503.65 10,836.58 0.00 10,968.95 1,877.26 12,846.21 -2,009.63 25,559.83 5,433.07 240.64

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MARUTI SUZUKI Profit & Loss account Profit & Loss account of Maruti Suzuki Mar 05 Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income 13,458.20 2,411.90 11,046.30 187.50 141.70 11,375.50 8,650.20 58.10 196.00 215.70 374.27 121.73 -22.40 9,593.60 1,594.40 1,781.90 36.00 1,745.90 456.80 16.30 1,272.80 51.40 1,324.20 446.50 853.60 943.40 0.00 57.80 8.20 2,889.10 29.55 40.00 151.56 Mar06 14,898.80 2,700.90 12,197.90 184.40 199.70 12,582.00 9,423.40 57.20 228.70 302.40 349.51 145.39 -6.70 10,499.90 1,897.70 2,082.10 20.40 2,061.70 285.40 0.00 1,776.30 5.40 1,781.70 560.90 1,189.10 1,076.50 0.00 101.10 14.20 2,889.10 41.16 70.00 188.73 Mar07 17,358.40 2,552.00 14,806.40 338.10 -200.70 14,943.80 10,863.00 97.40 288.40 392.40 483.26 239.44 -14.30 12,349.60 2,256.10 2,594.20 37.60 2,556.60 271.40 0.00 2,285.20 33.40 2,318.60 705.30 1,562.00 1,486.60 0.00 130.00 21.90 2,889.10 54.07 90.00 237.23 Mar08 21,200.40 3,133.60 18,066.80 494.00 336.30 18,897.10 13,958.30 147.30 356.20 523.30 521.48 287.62 -19.80 15,774.40 2,628.70 3,122.70 59.60 3,063.10 568.20 0.00 2,494.90 76.60 2,571.50 763.30 1,730.80 1,816.10 0.00 144.50 24.80 2,889.10 59.91 100.00 291.28 Mar09 23,381.50 2,652.10 0,729.40 491.70 -356.60 20,864.50 15,983.20 193.60 471.10 716.10 751.06 303.44 -22.30 18,396.20 1,976.60 2,468.30 51.00 2,417.30 706.50 0.00 1,710.80 37.90 1,748.70 457.10 1,218.70 2,413.00 0.00 101.10 17.20 2,889.10 42.18 70.00 323.45

Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Exp Selling and Admin Exp Miscellaneous Expenses Preoperative Exp Capitalized Total Expenses Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualized) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)

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MARUTI SUZUKI Balance Sheet Balance Sheet of Maruti Suzuki India Mar '05 Sources Of Funds Total Share Capital 144.50 Equity Share Capital 144.50 Share Application Money 0.00 Reserves 4,234.30 Revaluation Reserves 0.00 Networth 4,378.80 Secured Loans 307.60 Unsecured Loans 0.00 Total Debt 307.60 Total Liabilities 4,686.40 Application Of Funds Gross Block 5,053.10 Less: Accum. Dep 3,179.40 Net Block 1,873.70 Capital Work in Progress 42.10 Investments 1,516.60 Inventories 666.60 Sundry Debtors 599.50 Cash and Bank Balance 79.40 Total Current Assets 1,345.50 Loans and Advances 801.90 Fixed Deposits 950.00 Total CA, Loans & Adv 3,097.40 Deffered Credit 0.00 Current Liabilities 1,454.20 Provisions 389.20 Total CL & Provisions 1,843.40 Net Current Assets 1,254.00 Miscellaneous Expenses 0.00 Total Assets 4,686.40 Contingent Liabilities 893.60 Book Value (Rs) 151.56

Mar '06 144.50 144.50 0.00 5,308.10 0.00 5,452.60 71.70 0.00 71.70 5,524.30 4,954.60 3,259.40 1,695.20 92.00 2,051.20 881.20 654.80 51.60 1,587.60 933.10 1,350.00 3,870.70 0.00 1,704.80 480.00 2,184.80 1,685.90 0.00 5,524.30 1,289.70 188.73

Mar '07 144.50 144.50 0.00 6,709.40 0.00 6,853.90 63.50 567.30 630.80 7,484.70 6,146.80 3,487.10 2,659.70 238.90 3,409.20 713.20 747.40 114.80 1,575.40 1,072.60 1,308.00 3,956.00 0.00 2,288.60 490.50 ,779.10 1,176.90 0.00 7,484.70 2,094.60 237.23

Mar '08 144.50 144.50 0.00 8,270.90 0.00 8,415.40 0.10 900.10 900.20 9,315.60 7,285.30 3,988.80 3,296.50 736.30 5,180.70 1,038.00 655.50 324.00 2,017.50 1,173.00 0.00 3,190.50 0.00 2,718.90 369.50 3,088.40 102.10 0.00 9,315.60 2,734.20 291.28

Mar '09 144.50 144.50 0.00 9,200.40 0.00 9,344.90 0.10 698.80 698.90 10,043.80 8,720.60 4,649.80 4,070.80 861.30 3,173.30 902.30 918.90 239.00 2,060.20 1,809.80 1,700.00 5,570.00 0.00 3,250.90 380.70 3,631.60 1,938.40 0.00 10,043.80 1,901.70 323.45

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Ratio analysis of TATA Motors and Maruti Suzuki Profitability Ratio

Return on investment
Years TATA Maruti Mar 05 30.09 19.49 Return On Investment Mar 06 Mar 07 Mar 08 27.74 27.96 25.98 21.81 22.79 20.56 Mar 09 8.09 13.04

ROI
35 30 25 ROI 20 15 10 5 0 Mar. 05 Mar. 06 Mar. 07 YEARS Mar. 08 Mar. 09 TATA Maruti

Interpretations
ROI is one of the most important ratios used for measuring the overall efficiency of a firm and determines whether the investments in the firms are attractive or not. According the graph, ROI of TATA has declined to a large extent in 2009, making it a quite risky investment. Marutis ROI has also declined. As the investors would like to invest only where the return is higher, Maruti would be attractive for investment.
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Net Profit
Years TATA Maruti Mar 05 7.13 7.72 Net Profit Mar 06 Mar 07 7.61 7.17 9.75 10.55 Mar 08 7.05 9.58 Mar 09 3.90 5.87

Net Profit
12 NET PROFIT RATIO 10 8 6 4 2 0 Mar. 05 Mar. 06 Mar. 07 YEARS Mar. 08 Mar. 09 TATA Maruti

Interpretations
Tata Motors during the 4 years between 2oo5 to 2008 are quite stable but, in 2009 due to recession sales decrease and production cost increased which shows the negative net profit margine which are 3.9 Maruti Suzuki shows a negative trends from 2007 onwards Maruti suzuki is good option for investment in equity because of high net profit ratio than TATA Motors

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Earning Per Share

EPS Years TATA Maruti Mar 05 34.19 29.55 Mar 06 39.94 41.16 Mar 07 49.65 54.07 Mar 08 52.63 59.91 Mar 09 19.48 42.18

EPS
70 60 50 EPS 40 30 20 10 0 Mar. 05 Mar. 06 Mar. 07 YEARS Mar. 08 Mar. 09 TATA Maruti

Interpretations
EPS measures the profit available to the equity shareholders per share, that is, the amount that they can get on every share held. Till 2008 TATA and Maruti had a rising EPS but in 2009 both of them fall and the effect is more on Tata motors because of the slump in domestic and international markets and sharp fall in sales and net profits which resulted in low EPS, therefore maruti is better option for investment

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Dividend Per Share

DPS Years TATA Maruti Mar 05 12.5 2 Mar 06 13 3.5 Mar 07 15 4.5 Mar 08 15 5 Mar 09 6 3.5

DPS
16 14 12 10 DPS 8 6 4 2 0 Mar. 05 Mar. 06 Mar. 07 YEARS Mar. 08 Mar. 09 TATA Maruti

Interpretations
Tata motors and Maruti Suzuki both the companies showed a positive trend in paying dividends till 2008, but the scenario changed in 2009 as both the companys dividend per share fell. According to graph Tatas dividend has fallen drastically while Maruti stick to below 5 per share. Therefore Maruti would be the best option for an investor

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Dividend Payout Ratio

DPR Years TATA Maruti Mar 05 41.68 7.73 Mar 06 37.13 9.69 Mar 07 35.34 9.72 Mar 08 35.51 9.78 Mar 09 35.52 9.7

DPR
45 40 35 30 DPR 25 20 15 10 5 0 Mar. 05 Mar. 06 Mar. 07 years Mar. 08 Mar. 09 TATA Maruti

Interpretations

Dividend payout ratio is the percentage of earnings paid to shareholders in dividends. It provides an idea to an investor of how well earnings support the dividend payments. Maruti has maintained a stable payout ratio. TATA has increased their payout ratio

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Price earning ratio

Years TATA Maruti Mar 05 19.09 21.5 P/E Ratio Mar 06 Mar 07 22.5 14.9 22.5 18-3 Mar 08 4.6 8.6 Mar 09 40.6 36-9

P/E ratio
45 40 35 p/e ratio 30 25 20 15 10 5 0 Mar. 05 Mar. 06 Mar. 07 years Mar. 08 Mar. 09 TATA Maruti

Interpretations
Tata Motors from 2005 to 2008 have low ratio than Maruti Suzuki but in 2009 Tata has high ratio than the maruti Suzuki So from 2005 to 2008 earning potential of Maruti Suzuki is more than Tata motors but Tatas earning potential increase in 2009 than Maruti Suzuki

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Price to book value

Years TATA Maruti Mar 05 5.74 4.19 P/bv Ratio Mar 06 Mar 07 6.24 4.16 4.9 4.17 Mar 08 1.19 1.76 Mar 09 3.28 4.81

P/bv ratio
7 6 5 p/bv ratio 4 3 2 1 0 Mar. 05 Mar. 06 Mar. 07 years Mar. 08 Mar. 09 TATA Maruti

Interpretations
Tata motors from 2005 to 2006 have higher P/bv ratio than maruti Suzuki and from 2007 to 2009 Tata motors have lower ratio than Maruti Suzuki So, from 2007 to 2009 maruti Suzuki shows better position because of higher P/bv ratio

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Leverage Ratios

Debt Equity ratio Debt Equity ratio

Years TATA Maruti Mar 05 .61 .070 Mar 06 .53 .013 Mar 07 .58 .092 Mar 08 .80 .107 Mar 09 1.06 .074

Debt Equity ratio

1.2 1 DEBT EQUITY RATIO 0.8 0.6 0.4 0.2 0 Mar. 05 Mar. 06 Mar. 07 YEARS Mar. 08 Mar. 09

TATA Maruti

Interpretation
A high debt to equity ratio suggests that a company has financed its growth mostly via debt. We see that the debt equity ratio of TATA motors is very high compared to that of Maruti. It means that a lot of debt is used by TATAs to finance its increased operations. Sometimes the cost of the debt financing may outweigh the return that the company generates on the debt through investment and business activities and can lead to bankruptcy. Maruti is going very swiftly in this field
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Interest coverage ratio Interest coverage ratio Mar 06 Mar 07 8.56 8.12 102.06 69

Years TATA Maruti

Mar 05 10.26 49-5

Mar 08 7.98 52.31

Mar 09 3.75 48.4

Interest coverage ratio

120 interest coverage ratio 100 80 60 40 20 0 Mar. 05 Mar. 06 Mar. 07 years Mar. 08 Mar. 09 TATA Maruti

Interpretation
Tata Motors have very low interest coverage ratio than maruti Suzuki So, Tata motors use excess debt content than Maruti suuki which is not good for company

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Liquidity Ratio Current ratio Current ratio

Years TATA Maruti Mar 05 .99 1.68 Mar 06 1.24 1.77 Mar 07 1.24 1.42 Mar 08 .89 1.03 Mar 09 .84 1.53

Current Ratio
2 1.8 1.6 CURRENT RATIO 1.4 1.2 1 0.8 0.6 0.4 0.2 0 Mar. 05 Mar. 06 Mar. 07 YEARS Mar. 08 Mar. 09 TATA Maruti

Interpretation

We see in calculation maruti has more strong liquidity than tata motors as it current ratio always greater than 1 maruti is more successful paying of its liquidity and tat motors ratio is more than 1 only in 2006 and 2007

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Quick Ratio Quick ratio

Years TATA Maruti Mar 05 .78 1.32 Mar 06 .99 1.37 Mar 07 .94 1.17 Mar 08 .69 .69 Mar 09 .67 1.29

Quick Ratio
1.6 1.4 QUICK RATIO 1.2 1 0.8 0.6 0.4 0.2 0 Mar. 05 Mar. 06 Mar. 07 YEARS Mar. 08 Mar. 09 TATA Maruti

Interpretations
Maruti is always showing positive trend on its ratio is always greater than 1 except in 2008 While Tata Motors was doing good till 2007 but performance decrease from 2008 onwards So, investment opportunities in maruti Suzuki is better than Tata Motors

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CHAPTER- 5

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FINDINGS
Data analysis and interpretations of the ratios of Tata Motors and Maruti Suzuki the following findings have been given:

Return on investment has been fluctuating since 2005 and the year 2009 witnessed low returns in case of both the companies amid which TATA has the least rate of return. Maruti Suzuki has high efficiency of operation than Tata Motors .positive trend in the earnings per share till 2008 but downward trend in 2009. Especially TATA has witnessed a steep fall in the year 2009. ,so both the company have show good track of profitability and better capital productivity .Dividend per share is increasing year to year in both the companies from 2005 to 2008 but in 2009 declined dps in both the companies.due to recession

.Maruti with a stable dividend payout ratio since 2005. TATA has high ratio than Maruti Suzuki ,So, Tata use liberal dividend policy and Maruti Suzuki use conservative dividend

Maruti Suzuki from 2005 to 2008 have high P/E ratio than Tata

So, the market

confidence on Maruti Suzukis equity is more than the Tata Motors , but in 2009 Tata motors has increase their market confidence than Maruti Suzuki due to higher p/E ratio than theMaruti Suzuki Tata Motors from 2005 to 2006 high rate of return a firm is earning on its common stock than Maruti Suzuki , but from 2007 to 2009 Maruti earn more on its equity than Tata motors

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Tata Motors has extremely high debt-equity ratio So, it is high geared company due to this , there is more volatile in return to shareholders but maruti Suzuki doing well and Maruti Suzuki has less volatile in return to shareholder

Maruti is in better position to cover its current interest payment out of current profits than Tata Motors

By analyzing the current trend of Indian Economy and Automobile industry being a developing economy . Automobile industry contribute 5% in the GDP of india and huge contribute in Employment Recession hits the Automobile industry and decline in growth Inflation is not much affected automobile industry except car segment . car segment affected badly and decline sales 8 to 9% FDI in automobile industry has in great position Export continuous increase in Automobile industry since 2005nexcept lot of scope for growth and this industry .levels of huge opportunities to invest being proved by more foreign companies set up there ventures in India.

.Increase in income level & consumer demand, technology, globalization, foreign investments are few of the opportunities which the industry has to explore for developing the economy.

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CONCLUSION
Maruti Suzuki India LTD. company has a trend of growth from till 2008.During the financial year 2008-09 the there is downfall in the growth of the company. The main reason behind this downfall is because of the global recession. The downfall of net profit during the financial year 2008-09 is 29.6% over the financial year 2007-2008.

TATA Motors, which was trying to consolidate its leadership position in the market, also had to face the impact of global meltdown. Amid the crippling economic crisis, Tata purchased Britains Jaguar Land Rover (JLR) from Ford Motor Company. Acquiring JLR saddled Tata with some tough losses. Dividends and earnings remain low.

Global recession had a dampener effect on the growth of automobile industry but it was a short term phenomenon. The industry is bouncing back. One factor favoring this point is that India has become a hot destination for companies of diverse nature to invest in. Cut throat competition among top companies, lots of new car and vehicle model launches at regular intervals keeps the Indian auto sector moving.

A continuous effort at cost cutting and improving productivity will help the companies in making reasonable profits despite the impact of higher commodity prices and weaker rupee.

The analysis gives an optimistic view about the industry and its growth which recommends the investors to keep a good watch on the major players to benefit in terms of returns on their investments
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SUGGESTIONS
By analyzing the automobile industry with the help of fundamental analysis, it has been revealed that this industry has a lot of potential to grow. So recommending investing in Automobile industry with no doubt is going to be a good and smart option because this industry is booming like never before not only in India but all over the world.

Maruti Suzuki would be a better option for an investor compared to TATA In view of the slump in the domestic and international market, TATA has recorded a slowdown in sales and income level. Its Earnings per share has also declined drastically. It has reduced its dividend per share from rs.15 in the previous year to rs.6 in 2009. The return on investment is also very low. In view of all these, TATA is not a better option for an investor.

The global turmoil in financial markets has affected Maruti also. The company is maintaining a stable position. Its sales have grown over past five years. Inspite of the general economic slowdown, the sales of Maruti Suzuki increased from Rs 21200 Crore to Rs 23381 Crore. As it is maintaining a stable position, it can be recommended that for now Maruti share price shows that its a time to hold the position or buy more shares as there is scope of further rise in share prices.

Investing in Maruti Suzuki for long time could be a good option whereas in TATA motors there is a chance of getting correction, as it already went on high side in a very short period of time and is experiencing a downfall from 2008.

Tata Motors should use less debt and control debt equity ratio

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CHAPTER- 6

71

BIBLIOGRAPHY

Text Books
Security Analysis and Portfolio Managementby Punithavathy Pandian, Vika Publications. Security analysis and portfolio managementby V.A. Avadhani Financial Markets and Servicesby Gordon and Natarajan, Himalaya Publications. Financial Managementby Shashi K Gupta and R. K Sharma, Kalyani Publications.

Newspapers Economic times Business line

Websites www.nseindia.com www.bseindia.com www.investopedia.com www.moneycontrol.com www.arihantcapital.com www.tatamotors.com www.marutisuzuki.com www.yahoofinance.com

CNBC TV18 The Informed Investor supported by SEBI and presented byNSE

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ANNEXURE

TATA MOTORS Profit & Loss account Profit & Loss account of Tata Motors Mar '05 Income Sales Turnover 20,262.61 Excise Duty 3,063.44 Net Sales 17,199.17 Other Income 403.98 Stock Adjustments 144.00 Total Income 17,747.15 Expenditure Raw Materials 12,245.28 Power & Fuel Cost 237.81 Employee Cost 1,039.34 Other Manufacturing Exp 592.64 Selling and Admin Exp 890.21 Miscellaneous Expenses 620.27 Preoperativ Exp Capitalised -282.43 Total Expenses 15,343.12 Operating Profit 2,000.05 PBDIT 2,404.03 Interest 234.30 PBDT 2,169.73 Depreciation 450.16 Other Written Off 67.12 Profit Before Tax 1,652.45 Extra-ordinary items -1.54 PBT (Post Extra-ord Items) 1,650.91 Tax 415.50 Reported Net Profit 1,236.95 Total Value Addition 3,097.84 Preference Dividend 0.00 Equity Dividend 452.19 Corporate Dividend Tax 63.42 Per share data (annualised) Shares in issue (lakhs) 3,617.52 Earning Per Share (Rs) 34.19 Equity Dividend (%) 125.00 Book Value (Rs) 113.65

Mar '06 23,490.55 3,401.92 20,088.63 852.41 256.91 21,197.95 14,633.02 258.51 1,143.13 671.31 1,061.07 740.99 -308.85 18,199.18 2,146.36 2,998.77 350.24 2,648.53 520.94 73.78 2,053.81 0.00 2,053.81 524.93 1,528.88 3,566.16 0.00 497.94 69.84 3,828.34 39.94 130.00 143.94

Mar '07 31,089.69 4,425.44 26,664.25 1,114.38 349.68 28,128.31 19,879.56 327.41 1,367.83 872.95 1,505.23 1,051.49 -577.05 24,427.42 2,586.51 3,700.89 455.75 3,245.14 586.29 85.02 2,573.83 -0.07 2,573.76 660.37 1,913.46 4,547.86 0.00 578.07 98.25 3,853.74 49.65 150.00 177.59

Mar '08 33,123.54 4,355.63 28,767.91 734.17 -40.48 29,461.60 20,891.33 325.19 1,544.57 904.95 2,197.49 964.78 -1,131.40 25,696.91 3,030.52 3,764.69 471.56 3,293.13 652.31 64.35 2,576.47 0.00 2,576.47 547.55 2,028.92 4,805.58 0.00 578.43 81.25 3,855.04 52.63 150.00 202.70

Mar '09 28,538.20 2,877.53 25,660.67 921.29 -238.04 26,343.92 18,801.37 304.94 1,551.39 866.65 1,652.31 1,438.89 -916.02 23,699.53 1,723.10 2,644.39 704.92 1,939.47 874.54 51.17 1,013.76 15.29 1,029.05 12.50 1,001.26 4,898.16 0.00 311.61 34.09 5,140.08 19.48 60.00 240.64

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Balance sheet of TATA Motors

Mar '05 Sources of funds Total Share Capital 361.79 Equity Share Capital 361.79 Share Application Money 0.00 Reserves 3,749.60 Revaluation Reserves 0.00 Networth 4,111.39 Secured Loans 489.81 Unsecured Loans 2,005.61 Total Debt 2,495.42 Total Liabilities 6,606.81 Application of funds Gross Block 6,611.95 Less: Accum. Dep 3,454.28 Net Block 3,157.67 Capital Work in Progress 538.84 Investments 2,912.06 Inventories 1,601.36 Sundry Debtors 811.32 Cash and Bank Balance 345.26 Total Current Assets 2,757.94 Loans and Advances 2,831.16 Fixed Deposits 1,659.78 Total CA, Loans & Advances 7,248.88 Deffered Credit 0.00 Current Liabilities 6,142.74 Provisions 1,126.06 Total CL & Provisions 7,268.80 Net Current Assets -19.92 Total Assets 6,606.81 Contingent Liabilities 1,450.32 Book Value (Rs) 113.65

Mar '06 382.87 382.87 0.00 5,127.81 26.39 5,537.07 822.76 2,114.08 2,936.84 8,473.91 7,971.55 4,401.51 3,570.04 951.19 2,015.15 2,012.24 715.78 327.66 3,055.68 5,964.61 791.77 9,812.06 0.00 6,673.61 1,215.04 7,888.65 1,923.41 8,473.91 2,185.63 143.94

Mar '07 385.41 385.41 0.00 6,458.39 25.95 6,869.75 2,022.04 1,987.10 4,009.14 10,878.89 8,775.80 4,894.54 3,881.26 2,513.32 2,477.00 2,500.95 782.18 535.78 ,818.91 6,208.53 290.98 10,318.42 0.00 6,956.88 1,364.32 8,321.20 1,997.22 10,878.89 5,196.07 177.59

Mar '08 385.54 385.54 0.00 7,428.45 25.51 7,839.50 2,461.99 3,818.53 6,280.52 14,120.02 10,830.83 5,443.52 5,387.31 5,064.96 4,910.27 2,421.83 1,130.73 750.14 4,302.70 4,831.36 1,647.17 10,781.23 0.00 10,040.37 1,989.43 12,029.80 -1,248.57 14,120.02 5,590.83 202.70

Mar '09 514.05 514.05 0.00 11,855.15 25.07 12,394.27 5,251.65 7,913.91 13,165.56 25,559.83 13,905.17 6,259.90 7,645.27 6,954.04 12,968.13 2,229.81 1,555.20 638.17 4,423.18 5,909.75 503.65 10,836.58 0.00 10,968.95 1,877.26 12,846.21 -2,009.63 25,559.83 5,433.07 240.64

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MARUTI SUZUKI Profit & Loss account Profit & Loss account of Maruti Suzuki Mar 05 Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income 13,458.20 2,411.90 11,046.30 187.50 141.70 11,375.50 8,650.20 58.10 196.00 215.70 374.27 121.73 -22.40 9,593.60 1,594.40 1,781.90 36.00 1,745.90 456.80 16.30 1,272.80 51.40 1,324.20 446.50 853.60 943.40 0.00 57.80 8.20 2,889.10 29.55 40.00 151.56 Mar06 14,898.80 2,700.90 12,197.90 184.40 199.70 12,582.00 9,423.40 57.20 228.70 302.40 349.51 145.39 -6.70 10,499.90 1,897.70 2,082.10 20.40 2,061.70 285.40 0.00 1,776.30 5.40 1,781.70 560.90 1,189.10 1,076.50 0.00 101.10 14.20 2,889.10 41.16 70.00 188.73 Mar07 17,358.40 2,552.00 14,806.40 338.10 -200.70 14,943.80 10,863.00 97.40 288.40 392.40 483.26 239.44 -14.30 12,349.60 2,256.10 2,594.20 37.60 2,556.60 271.40 0.00 2,285.20 33.40 2,318.60 705.30 1,562.00 1,486.60 0.00 130.00 21.90 2,889.10 54.07 90.00 237.23 Mar08 21,200.40 3,133.60 18,066.80 494.00 336.30 18,897.10 13,958.30 147.30 356.20 523.30 521.48 287.62 -19.80 15,774.40 2,628.70 3,122.70 59.60 3,063.10 568.20 0.00 2,494.90 76.60 2,571.50 763.30 1,730.80 1,816.10 0.00 144.50 24.80 2,889.10 59.91 100.00 291.28 Mar09 23,381.50 2,652.10 0,729.40 491.70 -356.60 20,864.50 15,983.20 193.60 471.10 716.10 751.06 303.44 -22.30 18,396.20 1,976.60 2,468.30 51.00 2,417.30 706.50 0.00 1,710.80 37.90 1,748.70 457.10 1,218.70 2,413.00 0.00 101.10 17.20 2,889.10 42.18 70.00 323.45

Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Exp Selling and Admin Exp Miscellaneous Expenses Preoperative Exp Capitalized Total Expenses Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualized) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)

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MARUTI SUZUKI Balance Sheet Balance Sheet of Maruti Suzuki India Mar '05 Sources Of Funds Total Share Capital 144.50 Equity Share Capital 144.50 Share Application Money 0.00 Reserves 4,234.30 Revaluation Reserves 0.00 Networth 4,378.80 Secured Loans 307.60 Unsecured Loans 0.00 Total Debt 307.60 Total Liabilities 4,686.40 Application Of Funds Gross Block 5,053.10 Less: Accum. Dep 3,179.40 Net Block 1,873.70 Capital Work in Progress 42.10 Investments 1,516.60 Inventories 666.60 Sundry Debtors 599.50 Cash and Bank Balance 79.40 Total Current Assets 1,345.50 Loans and Advances 801.90 Fixed Deposits 950.00 Total CA, Loans & Adv 3,097.40 Deffered Credit 0.00 Current Liabilities 1,454.20 Provisions 389.20 Total CL & Provisions 1,843.40 Net Current Assets 1,254.00 Miscellaneous Expenses 0.00 Total Assets 4,686.40 Contingent Liabilities 893.60 Book Value (Rs) 151.56

Mar '06 144.50 144.50 0.00 5,308.10 0.00 5,452.60 71.70 0.00 71.70 5,524.30 4,954.60 3,259.40 1,695.20 92.00 2,051.20 881.20 654.80 51.60 1,587.60 933.10 1,350.00 3,870.70 0.00 1,704.80 480.00 2,184.80 1,685.90 0.00 5,524.30 1,289.70 188.73

Mar '07 144.50 144.50 0.00 6,709.40 0.00 6,853.90 63.50 567.30 630.80 7,484.70 6,146.80 3,487.10 2,659.70 238.90 3,409.20 713.20 747.40 114.80 1,575.40 1,072.60 1,308.00 3,956.00 0.00 2,288.60 490.50 ,779.10 1,176.90 0.00 7,484.70 2,094.60 237.23

Mar '08 144.50 144.50 0.00 8,270.90 0.00 8,415.40 0.10 900.10 900.20 9,315.60 7,285.30 3,988.80 3,296.50 736.30 5,180.70 1,038.00 655.50 324.00 2,017.50 1,173.00 0.00 3,190.50 0.00 2,718.90 369.50 3,088.40 102.10 0.00 9,315.60 2,734.20 291.28

Mar '09 144.50 144.50 0.00 9,200.40 0.00 9,344.90 0.10 698.80 698.90 10,043.80 8,720.60 4,649.80 4,070.80 861.30 3,173.30 902.30 918.90 239.00 2,060.20 1,809.80 1,700.00 5,570.00 0.00 3,250.90 380.70 3,631.60 1,938.40 0.00 10,043.80 1,901.70 323.45

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