ANALYSIS OF

THE FACTORS • GROUP 5 :

IMPACTING •
•
ABHIJIT KALE – 209/2017
SHIVANGI KAMRA – 211/2017
THE OVERALL • ANKUSH SHARMA – 224/2017
•
PERFORMANCE •
MOHIT SHARMA – 230/2017
LAKSHAY KHOSLA – 240/2017
OF THE • ANSHUL MAHAJAN – 242/2017
• SURYAKANT TIWARI – 243/2017
AUTOMOBILE
INDUSTRY
 AUTOMOBILE INDUSTRY
INDUSTRY OVERVIEW :
Indian Auto Industry is the 3RD largest in the
world.
Accounts for 7.1 per cent of the country's
Gross Domestic Product (GDP).
Exports grew at 4.3 per cent CAGR between
FY12-17.
Domestic sales of passenger vehicles expected
to increase at a CAGR of 12.87 per cent
between 2017-26.
•The automotive manufacturing industry comprises the
production of commercial vehicles, passenger cars, and
three & two-wheelers.

•Two-wheelers are by far the most popular form of vehicle

in India, taking an 80% share in 2015-16.

•25 million automobiles produced in FY17.

•Total production volume grew at a CAGR of 5.56 per cent

between FY12-17.
 RESEARCH OBJECTIVES
To Evaluate The Parameters Affecting The Performance Of The
Automobile Industry.

RESEARCH HYPOTHESIS
H0 : INDEPENDENT VARIABLES UDERTAKEN ARE NOT AFFECTING THE
PERFORMANCE OF THE COMPANY
H1 : INDEPENDENT VARIABLES UDERTAKEN ARE AFFECTING THE
PERFORMANCE OF THE COMPANY

Research type: Explanatory

 LITERATURE REVIEW
• Majid Jami , Mahdi Naqdi Bahar ( 2016 ) , analyzes the profitability ratios to evaluate the
performance of Indian automobile industry. The study intends to examine ROA, ROE, ROS and
Operating Ratio in automobile industry over a period of 7 years from 2007-8 to 2013-14. The sample
units have been selected from CNX auto INDEX of Bombay Stock Exchange as A group companies.
The analysis of regression coefficients reveals that ROA, ROE, ROS and Operating Ratio have no
control over Share price.

• Dharmaraj Arumugam ( 2016 ) , Factors determining profitability in Indian automobile industry . This
paper aims to measure the profitability and also to analyze the effects of various factors on the
profitability in Indian Automobile industry. For this purpose 16 companies were taken and 21
variables were analyzed through multiple correlation analysis and step wise multiple regression. It is
proved that profitability of the Indian Automobile Industry is highly dependent on Operating Ratio
and it contributes 93.40 per cent to variation in Return on Sales.
• A. Dharmaraj , Dr. N.Kathirvel (2013) ,The data were collected for fifteen years for
selected fifteen companies from the annual reports. The descriptive statistics
includes Mean, Standard Deviation. Analysis of variance is a tool used to test the
differences amount the means of populations by examining the amount of variation
within each of these examples, relative to the amount of variation between the
samples. The study provides companies with understanding the activities that would
enhance their financial performances. The results of this study imply that, they are
financially strong and they are growing at the rate of 17% per annum.
 RESEARCH DESIGN
PERIOD OF THE STUDY:
• Keeping in view the scope of the study, it is decided to carry out in depth
case study of 5 automobile companies from the financial year 2007-08 to
2016-2017.
RESEARCH METHODOLOGY:
• The study is mainly based on secondary data.
• The major source of data analyzed and interpreted in this study related to
all those companies selected is collected from “PROWESS” database.
• The relevant secondary data have also been collected from annual reports
of companies, CMIE publications, annual survey of industry, business
newspapers.
• We have collected, assembled and correlated the data, classified the data
appropriately and condensed them into a related data series; stated the resultant
information in a comprehensive form, in text and tables and analyzed and
interpreted the reported data

LIMITATIONS OF THE STUDY:

• The study is based on secondary data obtained from the published annual reports
and as such its finding depends entirely on the accuracy of such data.
• The present study is largely based on ratio analysis which has its own limitations.
• Non-availability of some required financial data for the period of study has
restricted the size of the sample. Therefore, the limitation of the small sample is
also prevalent in this study.
• The companies taken are listed in BSE.
TOOLS AND TECHNIQUES OF FINANCIAL
ANALYSIS
The following are some of the common techniques of financial
analysis:
1. Comparative Financial Statements
2. Common Size Financial Statements
3. Trend Analysis
4. Funds Flow Analysis
5. Cash Flow Analysis
6. Cost Volume Profit (CVP) Analysis
7. Ratio Analysis
CLASSIFICATION OF RATIOS:

Several ratios can be grouped into various classes, according to the activity or function
they perform.

In view of the diverse requirements of the various users of the ratios, the ratios can be
classified into four categories:
1. Liquidity Ratios: They measure the firm's ability to meet current obligations.
2. Activity Ratios: They reflect the firm's efficiency in utilizing the assets.
3. Leverage Ratios: These ratios show the proportion of debt and equity in financing
the firm's assets.
4. Profitability Ratios: These ratios measure overall performance and effectiveness of
the firm.
 FINANCIAL RATIOS
INDEPENDENT VARIABLES: • BASIC EPS
• CURRENT RATIO • PBT
• TOTAL INCOME /TOTAL ASSETS • SALES
• ROE • YIELD
• ROC
• ASSET TURNOVER RATIO DEPENDENT VARIABLES:
• INTEREST COVERAGE RATIO • P/E
• ROA • BOOK VALUE PER SHARE
 COMPANIES
ORGANIZATION MARKET CAPITALIZATION (Rs MARKET SHARE
CRORE) (NET SALES)

ASHOK LEYLAND 346,94.07 7.71

MARUTI SUZUKI 2,731,06.05 26.18

M&M 862,66.63 16.85

HERO MOTORCORP 701,45.54 10.96

TATA MOTORS 1,395,86.46 17.08

FRAMEWORK OF ANALYSIS
Determining • Through Research Papers and
Variables Industry Knowledge

Data • Through Prowess

Procurement and Bloomberg

Running • Factor analysis

Statistical
• Regression
Tools

Evaluation of
Results
 Exploratory FACTOR ANALYSIS Correlation Matrixa

TOTAL RETURN ON ASSETS

CURRENT INCOME/TOTAL CAPITAL RETURN ON TURNOVER INTEREST RETURN ON
RATIO ASSETS BASIC EPS EMPLOYED (%) EQUITY (%) RATIO (%) YIELD (%) COVER PBT ASSETS (%) Sales
Correlation CURRENT RATIO 1.000 .654 .339 .575 .475 .670 -.065 .533 .292 .622 .046
TOTAL INCOME/TOTAL
ASSETS .654 1.000 .603 .902 .833 .945 .195 .680 .375 .905 -.025

BASIC EPS .339 .603 1.000 .685 .580 .648 .012 .478 .836 .724 .554
RETURN ON CAPITAL
EMPLOYED (%) .575 .902 .685 1.000 .955 .829 .229 .740 .510 .985 -.024

RETURN ON EQUITY (%) .475 .833 .580 .955 1.000 .743 .331 .576 .472 .929 -.108
ASSETS TURNOVER RATIO
(%) .670 .945 .648 .829 .743 1.000 .077 .576 .411 .834 .135

YIELD (%) -.065 .195 .012 .229 .331 .077 1.000 .072 -.103 .183 -.336
INTEREST COVER .533 .680 .478 .740 .576 .576 .072 1.000 .195 .736 -.120
PBT .292 .375 .836 .510 .472 .411 -.103 .195 1.000 .585 .563
RETURN ON ASSETS (%)
.622 .905 .724 .985 .929 .834 .183 .736 .585 1.000 .003

Sales .046 -.025 .554 -.024 -.108 .135 -.336 -.120 .563 .003 1.000
Sig. (1-tailed) CURRENT RATIO .000 .008 .000 .000 .000 .327 .000 .020 .000 .375
TOTAL INCOME/TOTAL
ASSETS .000 .000 .000 .000 .000 .087 .000 .004 .000 .431

BASIC EPS .008 .000 .000 .000 .000 .466 .000 .000 .000 .000
RETURN ON CAPITAL
EMPLOYED (%) .000 .000 .000 .000 .000 .055 .000 .000 .000 .433

RETURN ON EQUITY (%) .000 .000 .000 .000 .000 .010 .000 .000 .000 .228
ASSETS TURNOVER RATIO
(%) .000 .000 .000 .000 .000 .297 .000 .002 .000 .175

YIELD (%) .327 .087 .466 .055 .010 .297 .311 .238 .102 .008
INTEREST COVER .000 .000 .000 .000 .000 .000 .311 .087 .000 .204
PBT .020 .004 .000 .000 .000 .002 .238 .087 .000 .000
RETURN ON ASSETS (%)
.000 .000 .000 .000 .000 .000 .102 .000 .000 .491

Sales .375 .431 .000 .433 .228 .175 .008 .204 .000 .491
a. Determinant = 1.34E-008

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .743
Bartlett's Test of Sphericity Approx. Chi-Square 806.575
df 55
Sig. .000
 Communalities

Initial Extraction
CURRENT RATIO .705 .600
TOTAL INCOME/TOTAL
ASSETS .962 .928

BASIC EPS .927 .927

RETURN ON CAPITAL
EMPLOYED (%) .992 .993

RETURN ON EQUITY (%) .972 .926

ASSETS TURNOVER RATIO
(%) .950 .835

YIELD (%) .411 .304

INTEREST COVER .872 .540
PBT .907 .784
RETURN ON ASSETS (%)
.992 .996

Sales .788 .755

Extraction Method: Principal Axis Factoring.

Total Variance Explained

Initial Eigenvalues Extraction Sums of Squared Loadings Rotation Sums of Squared Loadings
Factor Total % of Variance Cumulative % Total % of Variance Cumulative % Total % of Variance Cumulative %
1 6.380 57.999 57.999 6.252 56.835 56.835 4.955 45.044 45.044
2 1.978 17.986 75.986 1.722 15.651 72.486 2.396 21.779 66.823
3 1.048 9.523 85.508 .614 5.578 78.064 1.236 11.240 78.064
4 .539 4.898 90.406
5 .433 3.938 94.344
6 .372 3.386 97.731
7 .155 1.405 99.136
8 .054 .488 99.624
9 .025 .224 99.848
10 .012 .109 99.956
11 .005 .044 100.000
Extraction Method: Principal Axis Factoring.
 Factor Matrixa
Rotated Factor Matrixa
Factor
1 2 3 Factor
CURRENT RATIO .637 -.072 -.434
TOTAL INCOME/TOTAL
1 2 3
.931 -.196 -.148
ASSETS CURRENT RATIO .755 .054 -.167
BASIC EPS .778 .542 .168
TOTAL INCOME/TOTAL
RETURN ON CAPITAL .924 .179 .207
EMPLOYED (%) .978 -.155 .113 ASSETS
RETURN ON EQUITY (%) .892 -.222 .284 BASIC EPS .464 .841 .068
ASSETS TURNOVER RATIO
(%) .882 -.030 -.236 RETURN ON CAPITAL
YIELD (%) .146 -.368 .383 EMPLOYED (%) .844 .328 .416
INTEREST COVER .689 -.208 -.149
PBT
RETURN ON EQUITY (%) .716 .298 .569
.591 .627 .203
RETURN ON ASSETS (%)
.991 -.091 .069
ASSETS TURNOVER RATIO
(%) .874 .265 .040
Sales .117 .855 -.104
Extraction Method: Principal Axis Factoring. YIELD (%) .064 -.105 .537
a. 3 factors extracted. 10 iterations required.
INTEREST COVER .716 .066 .151
Factor Transformation Matrix PBT .264 .845 .009
Factor 1 2 3 RETURN ON ASSETS (%)
.857 .371 .350
1 .870 .425 .251
2 -.264 .830 -.492 Sales -.081 .721 -.477
3 Extraction Method: Principal Axis Factoring.
-.417 .362 .834
Rotation Method: Varimax with Kaiser Normalization.a
Extraction Method: Principal Axis Factoring.
Rotation Method: Varimax with Kaiser a. Rotation converged in 4 iterations.
Normalization.
 REGRESSION
DEPENEDENT VARIABLE: BOOK VALUE PER SHARE

Model Summaryb

Adjusted R Std. Error of the

Model R R Square Square Estimate Durbin-Watson
1 .973a .947 .944 59.41310 1.303
a. Predictors: (Constant), REGR factor score 3 for analysis 1, REGR factor score 2 for
analysis 1, REGR factor score 1 for analysis 1

b. Dependent Variable: BOOK VALUE PER SHARE

ANOVAa

Model Sum of Squares df Mean Square F Sig.

1 Regression 2922683.945 3 974227.982 275.992 .000b
Residual 162376.150 46 3529.916
Total 3085060.095 49
a. Dependent Variable: BOOK VALUE PER SHARE
b. Predictors: (Constant), REGR factor score 3 for analysis 1, REGR factor score 2 for analysis 1,
REGR factor score 1 for analysis 1
 Casewise Diagnosticsa

BOOK VALUE
Case Number Std. Residual PER SHARE Predicted Value Residual
12 3.388 273.55 72.2403 201.30970
a. Dependent Variable: BOOK VALUE PER SHARE
 Collinearity Diagnosticsa

Variance Proportions

REGR factor REGR factor REGR factor

score 1 for score 2 for score 3 for
Model Eigenvalue Condition Index (Constant) analysis 1 analysis 1 analysis 1
1 1 1.078 1.000 .00 .44 .07 .41
2 1.000 1.038 1.00 .00 .00 0.00
3 .995 1.041 .00 .01 .92 .07
4 .927 1.078 .00 .55 .01 .51
a. Dependent Variable: BOOK VALUE PER SHARE

Coefficientsa

Standardized
Unstandardized Coefficients Coefficients 95.0% Confidence Interval for B Collinearity Statistics
Model B Std. Error Beta t Sig. Lower Bound Upper Bound Tolerance VIF
1 (Constant) 262.981 8.402 31.299 .000 246.068 279.894
REGR factor score 1 for
analysis 1 22.778 8.408 .092 2.709 .009 5.854 39.702 .994 1.006

REGR factor score 2 for

analysis 1 236.279 8.753 .913 26.994 .000 218.660 253.898 .999 1.001

REGR factor score 3 for

analysis 1 -91.198 9.265 -.334 -9.843 .000 -109.848 -72.548 .995 1.005

a. Dependent Variable: BOOK VALUE PER SHARE

 DEPENDENT VARIABLE: PE RATIO

Model Summaryb

Adjusted R Std. Error of the

Model R R Square Square Estimate Durbin-Watson
1 .628a .394 .355 3.98771 1.555
a. Predictors: (Constant), REGR factor score 3 for analysis 1, REGR factor score 2 for
analysis 1, REGR factor score 1 for analysis 1

b. Dependent Variable: PE RATIO

ANOVAa

Model Sum of Squares df Mean Square F Sig.

1 Regression 475.839 3 158.613 9.975 .000b
Residual 731.485 46 15.902
Total 1207.324 49
a. Dependent Variable: PE RATIO
b. Predictors: (Constant), REGR factor score 3 for analysis 1, REGR factor score 2 for analysis 1,
REGR factor score 1 for analysis 1
 Collinearity Diagnosticsa

Variance Proportions

REGR factor REGR factor REGR factor

score 1 for score 2 for score 3 for
Model Eigenvalue Condition Index (Constant) analysis 1 analysis 1 analysis 1
1 1 1.078 1.000 .00 .44 .07 .41
2 1.000 1.038 1.00 .00 .00 0.00
3 .995 1.041 .00 .01 .92 .07
4 .927 1.078 .00 .55 .01 .51
a. Dependent Variable: PE RATIO

Coefficientsa

Standardized
Unstandardized Coefficients Coefficients 95.0% Confidence Interval for B Collinearity Statistics
Model B Std. Error Beta t Sig. Lower Bound Upper Bound Tolerance VIF
1 (Constant) 16.886 .564 29.942 .000 15.751 18.021
REGR factor score 1 for
analysis 1 1.001 .564 .204 1.775 .083 -.135 2.137 .994 1.006

REGR factor score 2 for

analysis 1 2.761 .587 .540 4.700 .000 1.579 3.944 .999 1.001

REGR factor score 3 for

analysis 1 -1.398 .622 -.259 -2.248 .029 -2.650 -.147 .995 1.005

a. Dependent Variable: PE RATIO

RESULTS AND STRATEGIES

PE ratio • 16.886+1.001[1]+2.761[2]+1.398[3]+ 2.337(error)

BVPS • 262.981+22.778[1]+236.279[2]-91.198[3]+34.82(error)

Factor 2 = Basic EPS + PBT + Sales

Sales PBT EPS

 MARKETING
QUALITY & PERFORMANCE

AFTER SALES SERVICE

• PERFORMANCE • ADVERTISEMENT • SERVICE QUALITY
• COST • NEEDS AND WANTS • KNOWLEDGE OF
OF BUYER SERVICE
• AVAILAIBILITY
• CRM TECHNOLOGY PERSONNEL
• FEATURES • INCENTIVES
• COMFORT • DELIVERY TIME
• TRAINED STAFF
• PRICE OF SERVICE
 AFTER SALES SERVICE
The best way to promote a product is by word of mouth. A satisfied customer can become non-paid brand
ambassador of company and can provide more no. of reference from word of mouth.

According to Neilson survey report:

 1800 customers having different types of vehicles was evaluated and were asked to rate on the scale of 0-10
whether they will recommend the same vehicle to others.
 People from 0-6 were called detachers and those marking 9-10 were called promoters.
 It was seen that no. of promoters were 10 times than the no. of detachers.

MARUTI VS HONDA VS TOYOTA

No. of service
stations : 3307 202 206
Thank You