MBA Project

Kotak Securities Ltd,Bagalkot
Exam No.: MBA09004012 Roll No: 12
KARNATAKA
UNIVERSITY DHARWAD
Shri. B.V.V.Sanghas
INSTITUTE OF MANAGEMENT STUDIES, BAGALKOT
2010-2011
PROJECT TITLE
A Study on Comparison on key Financial Parameters Of Players within Automobile Industry with Similar Parameters in Nifty, At Kotak Securities Ltd, Bagalkot
Internal Guide: Prof. PRAKASH. VADAVADAGI
External Guide: Mr. R. MANJUNATH
SUBMITTED BY Mr. GOMATESH. D. BADANIKAI IVth SEM

BVV Sanghas Institute of management Studies, Bagalkot 1
Kotak Securities Ltd,Bagalkot Shri B V V Sanghas
Institute of Management Studies

Vidyagiri, Bagalkot
CERTIFICATE OF APPROVAL OF PROJECT REPORT 2009-2011

This is to certify that the project entitled A Study on Comparison on key Financial Parameters Of Players within Automobile Industry with Similar Parameters in Nifty, At Kotak Securities Ltd, Bagalkot is being submitted by Mr. GOMATESH BADANIKAI student of MBA Final year and has satisfactorily completed the Major Concurrent project (MCP) for partial fulfillment of MBA Program by the Karnataka University, Dharwad.
Prof. PRAKASH .V Internal Guide
Dr. Y. B.Pattanashetti Director
External Examiner 1) 2)
DECLARATION
I hereby declare that this project entitled A Study on Comparison on key Financial Parameters Of Players within Automobile Industry with Similar Parameters in Nifty conducted at Kotak Securities Ltd, Bagalkot is a record of independent work carried out by me under the guidance of Prof. PRAKASH. VADAVADAGI as per the requirements of the curriculum of Master of Business Administration course of Karnataka University, Dharwad.
This has not been previously submitted for the award of any Degree, Diploma or Associateship or any other similar titles.
Place: Bagalkot Date: Gomatesh D. Badanikai
BVV Sanghas Institute of management Studies, Bagalkot
Kotak Securities Ltd,Bagalkot ACKNOWLEDGMENT

I express my profound some of gratitude to the Management of Kotak Securities Ltd, Bagalkot. For giving me an opportunity to work in their esteemed organization. I would like to take this opportunity to thank Prof. PRAKASH .VADAVADGI, Faculty of MBA Department. BIMS, Bagalkot for all his valuable guidance, without whom a project of this kind would not have been possible. I would like to take this opportunity to thank our Director, Shri. Y.B.Pattanshetti, Director of MBA BIMS, Bagalkot. For giving me an opportunity to complete my project. I express my sincere gratitude and thanks to the Relationship manager, Mr. R. Manjunath, of Kotak Securities Ltd, Bagalkot for giving me an opportunity and guidance to complete my project. I also take this opportunity to express my deep sense of gratitude and thanks to Staff Members of Kotak Securities Ltd, Bagalkot for their most valuable guidance and critical evaluation, throughout the course of my project work, which helped me to complete my work successfully. I also express my sincere thanks and dedicate my work to my Parents Friends & Family Members who have been always a moral support and strong pillars at all walks of my life and at every stage with a cheer enthusiasm.
Gomatesh D. Badanikai
Table of Contents
Chapter No.
Name Of Chapters
Page No.
Executive Summary
1.
theoritical background
2.
Design Of The Study
3.
Industry Profile
4.
company Profile
5.
DATA ANALYSIS AND INTERPRETATION
6.
FINDING, CONCLUSION AND RECOMMENDATION
7.
BIBLIOGRAPHY
EXECUTIVE SUMMARY
Kotak Securities Ltd,Bagalkot Executive summary

India ranks 12th in the list of worlds top 15 automakers. It is the second largest two wheeler manufacturers and 5th largest commercial manufacturers in the world. It produces about 100 lakh two wheelers, 19 lakh passenger vehicles, 5 lakh three wheeler, and 4.5 lakh commercial vehicles on an annual basis. The contribution of Automobile sector to the GDP is 5% and by 2016 it is expected to double. Research was carried out to find that there are any differences in performance of nifty & automobile companies by the use of ratio analysis and statistical technique. Objectives of this study is To compare & analyze the financial parameters to bring out the real value in terms of these parameters as achieved by NIFTY on average and automobile industry. In this analysis we find that there are many differences in the performance of Nifty and automobile companies The Contribution of the automobile Companies are very less in the growth of the Companies. So we can say that the growth of the Nifty companies is due to the various other sectors. On the basis of studying the above given conclusions, we suggested that The Automobile Industry on the whole is contributing very less towards the growth companies so the need to improve their position on the basis of all key financial parameters. Companies should work to improve their stability and coverage position.
CHAPTER I
THEORETICAL BACKGROUND
Kotak Securities Ltd,Bagalkot Theoretical background

National Stock Exchange of India (NSE) In the fast growing Indian financial market, there are 23 stock exchanges trading securities. The National Stock Exchange of India (NSE) situated in Mumbai - is the largest and most advanced exchange with 1016 companies listed and 726 trading members. The NSE is owned by the group of leading financial institutions such as Indian Bank or Life Insurance Corporation of India. However, in the totally de- mutualised Exchange, the ownership as well as the management does no t have a right to trade on the Exchange. Only qualified traders can be involved in the securities trading. The NSE is one of the few exchanges in the world trading all types of securities on a single platform, which is divided into three segments: Wholesale Debt Market (WDM), Capital Market (CM), and Futures & Options (F&O) Market. Each segment has experienced a significant growth throughout a few years of their launch. While the WDM segment has accumulated the annual growth of over 36% since its opening in 1994, the CM segment has increased by even 61% during the same period. The National Stock Exchange of India has stringent requirements and criteria for the companies listed on the Exchange. Minimum capital requirements, project appraisal, and company's track record are just a few of the criteria. In addition, listed companies pay variable listing fees based on their corporate capital size. The National Stock Exchange of India Ltd. provides its clients with a single, fully electronic trading platform that is operated through a VSAT network. Unlike most world exchanges, the NSE uses the satellite communication system that connects traders from 345 Indian cities. The advanced technologies enable up to 6 million trades to be operated daily on the NSE trading platform.

National Stock Exchange of India Profile:
National
Stock
Exchange
of
India
Ltd.
Exchange Plaza, Plot no. C/1, G Block, Address Bandra-Kurla Complex Bandra (E) Mumbai - 400 051 Telephone (022) 26598100 8114 Click here for the National Stock Exchange of India web Web Site site Trading Hours Holidays 9.30 am - 4.30 pm. Bakri Id (11 Jan), Republic Day (26 Jan), Moharram (9 Feb), Holi (15 Mar), Ram Navami (6 Apr), Mahavir Jayanti (11 Apr), Ambedkar Jayanti (14 Apr), Maharashtra Day (1 May), Independence Day (15 Aug), Gandhi Jayanti (2 Oct), Laxmi Puja (21 Oct), Bhaubeej (24 Oct), Ramzan Id (25 Oct), Christmas (25 Dec) Securities Equities, bonds, CPs, CDs, warrants, mutual funds units, ETFs, derivatives. Trading System Fully automated screen based trading platform NEAT Key Staff S.B. Mathur Chairman Ravi Narain - Managing Director and CEO
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History of the National Stock Exchange of India :
Capital market reforms in India and the launch of the Securities and Exchange Board of India (SEBI) accelerated the incorporation of the second Indian stock exchange called the National Stock Exchange (NSE) in 1992. After a few years of operations, the NSE has become the largest stock exchange in India.
Three segments of the NSE trading platform were established one after another. The Wholesale Debt Market (WDM) commenced operations in June 1994 and the Capital Market (CM) segment was opened at the end of 1994. Finally, the Futures and Options segment began operating in 2000. Today the NSE takes the 14th position in the top 40 futures exchanges in the world.
In 1996, the National Stock Exchange of India launched S&P CNX Nifty and CNX Junior Indices that make up 100 most liquid stocks in India. CNX Nifty is a diversified index of 50 stocks from 25 different economy sectors. The Indices are owned and managed by India Index Services and Products Ltd (IISL) that has a consulting and licensing agreement with Standard & Poor's.
In 1998, the National Stock Exchange of India launched its web-site and was the first exchange in India that started trading stock on the Internet in 2000. The NSE has also proved its leadership in the Indian financial market by gaining many awards such as 'Best IT Usage Award' by Computer Society in India (in 1996 and 1997) and CHIP Web Award by CHIP magazine (1999).
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Introduction to Ratio
1) Curre nt Ratios:
It shows relationship between current assets or current liabilities. Formula is following:
Current Ratio= Total Current Assets / Total Current Liabilities
Its ideal ratio is 2:1. More than 2 is show that company has the ability to meet its current obligations but less than 2 is show that company has difficulty to meeting current obligations. Low current ratio reveals that firm has insufficient cash to pay its liabilities and shortage of working capital in business.
2) Debt Equity Ratio: Debt Equity Ratio = Total external debt / Total Equity (Share holders funds)
External debt could be short term debt or long term debt or any sort of sort of debt liabilities. Share holders funds include equity and preferential shares and reserves.
The lesser the value of this ratio the higher the security enjoyed by the share holders. The reason is obvious; if the debt is less there are less chances of bankruptcy. Also the company can pump the profits more into the business to expand its operations.
In this case, 1:1 ratio is said to be reasonable. In this case, very high ratio is not good for the owner. This leads to increased interference of creditors in the management of the firm. Whereas, low dept equity ratio leads to sufficient safety margin to creditors, due to high stake of owners in the capita of an enterprise. Both low and high dept equity ratios are not desirable.

3) Inte rest Coverage Ratio
Interest Coverage Ratio = EBIT / Debt Interest
EBIT is Earnings before Interest and Tax for a period Debt interest is interest on debt for the same period It tells how well the firms earnings cover the interest. The higher the value of this ratio the higher would be the healthiness of the firm as there would be less chances of default.
4) Price-Earnings Ratio - P/E Ratio What Does Price-Earnings Ratio - P/E Ratio Mean?
A valuation ratio of a company's current share price compared to its per-share earnings. Calculated as:
EPS is usually from the last four quarters (trailing P/E), but sometimes it can be taken from the estimates of earnings expected in the next four quarters (projected or forward P/E). A third variation uses the sum of the last two actual quarters and the estimates of the next two quarters.
Also sometimes known as "price multiple" or "earnings multiple".
5) Return On Assets - ROA What Does Return On Assets ROA Mean?
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An indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. Calculated by dividing a company's annual earnings by its total assets, ROA is displayed as a percentage. Sometimes this is referred to as "return on investment. The formula for return on as sets is: Return on Total Assets= Net Profit after Tax / Total Assets * 100 The higher the ratio better is profit earning capacity of an enterprise and vice-versa. The main objective of this is to measure effectiveness of funds. 6) Net Profit Ratio (NP Ratio): Definition of net profit ratio:
Net profit ratio is the ratio of net profit (after taxes) to net sales. It is expressed as percentage.
Components of net profit ratio:
The two basic components of the net profit ratio are the net profit and sales. The net profits are obtained after deducting income-tax and, generally, non-operating expenses and incomes are excluded from the net profits for calculating this ratio. Thus, incomes such as interest on investments outside the business, profit on sales of fixed assets and losses on sales of fixed assets, etc are excluded.
Formula:
Net Profit Ratio = (Net profit / Net sales) 100
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ANOVA
I. Introduction The Analysis Of Variance (or ANOVA) is a powerful and common statistical procedure in the social sciences. It can handle a variety of situations. We will talk about the case of one between groups factor here and two between groups factors in the next section.
The example that follows is based on a study by Darley and Latan (1969). The authors were interested in whether the presence of other people has an influence on whether a person will help someone in distress. In this classic study, the experimenter (a female graduate student) had the subject wait in a room with 0, 2, or 4 confederates. The experimenter announces that the study will begin shortly and walks into an adjacent room. In a few moments the person(s) in the waiting room hear her fall and complain of ankle pain. The dependent measure is the number of seconds it takes the subject to help the experimenter. How do we analyze this data? We could do a bunch of between groups t tests. However, this is not a good idea for three reasons.
1. The amount of computational labor increases rapidly with the number of groups in the study. 2. We are interested in one thing -- is the number of people present related to helping behavior? -- Thus it would be nice to be able to do one test that would answer this question. 3. The type I error rate rises with the number of tests we perform.
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II. Logic
The reason this analysis is called ANOVA rather than multi- group means analysis (or something like that) is because it compares group means by analyzing comparisons of variance estimates. Consider:
We draw three samples. Why might these means differ? There are two reasons :
1. Group Membership (i.e., the treatment effect or IV). 2. Differences not due to group membership (i.e., chance or sampling error).
The ANOVA is based on the fact that two independent estimates of the population variance can be obtained from the sample data. A ratio is formed for the two estimates, where: one is sensitive to treatment effect & error between groups estimate and the other to Error within groups estimate
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Given the null hypothesis (in this case HO : = = ), the two variance estimates 1 2 3 should be equal. That is, since the null assumes no treatment effect, both variance estimates reflect error and their ratio will equal 1. To the extent that this ratio is larger than 1, it suggests a treatment effect (i.e., differences between the groups).
It turns out that the ratio of these two variance estimates is distributed as F when the null hypothesis is true.
Note:
1. F is an extended family of distributions, which varies as a function of a pair of degrees of freedom (one for each variance estimate). 2. F is positively skewed. 3. F ratios, like the variance estimates from which they are derived, cannot have a value less than zero.
Using the F, we can compute the probability of the obtained result occurring due to chance. If this probability is low (p ), we will reject the null hypothesis.
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III. Notation
We already knew that:
I = any score
n = the last score (or the number of scores)
What is new here is that:
j = any group
p = the last group (or the number of groups)
Thus:
Group 1 2 J P
X11 X12 X1j X1p X21 X22 X2j X2p Xi1 Xi2 Xij Xip
Xn1 Xn2 Xnj Xnp T1 n1 T2 n2 Tj nj Tp np
And:
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1.
2.
3.
4.
5.
IV. Te rminology Since we are talking about the analysis of the variance, let's review what we know about it.
So the variance is the mean of the squared deviations about the mean (MS) or the sum of the squared deviations about the mean (SS) divided by the degrees of freedom.
V. Partitioning the Variance As noted above, two independent estimates of the population variance can be obtained. Expressed in terms of the Sum of Squares:
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To make this more concrete, consider a data set with 3 groups and 4 subjects in each. Thus, the possible deviations for the score X13 are as follows:
As you can see, there are three deviations and:
Total
within groups
between groups #2
#3
#1
To obtain the Sum of the Squared Deviations about the Mean (the SS), we can square these deviations and sum them over all the scores.
Thus we have:
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Note: nj in formula for the SSBetween means do it once for each deviation. VI. The F Test
It is simply the ratio of the two variance estimates:
As usual, the critical values are given by a table. Going into the table, one needs to know the degrees of freedom for both the between and within groups variance estimates, as well as the alpha level.
For example, if we have 3 groups and 10 subjects in each, then:
DfB = p 1 DfW = p(n - 1) or with unequal N's:
=31=2 = 3 * (10-1) = 27
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DfT = N 1
= 30 - 1 = 29
Note that the df add up to the total and with =.05, Fcrit = 3.35
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CHAPTER 2
DESIGN OF THE STUDY
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Kotak Securities Ltd,Bagalkot Design Of The Study

Statement of the Proble m: A Study on Comparison on key Financial Parameters Of Players within Automobile Industry with Similar Parameters in Nifty. Objectives of study:To compare and analyze the financial parameters to bring out real value in terms of these parameters achieved by NIFTY on an average and Automobile companies. Sub Objectives: To calculate and analyze the profitability parameter. To calculate and analyze the coverage power of the companies. To calculate and analyze the financial strength of the company on the basis of stability and liquidity ratio. Hypothesis testing H1 : There is no significant difference between the key financial parameters of NIFTY and All AUTOMOBILE COMPANIES. H2 : There is no significant difference between the key financial parameters of NIFTY and ABOVE AVERAGE AUTOMOBILE COMPANIES.
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Research design Research design simply means a search for facts answer to questions and solutions to problems. A research design is a purposeful scheme of action proposed to be covered out in a sequence during the process of research focusing on the problem to be tackled. It is a guideline for the researcher to enable him to keep track of his actions and to know whether he was moving in the right direction in order to achieve his goal. For the purpose of this study, the following methodology was adopted: Identification of certain industry that is considered to be leading indicators of stock market and Selecting Auto companies having the market capitalization of Rs.1000 Crores. Collection of Required data by using companys balance sheet and P&L A/c Statements and closing price of stocks for yearend 2010. To compare the key financial parameters of players within an industry with similar parameters in NIFTY, the exploratory and analytical research design is used for calculation of ratio with the help of balance sheet and profit &loss account during sept 2009 to March 2010 of the companies with the following parameters. Interest Coverage Ratio Debt-Equity Ratio Return on Assets Current Ratio Price-Earnings Ratio Net Profit Ratio Conducting one way ANOVA tests on the Ratios. closing values for the same period Collection of N ifty 50 indices
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Comparing their average ratios with Auto companies average ratioas well as above average Auto companies. Data collection tool: This study is by and large a desk job work. Secondary data are collected for the study purpose. Conducting interviews with stockbrokers collects the primary data. Secondary data is collected from different sources, which are as follows: Textbooks and journals- as stated under review of literature. Websites- equitymaster.com, Moneycontro.com, bseindia.com, indiainfoline.com, google.com News papers Economic Times, Business Line. Stock Exchange BSE and NSE.
Sample Design: On judgment basis (Non probability), the companies from Automobile sector and nifty have been selected for study. Size of Sample : 44 companies of NIFTY have been taken for study. 16 Automobile companies having market capitalization of Rs.1, 000 Crores. Stastical tools used in the study: Average One Way ANOVA.
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CHAPTER 3
INDUSTRY PROFILE
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Kotak Securities Ltd,Bagalkot Industry Profile

Automobile Industry
Global Scenario of Automobile Industry The passenger car segment has emerged as a major driving force for upstream industries like steel, iron, aluminum, rubber, plastics, glass, and electronics and downstream industries like advertising and marketing, transport and insurance. The car industry generates large amount of employment opportunities in the economy. For example in the US, every sixth worker is involved in the making of an automobile. The global automotive car market is growing at a rate of only 2 percent per annum and is not expected to pick up in the near term. Growth has dropped due to the increasing levels of saturation in the larger car markets of the world. Worldwide the trend is towards ensuring that one's products are superior in terms of quality. This will enhance the useful life of cars and, hence, slow down growth in sales. The world car production has increased from 44.66 mn in 1996 to an estimated 48.3 mn cars in 1999. Japan, Canada and USA brought about the major increases, which contribute to 53% of the world's car production. The largest car market - the US market expects car sales to decline 8 to 9 per cent to 16 million cars in 2001, as compared to 17.4 million cars sold in 2000. The USA and Japan are the leaders with around 42% of the total world market. However, since the last two to three years, the international passenger car industry has been witnessing an over capacity of more than 30%. The trend suggests that industry volumes may grow by just 2% or around 10 mn vehicles per year.
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If this situation continues for the next few years the world car market may witness shakeout in the near future. Already signs towards this are being observed as the phenomenon of mergers catches on. The recent mergers in the international car market are Ford-Volvo, Renault-Nissan, and Daimler-Chrysler. A few more players are expected to join the fray in the next few years so as to strengthen their hold in the world market. Among the top car manufacturing companies General Motors and Ford Motors group of USA lead with a contribution of 15.8% and 11.6%, of world car production, respectively. Volkswagen and Toyota stand third and fourth with more than 9% contribution each to the world car production. The global domination of the larger automotive manufacturers is slowly on the wane and the trend in sales is shifting towards more "region-centric" products. Automakers that have been enjoying a generally prosperous spell would have to rethink on the way vehicles are designed, manufactured, distributed or sold. Already, players like General Motors Volkswagen and Toyota have begun to reexamine their dealer relationships and pricing strategies. Car makers would now have to think in terms of a new customer focus and provide better financing and servicing. Strategic tieups, mergers and acquisitions have become the talk of the day. A few instances are Daimler Benz's tie- up with Chrysler of the US, Ford's acquiring of Daewoo and tie up with Volvo Car Corporation and Renault acquiring a stake in Nissan. Such deals will certainly lead to economy in terms of costs but it remains to be seen whether they will also create significant new opportunities for growth. With global consolidation in the car industry, it is expected that more internat ional players will work closely to bring about operational efficiencies. By nature, the car industry is
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highly capital- intensive and vast amounts of money are being spent on R&D. With the players getting together to produce more technologically superior cars, they can derive greater benefits from their R&D efforts. Profits, which are under pressure due to wafer thin margins, will be boosted due to greater economies of scale. Moreover, bigger capacities among players mean lesser fixed costs per car produced. Even if mergers are not on the cards in the near future (one can see that the Daimler-Chrysler merger has not brought about synergies as expected by automobile experts), technologysharing and the offering of equity stakes is inevitable. In India, the car market has become extremely competitive and come April 2001, India's automobile market will be thrown open to imports of completely built up vehicles, which hitherto was prohibited. With the international acquisitions and alliances, one can expect to see a dramatic change in the auto market. If GM were to acquire Daewoo in Korea, then GM would be in a commanding position in India with its alliance with FIAT and Suzuki motors as well. Already Daimler Chrysler and Ford are contemplating introducing new models in India from their various associate companies through their local subsidiaries. The situation could become very difficult for the purely Indian automakers such as Telco, Mahindra and Hindustan Motors unless they rethink their strategy. It can easily be seen why TELCO has been in the news on rumors that it wants to hive off its car division and bring in an overseas partner. Reports suggest that HM is thinking of exporting parts from its manufacturing units and also assembling and distributing other makes of vehicles that may wish to enter into India, but cannot enter full scale manufacture due to the small market sizes.
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Clearly exports will be the big opportunity for Indian automobile companies if they can control costs and deliver good quality output. Already Maruti, Hyundai and Ford as well as Mercedes Benz have started exports in a small way and this can grow. Majors like TELCO and Ashok Leyland are already exporting their products in reasonable volumes. Availability of easy financing options has been a major reason for the dramatic growth the automobile market has witnessed in recent times. Maruti has set up a separate financing unit in association with banks. GM has one of the largest financing companies in the US and can easily bring them into India should it so decide. Industry background The automobile industry consisting of cars, trucks, buses, two-wheelers and threewheelers, is vital to the growth of the Indian economy. In the last decade their share in the Indian economy is around 5% of GDP. Economic progress is indicated by the amount of goods and services produced which give the impetus for transportation and boost the sale of vehicles. Increase in automobile production has a catalyst effect by indirectly increasing the demand for a number o f raw materials like steel, rubber, plastics, glass, paint, electronics and services. Since transportation is the nerve center of every other industry, the well being of the automobile industry is a good indicator of the health of the economy. Economic studies have shown that every truck manufactured creates anywhere between eight to twelve jobs and a bus would create around seven, which would include salespeople, drivers, mechanics, cleaners and servicing staff.
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Indian Automobile Industry Before Independence Before independence India was seen as a market for imported vehicles. The assembling of cars manufactured by General Motors and other leading brands was the order of the day. Indian auto industry focused on servicing, dealership, financing and maintena nce of vehicles. Manufacturing started only after a decade from independence. After Independence Till the 1950s the Indian Railways played a pivotal role in meeting India's transportation needs. The railways used to carry 90 per cent of the total freight, while road transport accounted for the balance. But in the current context the dynamics have changed. Surface transport accounts for 65% of freight movement and 80% of passenger movements. The slow growth of railway infrastructure has been partly due to ad ministrative reasons, partly due to difficulty in acquiring land and partly due to high capital cost involved for every additional railway line. The Indian automobile industry faced several challenges and road blocks to growth since independence. Manufacturing capability was restricted by the rule of license and could not be increased. The total production of passenger cars was limited to 40,000 a year for nearly three decades. This production was also confined to three main manufacturers Hindustan Motors, Premier Automobiles and Standard Motors. There was no homegrown expertise or research & development initiative. It was difficult to import scientific know how and vital spare parts and cumbersome to recruit foreign technical experts.
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The pricing was kept under control by the government. Here was the contradiction, a passenger car was thought to be a premium product only for the rich, yet it came under the purview of protection of a socialist regime. Initially labor was unskilled and had to go through a process of learning through trial and error. But to the credit of these workers, it was they who developed the skill set required for future expansion in the industry. The earlier automobiles were a domestic version of prominent International Brands. The Morris Oxford popular in the 1950s, became the Ambassador, the Fiat 1100 became the Premier Padmini. By 1960s nearly 98% of the product was developed indigenously. By the end of 1970s, significant changes in the automobile industry were witnessed. Initiatives like joint ventures for light commercial vehicles did not succeed. New models like Contessa, the Rover and the Premier 118NE, hit the market. Socialistic Pattern of Growth India by and large followed a socialist system till the later part of 1980s.The government focused on development through heavy, long gestation, capital intensive projects like steel manufacturing. The quality of the finished good and customer feedback were not given much priority. As a result the country missed a golden opportunity to accelerate to a faster growth trajectory by at least 2 decades. The Pioneering Achievements Mr. J.R.D Tata's role in the development of the Indian automobile industry has to be mentioned. The Tata group set up a high standard Engineering Research Centre (ERC) in
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1965 to facilitate technological advancement. Mr. Tata pioneered the indigenization of scientific knowledge for trucks in collaboration with Mercedes Benz. The launch of Maruti 800 in 1983 changed the dynamics of the passenger car sector in India. It was also known as the peoples car. Stability in the Market The Indian automobile industry has come a long way since independence. From being an importer of automobiles to a manufacturer. From having minimum foreign collaborations to joint ventures. This attribute cannot be considered as a weakness, but as sharing of best practices. This phenomenon can be compared to the business collaboration in the outsourcing industry. Highlights of Indian Automobile Industries India is the world's largest two wheel manufacturer. India is the world's second largest tractor manufacturer. India has the fourth largest car market in Asia. India has the world's largest three wheeler market. The Future The Indian automobile industry is expected to grow to US$ 40 billion by 2015 from the current level of US$ 7 billion in 2008. By the year 2016 the industry is expected to contribute 10% of the nations GDP. The industry manufacturers over 11 million vehicles a year, employing more than three million people.
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The greatest challenge and competition would be from the Chinese automobile industry. The Chinese automobile industry has been able to give stiff completion to India in terms of productivity, cost of manufacturing and technology. Again the present trend of excess manufacturing capability, reduced margins put additional pressure on the industry. The global recession has had a dampener effect on the growth of the industry, but market experts believe it is only a short term phenomenon and are confident of the industry bouncing back. On the positive side, Indias strength in software sector, combined with skilled labor and low cost of manufacturing should place it in a favorable position globally. Recently Ratan Tata, Chairman (Tata Motors) created history by launching the world's cheapest car NANO. The cars pricing is around one lakh, gaining instant recognition in the automobile industry across the globe. It heralded the coming to age of the Indian Automobile Industry
Competitive Edge Manpower The trends clearly indicate a huge opportunity for Indian manufacturers due to: Low cost advantage primarily on account of vast availability of low cost-high skilled manpower Average wage rates are 8$ per hour as compared to 20$ in the developed markets. Highly Competitive at Lower Scales Indian Auto Companies are highly cost competitive even at lower volumes due to: Appropriate levels of automation
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Low cost automation Autonomation High Quality & Productivity Indian Auto Companies have achieved a High level of Productivity by embracing Japanese Concepts and Best Practices: TQM TPM Toyota Production Systems In fact cost productivity is our key differentiator viz-a-viz competition from other low cost economies. Just-In-Time Delivery & Logistics Indian Auto Companies have proven capability to supply on JIT basis out of Warehouses situated near the Customers Most Indian companies have arrangements with major Logistic Providers for JIT Supplies. Adequate Warehousing support and onsite Engineering support Indian auto component industry The Indian auto component industry has been navigating through a period of rapid changes with great lan. Driven by global competition and the recent shift in focus of global automobile manufacturers, business rules are changing and liberalization has had sweeping ramifications for the industry. The global auto components industry is estimated at US$1.2 trillion. The Indian auto component sector has been growing at 20% per annum since 2000 and is projected to maintain the high- growth phase of 15-20% till 2015. The Indian auto component industry is one of the few sectors in the economy that has a distinct global competitive advantage in terms of cost and quality. The value in sourcing auto components from India includes low labour cost, raw material availability, tec hnically skilled manpower and quality assurance. An average cost reduction of nearly 25-30% has

attracted several global automobile manufacturers to set base since 1991. Indias processengineering skills, applied to re-designing of production processes, have enabled reduction in manufacturing costs of components. Today, India has become the outsourcing hub for several Innovations and cost pruning hold the key to meeting the global challenge of rising demand from developed countries and competition from other emerging economies. Several large Indian auto component manufacturers are already gearing to this new reality and are in the process of substantially investing in capacity expansion, establishing partnerships in India and abroad, acquiring companies overseas and setting up Greenfield ventures, R&D facilities and design capabilities. Some leading manufacturers of auto components in India include Motor Industries Company of India, Bharat Forge, Sundaram Fasteners, Wheels India, Amtek Auto, Motherson Sumi, Rico Auto and Subros. The Indias Top 500 Companies, published by Dun & Bradstreet in 2006, listed 22 auto component manufacturers as top companies in India with a total turnover of US$ 3 bn. These companies are in the process of making a mark on the global arena, and some have already acquired assets abroad. Industry Structure The total turnover of the Indian auto component industry is estimated at US$9 bn in 2006. The industry has the resources to manufacture the entire range of auto products required for vehicle manufacturing, approximately 20,000 components. The entry of global manufacturers into India during the 1990s enabled induction of new technologies, new products, improved quality and better efficiencies in operations. This in turn effectively acted as a catalyst to the local development of the component industry.
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The Indian auto component industry is extensive and highly fragmented. Estimates by the Department of Heavy Industries, Government of India, indicate there are over 400 large firms who are part of the organized sector and cater largely to the Original Equipment Manufacturers (OEMs). Another 10,000 firms exist in the unorganized sector that operates in a tier-format. The firms in this segment operate in low technology products and cater to Tier I and Tier II suppliers and also serve the replacement market Around 4% of the companies operating in the auto component segment cater to 80% of the demand emanating from OEMs. Within the unorganized segment, apart from supplying in the aftermarket, a number of players are also involved in job work and contract manufacturing.
Source: ACMA The range of products manufactured, with each broad product segment having a different market structure and technology, has negated any possible concentrat ion of the market in a few hands. The market is so large and diverse that a large number of players can be absorbed to accommodate buyer needs. However, there are a select few large companies that have integrated their operations across the value chain. The key to competing in this
38

industry is through specialization by product-type, and integrating operations across the related area of specialization. An interesting insight provided by a study conducted by the National Council of Applied Economic Research revealed that the market segments for auto components included OEMs constituting 33%, local components having 25% with the balance 42% comprising of spurious market including re-conditioned parts. A large part of the spurious or grey market companies are in the unorganized sector. The regional base of auto component manufacturers is mostly concentrated in the West, North and South of India. This regional concentration of auto component manufacturers has been dictated by the emergence of automobile manufacturers in these regions. The set up of Tata Motors, Bajaj, Mahindra & Mahindra and TVS in the 1950s and 1960s laid the foundation for auto component manufacturers in the West and South, whilst the entry of Maruti during the 1980s created the base in the North. Industry Growth Production of auto ancillaries was estimated at US$10 bn in 2005-06 and has been growing at a robust 20% per annum since 2000. Exports of auto components have been strong growing at 24% per annum since 2000. This growth in exports if sustained for another five years will see Indias auto components exports will touch US$ 5 bn by 2011 from the US$ 2 bn at present. Till the 1990s, the auto component industry was solely dependent on the domestic automobile industry to drive the demand for ancillary products. This composition of the market however is undergoing radical changes with global outsourcing gaining momentum. In recent times, exports has emerged as a significant driver of growth, and the demand

emanating from global OEMs and Tier I manufacturers has opened new opportunities for the auto component industry in India. At the same time, a bright outlook for the domestic automobile industry also offers significant growth potential, given the fast rising income levels with a rapidly growing middle and high income consumers. Share of exports in total production has risen from 10% in 1997 to 18% in 2006. The composition of exports in terms of the proportion of OEM and aftermarket has also undergone a sweeping change since the past decade. The ratio of OEM to aftermarket has changed from 35:65 in the 1990s to 75:25 in 2006. While exports have been booming, there has been a sharp rise in imports of auto components as well, especially in the last three years. From an import of US$ 250 mn in FY03, they have gone up to US$750 mn in FY06. This is a healthy trend, indicative of rising domestic demand. Investments Since 2000, the auto component industry has recorded an investment level of Rs 18 bn and has attracted US$ 530 mn in terms of foreign direct investment. Investments in the sector have been growing at 14% per year. In 2005-06, investments touched US$ 4.4 bn, and are expected to grow significantly in future. The Investment Commission has set a target of attracting foreign investment worth US$ 5 bn for the next five years to increase Indias share in the global auto components market from the present 0.4% to 3-4%. This is a sizeable target considering the meager amount of FDI currently coming into the industry. The changing perception of global auto makers is however fast altering this scenario. With less than 1% share in the global market, India has tremendous potential to emerge as a supply base. Several global giants like Ford and Toyota have already set up base

in India to source auto components. Outsourcing is fast catching up with domestic OEMs as well, with most Indian OEMs today sourcing nearly 70-80% of their component requirements from vendors. This changing business scenario is leading to an inevitable outcome of consolidation within the industry. The takeover of Kar Mobiles by Rane Engine and of Gero Auto by Uma Precision are few instances. However, such mergers and takeovers will be few and far in between in the auto component industry, unlike the churn out anticipated in other emerging industries the principal factor being the vastness of the market and the range of products that need to be delivered. Rather than domestic consolidation, the general trend at present is for the large auto component manufacturers to establish a global presence. Top auto component manufacturers have already set up base in the global markets, especially in Europe. Overall, there have already been 16 acquisitions, with six made in 2005. The industry is the third highest among the Indian industries after IT and Pharma, in acquiring overseas assets. These acquisitions have largely been in Europe and the USA. This trend has been possible as the auto ancillary industry in these countries have been collapsing, thus making it affordable to acquire these companies. Nevertheless, this will provide a base for Indian companies to access the European and American markets. Indian auto component companies are also setting up bases in other emerging economies, who are potential competitors, for instance, Sundaram Fasteners Greenfield facility in Zhejiang and Bharat Forges joint venture with the Chinese automotive major FAW Corporation. Another auto component manufacturer with plans to enter China is PMP Components, which intends to set up a sourcing base to establish itself as a low cost supplier.
41

These trends are indicative of the changing business environment in the country. Top auto component manufacturers are gearing to take big risks. Their cross-border vision has established them as global companies. Though the going- global phenomenon is limited to a handful of companies, the smaller companies are also indirectly gearing to this trend by entering into formal manufacturing contracts and specialization.
Top Automobile Companies in India Starting from the era when there was too slim of a variety of cars available in Indian market, Indian automobile industry has come up a long way to have a diverse array of cars these days. There are a number of top automobile companies running their operations in India, which again have a range of models in different segments of cars. However, while looking for top 10 automobile companies in India; one name that would always lead the list is Maruti Suzuki India. Maruti Suzuki has consistently been the dominant leader in the Indian automobile industry. However, there are also other big names like Tata Motors, Mahindra and Mahindra, Hyundai Motors, Hindustan Motors etc. During its early days, the most of the Indian car auto manufacturers banked upon foreign technologies. But the scenario has changed over the years and currently, the Indian

auto manufacturers are using their own technology. Due to the growing pace of Indian automobile market, a number of car manufacturers including the global leaders have locked their horns in the Indian auto market. After the recent setback due to the global recession, the Indian automobile market has again started to grow up. Though the auto sales except commercial vehicles started creeping up since the beginning of this financial year, it's only the month of September 2009 when the market saw buoyant sales. It fuelled optimism in the industry. The retail trade also started soaring up. The auto sales saw a 9.6% rise in the month of September with a sale of 1,092,262 units. The passenger vehicle sales also grew by 20.32%. The two wheeler market was also augmented by 7.67% during the same period with a total sale of 838,150 units. The same trade is applicable for the three-wheeler market, which saw a growth of 13.51% (with sale of 41,137 units) during the same period.
43
CHAPTER 4
COMPANY PROFILE
44
Kotak Securities Ltd,Bagalkot Company Profile

THE KOTAK MAHINDRA GROUP: Kotak Mahindra is one of India's leading financial conglomerates, offering complete financial solutions that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the financial needs of individuals and corporate. The group has a net worth of over Rs. 5,609 crore, employs around 17,100 people in its various businesses and has a distribution network of branches, franchisees, representative offices and satellite offices across 344 cities and towns in India and offices in New York, London, Dubai, Mauritius and Singapore. The Group services around 3.6 million customer accounts. KOTAK MAHINDRA
KEY GROUP COMPANIES AND THEIR BUSINESSES


Kotak Mahindra Bank The Kotak Mahindra Groups flagship company, Kotak Mahindra Finance Ltd which was established in 1985, was converted into a bank Kotak Mahindra Bank Ltd in March 2003 becoming the first Indian company to convert into a Bank. Its banking operations offers a central platform for customer relationships across the groups various businesses. The bank has a presence in the Commercial Vehicles, Retail Finance, Corporate Banking, Treasury and Housing Finance.
Kotak Mahindra Capital Company
Kotak Mahindra Capital Company Limited (KMCC) is India's premier Investment Bank and a Primary Dealer (PD) approved by the RBI. KMCC's core business areas include Equity Issuances, Mergers & Acquisitions, Structured Finance and Advisory Services, Fixed Income Securities and Principal Business.
Kotak Securities
Kotak Securities Ltd. is one of India's largest brokerage and securities distribution house in India. Over the years Kotak Securities has been one of the leading investment broking houses catering to the needs of both institutional and non- institutional investor categories with presence all over the country through franchisees and co-coordinators. Kotak Securities Ltd. offers online (through www.kotaksecurities.com) and offline services
Based on well-researched expertise and financial products to the non- institutional investors.
Kotak Mahindra Prime


Kotak Mahindra Prime Limited (KMP) (formerly known as Kotak Mahindra Primus Limited) has been formed with the objective of financing the retail and wholesale trade of passenger and multi utility vehicles in India. KMP offers customers retail finance for both new as well as used cars and wholesale finance to dealers in the automobile trade. KMP continues to be among the leading car finance companies in India.
Kotak Mahindra Asset Management Company
Kotak Mahindra Asset Management Company (KMAMC), a subsidiary of Kotak Mahindra Bank, is the asset manager for Kotak Mahindra Mutual Fund (KMMF). KMMF manages funds in excess of Rs 10,000 crores and offers schemes catering to investors with varying risk- return profiles. It was the first fund house in the country to launch a dedicated gilt scheme investing only in government securities.
Kotak Mahindra Old Mutual Life Insurance Limited
Kotak Mahindra Old Mutual Life Insurance Limited is a joint venture between Kotak Mahindra Bank Ltd. and Old Mutual fund. Kotak Life Insurance helps customers to take important financial decisions at every stage in life by offering them a wide range of innovative life insurance products, to make them financially independent.
47

The Journey so far
Kotak Group Products & Services: Bank Life Insurance Mutual Fund Car Finance Securities Institutional Equities Investment Banking Kotak Mahindra International Kotak Private Equity Kotak Realty Fund
48

About Kotak Securities Kotak Securities Ltd. is one of the oldest and leading stock broking houses in India with a market Kotak Securities Ltd. has also been the largest in IPO distribution. The company was established in the year 1995 by Mr. Uday Kotak CEO of the company. Kotak Securities Ltd. 100 % subsidiary of Kotak Mahindra Bank is one of the oldest and largest broking firms in the Industry The companys offerings include stock broking through the branch and Internet, Investments in IPO, Mutual funds and Portfolio management service. The company has been the first in providing many products and services which have now become industry standards. Some of them are: Facility of Margin Finance to the customers. Investing in IPOs and Mutual Funds on the phone. SMS alerts before execution of depository transactions. Mobile application to track portfolios. Auto Invest - A systematic investing plan in Equities and Mutual funds. Provision of margin against securities automatically against shares in your Demat account. The company has a full- fledged research division involved in Macro Economic studies, Sectral research and Company Specific Equity Research combined with a strong and well networked sales force which helps deliver current and up to date market information & news.
49

The company also a depository participant with National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL), providing dual benefit services wherein the investors can avail the companys brokerage services for executing the transactions and the depository services for settling them. The company process more than 4, 00,000 trades a day which is much higher even than some of the renowned international brokers. Kotak Mahindra is one of India's leading financial conglomerates, offering complete financial solutions that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the financial Needs of individual and corporate. Kotaksecurities.com is one-stop investment destination, offering investment opportunities in a host of financial instruments; with products like Easy Equity, Easy Mutual Fund, Easy IPO, and Easy Derivatives. Furthermore, Offerings are customized to suit customer investment profile; hence they can meet their investment objectives. The group has a net worth of over Rs. 5,609 crore, employs around 17,100 people in its various businesses and has a distribution network of branches, franchisees, representative offices and satellite offices across 344 cities and towns in India and offices in New York, London, Dubai, Mauritius and Singapore. The Group services around 3.6 million customer accounts. Kotak securities are a 100% subsidiary of Kotak Mahindra Bank and one of the oldest and largest broking firms in the Industry. They have been the first and only N BFC to receive the license to be converted into a bank.
50

They have been the first in providing many products and services which have now become industry standards. First to provide Margin Financing to the customers first to enable investing in IPOs and Mutual Funds on the phone Providing SMS alerts before execution of depository transactions Launching of Mobile application to track portfolio Auto Invest - A systematic investing plan in Equities and Mutual fund Provision of margin against securities automatically against shares in your Demat account. Board of Directors Dr. Shankar Acharya Uday Kotak Bina Chandra. C. Jayaram Dipak Gupta K.M. Gherda Anand Mahindra Cyril shroff Shivaji Dam M/S. S. B. Billimoria & co. Auditor Non- Executive part time Chairman. Executive vice chairman and MD Company secretary and Sr. vice president. Executive Director Executive Director
51

Awards Their accolades are a testimony to our services and high standards. Theey have been awarded as: Best Performing Equity Broker in India CNBC Financial Advisor Awards 2008 Avaya Customer Responsiveness Awards (2007) in Financial Services Sector Best Brokerage Firm in India" by Asiamoney in 2007 The Leading Equity House in India' in Thomson Extel Surveys Awards for the year 2007 Euromoney Award (2006 & 2007) - Best Provider of Portfolio Management & equities. Product profile 1). Easy Equity 2). Easy Derivatives 3). Easy IPO 4). Easy Mutual Fund 5). Easy Insurance 6). Kotak Portfolio Management Easy Derivatives Benefits of Kotak Super Derivatives
52

Combination of Technical and Derivative Analysis. State of the art Dealing Desk. Access to both Dealers and Expert. Focused Account. Portfolio Management. Kotak Securities is one of Indias oldest portfolio management co mpanies with over a decade of experience. It is also one of the largest, with Assets under Management of over Rs. 3300 Crores. Kotak Portfolio Benefit from Portfolio Manage ment Service An Investment Relationship Manager will ensure that you receive all the services related to your investment needs A dedicated website and a customer service desk allows you to keep a tab on your portfolios performance Your portfolio is tailored after a thorough research backed by the expertise from the Kotak Securities Research team EQUITY Stocks, also known as Equities, are shares in a company. It is the certificate of ownership of a corporation. In simple terms, when you invest in a company's stock or buy its shares, you own part of a company. Thus, as a stockholder, you s hare a portion of the profit the company may make, as well as a portion of the loss a company may take. As the company keeps doing better, your stocks will increase in value and yield higher dividends.
53

Dividend: A sum of money, determined by a company's d irectors, paid to shareholders of a corporation out of its earnings. Mutual Funds Investing in Mutual Funds through Kotaksecurities.com offer a multitude of benefits, these have been listed below:
1. Professional Investment Manage ment one of the primary benefits of investing in Mutual Funds is that an investor gets the advantage of professional management of his finances. 2. Diversification A crucial element in investing is asset allocation. It significantly contributes to the success of any portfolio. By pooling your funds with others, you can quickly benefit from greater diversification. 3. Low Cost A mutual fund enables you to participate in a diversified portfolio for as little as Rs.5000, and
54

sometimes even lesser. 4. Convenience and Flexibility 5. Liquidity: In open-ended schemes, you can get your money back at any point in time at the prevailing NAV (Net Asset Value) from the Mutual Fund itself. 6. Transparency: Regulations for Mutual Funds established by SEBI have made the industry very transparent. 7. Variety: Mutual funds offer you a whole range of industries/sectors to choose from.
55
CHAPTER 5
56

Table 1: Ratio Chart of Nifty Companies
Name Company of Date Interest Coverage Debt/Equity Return Current on Asset Ratio (%) 28.89 38.98 33.43 38.01 9.88 23.33 0.00 5.60 25.54 32.77 22.32 9.83 77.70 7.56 108.29 9.88 33.41 43.27 8.75 16.49 20.24 0.60 0.42 0.18 1.10 0.91 2.66 0.02 3.61 0.89 1.37 1.25 0.18 0.61 1.07 0.56 0.10 2.09 1.20 1.25 0.56 0.70 Price Earning Net Profit (%) 17.20 20.03 26.47 12.97 1.28 19.29 0.00 28.03 12.56 25.40 1.97 24.93 14.09 9.85 12.39 28.37 27.45 21.87 16.97 20.14 11.87
Ambuja ACC B Airtel BHEL BPC CIPLA Cairn India DLF GAIL Grasim I HCL H.D.F.C Hero Honda Hidalco HUL IDF Infosys ITC Jaiprakash Jindal steel L&T
Dec '09 Dec '09 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Jun '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10
80.29 28.01 39.51 200.80 3.40 47.40 0.00 2.11 66.40 24.33 1.00 1.55 255.19 8.97 403.07 1.68 3761.0 67.22 3.26 10.91 7.05
0.0256 0.0942 0.1372 0.0080 1.6960 0.0009 0.0421 0.9850 0.0881 0.1452 0.2831 6.3540 0.0191 0.2278 0.0000 3.8872 0.0000 0.0077 2.1067 1.2427 0.3714
13.12 10.23 12.59 27.02 12.16 24.96 0.00 68.38 16.53 8.07 0.02 27.60 17.44 18.11 23.59 20.67 13.11 24.77 10.42 44.27 22.45
57

M&M Maruti Su ONGC PGC Reliance Cap Reliance Indus Reliance Power Siemens Steel Authority Bajaj Auto Sterlite Indus Sun Pharm TCS Tata Steel Tata Motors Tata Power Wipro Relieance com Relieance Infrast Dr Reddy Lab NTPC Ranbaxy Lab Sesa Goa AVERAGE Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Sep '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 18.69 109.30 3.20 2.77 1.32 11.28 0.00 57.67 26.17 402.38 4.68 2154.6 668.75 4.90 3.69 3.98 53.48 2.50 5.35 70.01 6.81 29.62 4.72 196.7959 0.3678 0.0694 0.1880 2.3102 1.7184 0.4556 0.0000 0.0001 0.4956 0.4571 0.2390 0.0052 0.0024 0.6790 1.1110 0.5527 0.3126 0.4847 0.2716 0.0952 0.5931 0.8302 0.2671 0.6643 28.17 30.22 36.36 11.13 9.08 15.01 -0.70 37.23 18.24 59.06 1.92 4.38 44.00 14.27 13.23 11.39 23.69 2.93 4.54 16.80 12.28 13.53 32.76 23.5089 0.76 0.67 0.29 0.70 0.34 0.81 2.92 1.15 2.83 0.37 1.67 2.96 1.06 0.46 0.44 2.30 1.55 0.36 0.38 1.30 1.35 1.13 0.93 1.0923 14.67 16.46 13.94 22.11 54.70 21.65 131.01 33.57 15.48 17.12 86.10 41.37 27.24 11.22 19.24 34.38 21.19 73.25 21.18 25.56 19.55 17.43 18.44 26.6448 11.28 8.52 27.83 28.63 14.34 8.45 0 8.87 16.66 14.41 6.34 48.70 24.38 20.24 6.30 13.35 21.37 3.53 11.74 19.25 18.82 20.34 39.94 16.9641
58

Table 2: Ratio Chart of Automobile Companies
Name of Date Company Mkt Cap Interest Coverage Debt/Eq uity Return on Asset (%) 59.06 77.70 0.11 28.17 30.22 13.23 0.13 0.09 -0.03 0.11 0.25 0.39 0.26 0.05 0.44 0.08 13.14 59.06 77.7 28.17 30.22 13.23 Current Price Earnin Ratio g 0.37 0.61 0.66 0.76 0.67 0.44 0.95 0.29 0.70 0.94 1.17 1.54 1.17 3.64 1.90 5.03 1.30 1.54 3.64 1.9 5.03 17.12 17.44 22.20 14.67 16.46 19.24 17.55 23.47 0 11.44 17.47 19.49 26.04 27.43 17.03 11.54 17.41 17.44 22.2 19.24 17.55 23.47 17.47 Net Profit (%) 14.41 14.09 2.02 11.28 8.52 6.30 5.70 17.07 -27.35 4.98 12.80 12.74 10.26 11.20 13.21 7.42 7.79 14.41 14.09 11.28 17.07 12.8 12.74 59
Bajaj Auto Hero Honda TVS Motor M&M Maruti Su Tata Motors Ashok Leyland Eicher Motors HMT Escorts Bosch Exide Industries Matherson sumi Amtek Auto WABCo-Tvs Amtek India AVERAGE
Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10 Mar '10
37849.21 36642.66 2487.08 40949.85 34553.64 73038.74 6319.11 3423.87 4391.02 1321.81 21461.15 13600.00 8254.68 3484.70 1915.54 1162.46
402.38 255.19 254.65 18.69 109.30 3.69 848.74 95.65 19.93 249.51 1239.1 893.07 356.08 490.50 130.68 287.00 353.39 402.38 848.74 1239.1 893.07 356.08 490.68
0.46 0.02 1.16 0.37 0.07 1.11 0.62 0.04 0.89 0.17 0.07 0.04 0.58 0.70 0.03 1.25 0.47 1.16 1.11 0.62 0.89 0.58 1.25

19.49 26.04 27.43 AVERAGE 705.01 0.94 41.68 3.03 21.15 10.26 11.2 13.21 13.01
Analysis of Different Automobile companies on Different Parameter: After calculating the selected ratio of Nifty companies and selected steel companies, we have calculated the average of all the ratios of all nifty companies because the average will be the best representative of all the nifty and automobile companies. With the help of that data, we prepare the following Table. Table 3: Combine Ratio chart of Nifty & Automobile companies Ratio Nifty All Automobile Above average Automobile Companies Companies 353.39 0.47 13.14 1.30 17.41 7.79 705.01 0.94 41.68 3.03 21.15 13.01
Interest Coverage Debt Equity Return On Asset (%) Current Ratio P/E Ratio Net Profit Ratio
196.79 0.66 23.51 1.09 26.64 16.96
60

DATA ANALYSIS Inte rest Coverage Ratio Nifty All Automobile Companies 353.39 Above average Companies 705.01 Automobile
Interest Coverage
196.79
Debt Equity Ratio Debt Equity Nifty 0.66 All Automobile Companies 0.47 Above average Automobile Companies 0.94
61

Return on Asset (%) Ratio Return on Asset (%) Nifty 23.51 All Automobile Companies 13.14 Above average Automobile Companies 41.68
Current Ratio Ratio Current Ratio Nifty 1.09 All Automobile Companies 1.3 Above average Automobile Companies 3.03
62

P/E Ratio Ratio P/E Ratio Nifty 26.64 All Automobile Companies 17.41 Above average Automobile Companies 21.15
Net Profit Ratio Ratio Net Profit Ratio Nifty 16.96 All Automobile Companies 7.79 Above average Automobile Companies 13.01
63

Infe rence: Interest coverage ratio in Automobile industry is considerably lower than the average achieved by growth companies as respected by a NIFTY. The position is better in respect of the above average to NIFTY companies. Debt Equity ratio of the automobile companies is quite less as compared to NIFTY. Therefore we can say that debt equity condition is good enough for automobile companies. Return on asset of automobile companies is considerably lower than the nifty companies. But the condition of the above average companies is quite better and comparable with NIFTY. Current Ratio of both NIFTY and automobile companies is quite good. But the performance of the above average companies is contributing a lot. P/E Ratio of automobile companies is lower than NIFTY and above average companies. P/E ratio of nifty companies is quite good. N/p Ratio of automobile companies and above average companies is lower than NIFTY.
64

Analyzing through testing the hypothesis using one way ANOVA: Test on Nifty and All automobile companies Table 4: Combine Ratio chart of Nifty & Automobile companies Ratio Nifty All Automobile Above average Automobile Companies Companies 353.39 0.47 13.14 1.30 17.41 7.79 705.01 0.94 41.68 3.03 21.15 13.01
196.79 0.66 23.51 1.09 26.64 16.96
Testing of the following Hypotheses: H0: There is no significance difference between the key financial parameters of NIFTY and ALL AUTOMOBILE COMPANIES. H1: There is significance difference between the key financial parame ters of NIFTY and ALL AUTOMOBILE COMPANIES.
65

Table 4: ANOVA ratio of Nifty and Automobile companies SUM OF DF SQUARES SQUARE Between Groups Within Groups Total MEAN F SIG. F Crit
1362.135
1362.135
0.106
0.751
4.965
128132.1 129494.3
10 11
12813.214
Tabulated value: 4.96 at 1, 10 degree of freedom. Infe rence: Calculated value of F ratio (0.106) is less than the tabulated value (4.96).Therefore the Null Hypotheses is true which means there is no significance difference between key financial parameters of NIFTY and ALL AUTOMOBILE COMPANIES. Testing on Nifty and Above Average Automobile companies Table 5: Combine Ratio chart of Nifty & Automobile companies Ratio Nifty All Automobile Above average Automobile Companies Companies 353.39 0.47 13.14 1.30 17.41 7.79 705.01 0.94 41.68 3.03 21.15 13.01
196.79 0.66 23.51 1.09 26.64 16.96
66
Testing of the following Hypotheses: H0: There is no significance difference between the key financial parameters of NIFTY and ABOVE AVERAGE AUTOMOBILE COMPANIES. H1: There is significance difference between the key financial parameters of NIFTY and ABOVE AVERAGE AUTOMOBILE COMPANIES. Table 5: ANOVA ratio of Nifty and Automobile companies SUM OF DF SQUARES SQUARE Between Groups Within Groups Total MEAN F SIG. F Crit
12760.945
12760.945
0.257
0.623
4.965
496361.711 509122.656
10 11
49636.171
Tabulated value: 4.96 at 1, 10 degree of freedom. Infe rence: Calculated value of F ratio (0.257) is less than the tabulated value (4.96).Therefore the Null Hypotheses is true it is accepted which means there is no significance difference between the key financial parameters of NIFTY and ABOVE AVERAGE AUTOMOBILE COMPANIES.
67
CHAPTER 6
FINDINGS, CONCLUSION, RECOMANDATION
68

FINDINGS:On the basis of the analysis of the data collected with the help of the Statistical tools, following are the findings of the study. Interest coverage ratio in automobile industry is considerably higher than the average achieved by the nifty and lower than the achieved by the above average automobile companies. Debt Equity ratio in automobile company is lesser than both NIFTY and above average automobile companies. Return on Assets in Automobile companies is lesser than both NIFTY and above average companies. Current ratio in the above average automobile company is comparatively higher than NIFTY stocks and automobile companies. P/E ratio in all automobile companies is comparative lower than both above average automobile companies and NIFTY companies. Net Profit Ratio Above Average Automobile Companies and NIFTY Companies are quite comparative, but for All automobile Companies are little less. The finding from the ANOVA Test is that there are no significant differences between the NIFTY and Automobile companies and Null Hypothesis is accepted.
69

CONCLUSION
In this study after analyzing key financial parameters of the Automobile companies with the Nifty companies by using the statistical tools average and ANOVA, we came to following conclusion:
The performance of All Automobile Companies is not comparative with the Nifty. There are many differences in the performance of Nifty and Automobile companies on the whole. The interest Coverage Ratio, Debt-Equity Ratio, Current Ratio, Return on Assets Ratio is showing the good picture. But the Net Profit Ratio and P/E Ratio of the Above Average Automobile Companies are showing the adverse situation. The Contribution of the Automobile Companies is very less in the growth of the Companies. So we can say that the growth of the Nifty companies is due to the various other sectors
70

RECOMMENDATION
On the basis of studying the above given conclusions, we are suggesting some recommendations so that the automobile Companies can improve their performance and contribute more towards the Automobile Companies. Following are some suggestions. The Above average of Automobile companies maintaining its current ratio above than the standard as well as more than the required so company should reduce their current ratio. The Automobile Industry on the whole is contributing very less towards the growth companies so the need to improve their position on the basis of all key financial parameters.
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CHAPTER 7
BIBLIOGRAPHY
72

BIBLIOGRAPHY
Financial management, Fifth edition, Khan & Jain, Publisher -Tata McGraw-Hill publishing Co Ltd., New Delhi. Essentials of Financial Management-I M Pandey C.R.kothari. Research Methodology New Delhi: New Age International Publishers, 2004 Journals: Capital Market, Emerging trends in financial markets Outlook- money. Indian journal of Finance Dailies: Business Line Economics Times Financial Express Websites: Money control.com Kotak securities.com Capital Market.com nseindia.com
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Kotak Securities Ltd,Bagalkot

Exam No.: MBA09004012 Roll No: 12

Internal Guide: Prof. PRAKASH. VADAVADAGI

External Guide: Mr. R. MANJUNATH

SUBMITTED BY Mr. GOMATESH. D. BADANIKAI IVth SEM

Kotak Securities Ltd,Bagalkot Shri B V V Sanghas

Institute of Management Studies

CERTIFICATE OF APPROVAL OF PROJECT REPORT 2009-2011

Prof. PRAKASH .V Internal Guide

Dr. Y. B.Pattanashetti Director

Kotak Securities Ltd,Bagalkot

Place: Bagalkot Date: Gomatesh D. Badanikai

BVV Sanghas Institute of management Studies, Bagalkot

Kotak Securities Ltd,Bagalkot ACKNOWLEDGMENT

Kotak Securities Ltd,Bagalkot

Design Of The Study

DATA ANALYSIS AND INTERPRETATION

FINDING, CONCLUSION AND RECOMMENDATION

BVV Sanghas Institute of management Studies, Bagalkot

Kotak Securities Ltd,Bagalkot

BVV Sanghas Institute of management Studies, Bagalkot

Kotak Securities Ltd,Bagalkot Executive summary

BVV Sanghas Institute of management Studies, Bagalkot

Kotak Securities Ltd,Bagalkot

BVV Sanghas Institute of management Studies, Bagalkot

Kotak Securities Ltd,Bagalkot Theoretical background

Kotak Securities Ltd,Bagalkot

BVV Sanghas Institute of management Studies, Bagalkot

Kotak Securities Ltd,Bagalkot

BVV Sanghas Institute of management Studies, Bagalkot

Kotak Securities Ltd,Bagalkot

It shows relationship between current assets or current liabilities. Formula is following:

Current Ratio= Total Current Assets / Total Current Liabilities

Kotak Securities Ltd,Bagalkot

Interest Coverage Ratio = EBIT / Debt Interest

Also sometimes known as "price multiple" or "earnings multiple".

5) Return On Assets - ROA What Does Return On Assets ROA Mean?

BVV Sanghas Institute of management Studies, Bagalkot

Kotak Securities Ltd,Bagalkot

Components of net profit ratio:

Net Profit Ratio = (Net profit / Net sales) 100

BVV Sanghas Institute of management Studies, Bagalkot

Kotak Securities Ltd,Bagalkot

BVV Sanghas Institute of management Studies, Bagalkot

Kotak Securities Ltd,Bagalkot

BVV Sanghas Institute of management Studies, Bagalkot

Kotak Securities Ltd,Bagalkot

BVV Sanghas Institute of management Studies, Bagalkot

Kotak Securities Ltd,Bagalkot

We already knew that:

n = the last score (or the number of scores)

What is new here is that:

p = the last group (or the number of groups)

Xn1 Xn2 Xnj Xnp T1 n1 T2 n2 Tj nj Tp np

BVV Sanghas Institute of management Studies, Bagalkot

Kotak Securities Ltd,Bagalkot

BVV Sanghas Institute of management Studies, Bagalkot

Kotak Securities Ltd,Bagalkot

As you can see, there are three deviations and:

BVV Sanghas Institute of management Studies, Bagalkot

Kotak Securities Ltd,Bagalkot

It is simply the ratio of the two variance estimates:

For example, if we have 3 groups and 10 subjects in each, then:

DfB = p 1 DfW = p(n - 1) or with unequal N's: