21-07-2012, 12:41 PM
COMPARITIVE ANALYSIS OF AUTO SECTOR FIRMS PERFORMING GORPORATE GOVERNANCE
A COMPARITIVE ANALYSIS.doc (Size: 94 KB / Downloads: 48)
Introduction
Maruti Suzuki
Maruti Suzuki India Limited (MSIL), a subsidiary of Suzuki Motor Corporation (SMC), Japan, is the leader in passenger cars (PCs) and multipurpose vehicles (MPVs) in India, accounting for nearly 50 per cent of the total industry sales. In 2009-10, the Company sold 1,018,365 vehicles. This comprised 870,790 vehicles in the domestic market and 147,575 vehicles in export markets. Cumulatively, it has produced and sold over 8 million cars. The total income of the Company for 2009-10 stood at Rs.301,198 million. Maruti Suzuki has a strong balance sheet with reserves and surplus of Rs. 116.9 billion and debt equity ratio of 0.07 as on 31st March, 2010.
Gurgaon Plant
Spread over an area of 20,300 square meters with a capacity to produce over 500,000 engines per annum, the Gurgaon facility houses three fully integrated plants having a combined manufacturing capacity of over 700,000 vehicles per annum and a state-of-the-art K-series casting engine plant which employs global manufacturing best practices to ensure high quality standards.
Manesar Plant
Manesar is the Company's latest car assembly plant which was started in February, 2007. This plant has a capacity to produce over 300,000 units per annum with an additional capacity of 250,000 cars per annum, the operation of which began in 2009-10.
R & D Test Course
In 2009-10, 700 acres of land in Rohtak, Haryana have been procured by the company for setting up a world-class test course for R & D.
MSIL provides its customers with "one-stop-shop" experience such as Automobile Finance, Automobile Insurance, Maruti Genuine Parts and Accessories, Extended Warranty and Maruti Certified pre-owned cars. The Company had 341 pre-owned car outlets in 198 cities as on 31st March, 2010.
Export sales of the company touched 147,575 units, its highest ever. This is a 111% growth over the previous year's total of 70,023 units. Europe has accounted for over 75% of the sales. On a cumulative basis, the exports crossed 700,000 units. Currently the company is exporting to 98 countries in Europe, Asia, Latin America, Africa and Oceania.
Tata motors
Tata Motors Limited is India's largest automobile company, with consolidated revenues of INR 1,23,133 crores (USD 27 billion) in 2010-11. 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 third largest bus manufacturer.
The company's over 25,000 employees are guided by the vision to be ''best in the manner in which we operate, best in the products we deliver, and best in our value system and ethics.''
Established in 1945, Tata Motors' presence indeed cuts across the length and breadth of India. Over 6.5 million Tata vehicles ply on Indian roads, since the first rolled out in 1954. The company's manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand), Sanand (Gujarat) and Dharwad (Karnataka). Following a strategic alliance with Fiat in 2005, it has set up an industrial joint venture with Fiat Group Automobiles at Ranjangaon (Maharashtra) to produce both Fiat and Tata cars and Fiat powertrains. The company's dealership, sales, services and spare parts network comprises over 3,500 touch points; Tata Motors also distributes and markets Fiat branded cars in India.
Mahindra and Mahindra
Designed with a family in mind, it has a roomy passenger compartment with generous leg space and head room. It can comfortably seat four persons. Its mono-volume design will set a new benchmark among small cars. Its safety performance exceeds regulatory requirements in India. Its tailpipe emission performance too exceeds regulatory requirements. In terms of overall pollutants, it has a lower pollution level than two-wheelers being manufactured in India today. The lean design strategy has helped minimise weight, which helps maximise performance per unit of energy consumed and delivers high fuel efficiency. The high fuel efficiency also ensures that the car has low carbon dioxide emissions, thereby providing the twin benefits of an affordable transportation solution with a low carbon footprint.
In May 2009, Tata Motors ushered in a new era in the Indian automobile industry, in keeping with its pioneering tradition, by unveiling its new range of world standard trucks called Prima. In their power, speed, carrying capacity, operating economy and trims, they will introduce new benchmarks in India and match the best in the world in performance at a lower life-cycle cost. In October 2010, Tata Motors launched the Tata Aria, the first Indian four-wheel drive crossover. The Tata Aria redefines several benchmarks with its design and technologies, offering class leading features that take comfort and safety to a new height.
Tata Motors is equally focussed on environment-friendly technologies in emissions and alternative fuels. It has developed electric and hybrid vehicles both for personal and public transportation. It has also been implementing several environment-friendly technologies in manufacturing processes, significantly enhancing resource conservation.
Through its subsidiaries, the company is engaged in engineering and automotive solutions, construction equipment manufacturing, automotive vehicle components manufacturing and supply chain activities, machine tools and factory automation solutions, high-precision tooling and plastic and electronic components for automotive and computer applications, and automotive retailing and service operations.
LITERATURE REVIEW:
Indian Automobile Industry: Brief Introduction
India is the world's second fastest growing auto market and boasts of the sixth largest automobile industry after China, the US, Germany, Japan and Brazil. According to Vikas Sehgal, Global Head of automotive industry, Rothschild, the Indian automobile market, which includes cars, trucks and auto parts, is pegged at 3.5 million units by the end of 2011-12. Rothschild is a UK-based global financial advisory firm.
India's car market is evolving at a great pace. A car is not only a utility, but also represents aspirations and image of its owner. Hence, auto giants across the globe are leaving no stone unturned to attract Indian consumers by offering luxury, value, utility and convenience in their products. Key developments, initiatives, investments et al pertaining to the sector are discussed below.
Market Dynamics
Indian domestic passenger vehicle market is increasingly getting dominated by smaller cars. For the quarter ended December 2011, Maruti Suzuki India Ltd held a share of 34.3 per cent in domestic passenger vehicle pie while Hyundai India enjoyed 15.8 per cent of it. Tata Motors (standalone operations) and Mahindra & Mahindra (M&M) had a market share of 14.6 per cent and 12 per cent respectively during the reported period.
Key Statistics
• The Society of Indian Automobile Manufacturers (SIAM) anticipates 11-13 per cent growth in car sales during 2012-13
• The overall Indian automobile sector recorded a growth of 14.25 per cent (16.9 million units from 14.8 million units in 2010) in 2011. Passenger car sales increased by 4.24 per cent to 1.946 million units (from 1.867 million units in 2010), two-wheeler sales by 16.22 per cent to 13 million units and three-wheeler sales by 4.74 per cent to 525,000 units
• For 2011-12, passenger cars sales are expected to grow at 0-2 per cent, two-wheelers at 13-15 per cent and commercial vehicles at 18-20 per cent
• The cumulative production for April-December 2011 registered a growth of 14.94 per cent over same period in 2010. Production in December 2011 increased by 10.91 per cent year-on-year (Y-o-Y)
• Overall automobile exports registered a growth rate of 28.97 per cent during April-December 2011. Passenger Vehicles registered grew 18.14 per cent in this period while two-wheelers, commercial vehicles and three wheelers segments recorded growth of 29.75 per cent, 24.66 per cent and 42.63 per cent respectively
Indian Automobile Industry: Major Developments & Investments
Ford Motor Co's Indian subsidiary has placed an order with its Indian counterpart - major constructor Kajima Corp's subsidiary – to develop an auto factory in the city of Sanand in Gujarat. With an estimated outlay of 77 billion yen (US$ 1 billion), the facility is expected to get completed by 2014 with an initial annual capacity of 240, 000 units.
Bajaj Auto – India's second largest automaker – has made a debut in four-wheeler segment by launching a low-cost, eco-friendly automobile - RE60. The four wheeler vehicle has three-wheeler customers as its target market and is available in three fuel variants (petrol, CNG and LNG). The company sees Sri Lanka and Africa as potential export markets for RE60.
Indian auto major M&M is looking to develop enough infrastructure to run electric cars in India. The first company to commission solar power projects under the Jawaharlal Nehru National Solar Mission (JNNSM), M&M is on a look-out for solar powered charging stations to fuel electric cars. The company offers electric cars under the Mahindra-Reva brand.
Luxury car maker Mercedes Benz AG's Indian subsidiary Mercedes Benz India Ltd (MBIL) has set itself an ambitious target to sell over 70,000 cars in the Indian market by 2020; aiming for 1000 per cent growth in the next 9-10 years and hence leading the luxury car segment. The company will launch its A Class concept in India in 2013 and has already invested Rs 700 crore (US$ 135.85 million) in a new assembly plant in India.