Automobile

Industry
GROUP - 13
Automobile Industry:
Indian Automobile
Industry

India is the fourth-largest

automobile market in the world,
known for its robust growth
potential and innovation. The
industry plays a pivotal role in the
country’s economic development,
contributing approximately 7.1%
to the nation's GDP and nearly
49% to the manufacturing GDP.
 •Passenger Vehicles (PV): Cars, utility vehicles
(UVs), and vans. Major players include Maruti

Key Segments Suzuki, Hyundai, Tata Motors, and Mahindra.

•Commercial Vehicles (CV): Heavy trucks,

buses, and light commercial vehicles (LCVs).
Companies like Tata Motors, Ashok Leyland,
and Eicher Motors dominate this segment.

•Two-wheelers: The largest segment by

volume, led by manufacturers such as Hero
MotoCorp, Bajaj Auto, and TVS Motors.

•Three-wheelers: Includes auto-rickshaws,

often used for last-mile connectivity and public
transportation.

•Electric Vehicles (EVs): A fast-emerging

segment driven by government policies,
infrastructure improvements, and consumer
demand. Companies like Tata Motors,
Mahindra Electric, and start-ups like Ola
Electric are leading the EV revolution.
 Key Statistics:
Exports: In FY
Production: India 2023, India Employment: The
produced 22.93 exported over 5.6 industry supports
million vehicles million vehicles, over 37 million
(FY 2022-23) across with two-wheelers jobs directly and
all categories. accounting for the indirectly.
majority.
Electrification: EV Sustainability:
Digitalization and Green initiatives like
sales are expected Connected
to grow renewable energy
Vehicles: usage, carbon
exponentially, with Increasing demand
an aim for EVs to neutrality, and
for connected, sustainable
comprise 30% of autonomous, and
total vehicle sales manufacturing
shared mobility practices are being
by 2030. services. adopted by several
companies.
Industry
Dynamics
• Target Market Size: The Indian
automobile industry is projected to reach
a market size of USD 300 billion by
2026.
• Current Market Size: As of 2023, the
industry stands at approximately USD
118 billion.
• CAGR: The market is expected to grow
at a CAGR of 10-12% between 2023
and 2026, driven by factors like
increasing urbanization, rising disposable
incomes, and the shift toward electric
mobility.
• Passenger Vehicles (PV): Contributes to about
13% of total production.
•Commercial Vehicles (CV): Accounts for nearly
4% of production.
•Two-Wheelers: Dominates with over 76% of
production volume.
•Three-Wheelers: Accounts for around 3% of
production, widely used for last-mile
transportation.
Eicher Motors Overview

• Eicher Motors Limited is an

Indian multinational
automotive company that
manufactures motorcycles
and commercial vehicles,
headquartered in New Delhi.
Eicher is the parent company
of Royal Enfield, a
manufacturer of
middleweight motorcycles.
Qualitative Analysis
Brand Strength and Market Position
• Royal Enfield: Eicher’s flagship motorcycle brand holds a
cult status in the mid-size segment (250cc–750cc), both in
India and globally. Iconic models like Classic 350 and Bullet
contribute to strong brand loyalty.
• VE Commercial Vehicles (VECV): The joint venture with
Volvo has positioned Eicher as a leader in India’s
commercial vehicle space, offering modern, fuel-efficient
trucks and buses.
Innovation and Product Development
• Electric Vehicles: Eicher Motors is committed to the EV
revolution, introducing the Electric Himalayan Concept,
signaling a shift toward sustainable and eco-friendly mobility.
• New Launches: Eicher has focused on expanding its
product portfolio with innovative models like the Shotgun
650 and Himalayan 450, catering to both domestic and
international markets​
 Important Data
•Motorcycle Sales (Royal Enfield):
912,003 units sold (11% increase from the previous year).
•Commercial Vehicle Sales (VE Commercial Vehicles):
85,560 units sold, a growth of 7.5% year-over-year.
•Revenue:
Total revenue of ₹16,536 crore, up 15% from ₹14,442 crore in FY
2022-23.
•Net Profit:
₹4,001 crore, a significant increase of 37.3% from ₹2,914 crore in
the previous year.
•EBITDA:
₹4,326.91 crore, a growth of 26%.
•Operating Profit Margin (OPM):
Improved from 24% to 26%, reflecting operational efficiency.
•Market Share:
Motorcycles (mid-size segment): Eicher commands a 29.7%
market share.
Commercial Vehicles (CVs): Eicher holds a 17.5% market share.
•Return on Equity (ROE):
22.2%, reflecting strong profitability for shareholders.
 BALANCE SHEET
• Equity and Liabilities:
1. Equity Capital remains constant at ₹27 million in both 2023 and 2024.
2. Reserves show a significant increase from ₹14,963 million in 2023 to
₹18,018 million in 2024, indicating that the company has retained more
earnings or accumulated additional capital over the year.
3. Borrowings increased slightly:
1. Long-term borrowings increased from ₹63 million in 2023 to

Financial ₹163 million in 2024, indicating the company has taken on more
debt with longer repayment terms.
2. Short-term borrowings decreased slightly from ₹133 million to

Analysis ₹112 million.

4. Lease liabilities also saw a rise from ₹93 million to ₹144 million,
indicating more assets under leasing agreements.
5. Other liabilities increased from ₹3,919 million to ₹4,650 million,
contributing to a rise in the total liabilities.
6. Trade payables increased from ₹1,810 million to ₹2,090 million,
indicating that the company owes more to its suppliers.
7. Key Observation: The overall increase in borrowings, other liabilities,
and trade payables reflects greater financial obligations, possibly due to
expanded operations or capital expenditure needs.
• Assets:
1. Fixed assets increased from ₹2,690 million to ₹2,914 million, signifying
investment in property, plant, and equipment.
1. Land remained stable, while building value increased from ₹1,051
million to ₹1,127 million.
2. Plant machinery also saw an increase from ₹2,598 million to
₹2,744 million, indicating more capital was invested in production or
operational equipment.
3. Vehicles increased from ₹137 million to ₹180 million, suggesting
the purchase of additional vehicles for operations.
2. Gross Block (total fixed assets) increased from ₹5,142 million to ₹5,729
million, but accumulated depreciation also rose, implying ongoing
depreciation on these fixed assets.
3. Investments saw a rise from ₹12,321 million to ₹13,527 million,
reflecting increased investments in financial instruments, subsidiaries, or
other assets.
4. Inventories increased slightly from ₹1,278 million to ₹1,410 million,
suggesting a buildup in stock or materials.
5. Trade receivables remained relatively stable.
6. Cash equivalents decreased significantly from ₹766 million to ₹146
million, indicating a reduction in liquid cash holdings, possibly due to
investments or debt repayment.
7. Other asset items and other liabilities both saw significant increases,
indicating potential investments in intangible assets, receivables, or
prepayments.
x Mar-23 Mar-24
Sales - 14,442 16,536
Sales Growth % 40.24% 14.50%
Expenses - 10,996 12,206
Material Cost % + 57% 54% 2. Profit & Loss Statement (FY 2023-24)
Manufacturing Cost
3% 3% • Revenue Growth: Eicher Motors' total revenue
%
Employee Cost % 7% 7% increased by 14.5%, from ₹14,442 crore to
Other Cost % 9% 9% ₹16,536 crore. This reflects a strong demand for
Operating Profit 3,446 4,329 both motorcycles and commercial vehicles.
OPM % 24% 26% • Profitability:
Other Income - 908 1,521
• Operating Profit (EBITDA) grew by 26%,
Exceptional items 0 -1
from ₹3,446 crore to ₹4,327 crore.
Other income
908 1,523 • Net Profit increased by 37.3%, from ₹2,914
normal
Interest 28 51 crore to ₹4,001 crore, supported by
Depreciation 526 598 operational efficiency and cost control.
Profit before tax 3,800 5,202 • Operating Profit Margin (OPM): Increased
Tax % 23% 23% from 24% to 26%, demonstrating improved
Net Profit - 2,914 4,001 cost management and higher operating
Profit after tax 2,914 4,001 efficiency.
Profit from
0 0 • Other Income: Jumped by 67.73%,
Associates
contributing to improved bottom-line
Reported Net Profit 2,914 4,001
performance​
Minority share 0 0
Profit for EPS 2,914 4,001
Exceptional items
0 1
AT
 Mar-23 Mar-24
Cash from Operating Activity - 2,823 3,724
Profit from operations 3,527 4,404
Receivables -59 -5
Inventory -146 -131
3. Cash Flow Analysis (FY 2023-24)
Payables 22 304
Loans Advances 0 0 • Operating Cash Flow: Eicher Motors
Other WC items 249 220 generated ₹3,724 crore in cash from
Working capital changes 66 388 operations, up from ₹2,823 crore the previous
Direct taxes -770 -1,068 year. This increase reflects strong cash
Cash from Investing Activity - -2,397 -2,834 generation from core business activities and
Fixed assets purchased -682 -819
improved working capital management.
Fixed assets sold 9 4
Investments purchased -9,103 -6,106 • Investing Cash Flow: Net cash outflows from
Investments sold 5,080 5,968 investing activities increased from ₹-2,397
Interest received 204 112 crore to ₹-2,834 crore, driven by higher
Dividends received 41 95 investments in fixed assets and long-term
Investment in group cos 0 0 projects, signifying expansion.
Other investing items 2,055 -2,089
Cash from Financing Activity - -417 -844 • Financing Cash Flow: The company recorded
Proceeds from shares 11 47 a higher net outflow in financing activities due
Proceeds from borrowings 202 322 to higher dividend payments and debt
Repayment of borrowings -20 -127 repayments, though a slight increase in
Interest paid fin -18 -35 borrowing was noted
Dividends paid -574 -1,013
Financial liabilities -19 -37
Other financing items 0 0
Net Cash Flow 8 45
4. Key Financial Ratios (FY 2023-24)
• Net Profit Margin: 24.2%, indicating strong profitability relative to
revenue.
• Return on Assets (ROA): 17.3%, reflecting efficient use of assets to
generate profits.
• Return on Equity (ROE): 22.2%, showing strong returns for
shareholders due to high profitability and efficient management of equity
capital.
• EBITDA Margin: 26.2%, highlighting strong operational performance.
• Debt-to-Equity Ratio: 0.02, indicating minimal reliance on debt, a sign
of financial stability.
• Interest Coverage Ratio: 84.9x, showing the company’s ability to cover
its interest obligations comfortably​
Ashok Leyland Overview

• Ashok Leyland is an Indian

multinational automotive
manufacturer, with its
headquarters in Chennai. It is
now owned by the Hinduja Group.
It was founded in 1948 as Ashok
Motors, which became Ashok
Leyland in the year 1955 after
collaboration with British Leyland..
Qualitative Analysis
• 1. Industry Position and Market Share
• Leading Manufacturer: Ashok Leyland is one of India's largest
commercial vehicle manufacturers, especially known for its trucks,
buses, and defense vehicles. As of 2023, it held a significant share
in the commercial vehicle segment, which is likely to continue in
2024.

• Market Trends: With a growing demand for electric vehicles (EVs)

and a shift towards sustainable transportation, Ashok Leyland has
been investing in EV technology, positioning itself to capture a
share of this emerging market.

• 2. Innovation and Technology

• Focus on Electric Vehicles: The company has been ramping up its
efforts in electric and hybrid vehicles. With government initiatives
promoting clean energy, Ashok Leyland's investments in EV
technology could enhance its competitive edge.
• Digital Transformation: Embracing technology through IoT and
connected vehicles is likely to improve operational efficiency and
customer engagement.
 Important Data
•Ashok Leyland's total sales grew by 6.03% in May 2024, with a
strong 65.64% rise in export sales​

•The company's shareholding remains stable with strong promoter

and institutional investor presence as of June 2024​
•Autocar Professional

•It secured a Rs 150 crore deal for 180 electric trucks, with deliveries
starting by FY2025​
•Autocar Professional

•Ashok Leyland is expanding its Hosur plant to focus on electric

commercial vehicles​
•Autocar Professional

•Capital expenditure plans for FY2025 have been increased to meet

rising commercial vehicle demand​
 BALANCE SHEET.
PARTICULAR 2023 2024

Equity Capital 294 294

Reserves 8,258 8,711

Borrowings + 31,161 40,802

Other Liabilities + 14,984 17,788

Total Liabilities 54,697 67,595

Fixed Assets + 8,146 8,157

CWIP 268 415

Investments 4,852 2,329

Other Assets + 41,430 56,695

Total Assets 54,697 67,595

 2. Profit & Loss Statement (FY
2023-24)
particular Mar-23 Mar-24

Sales + 41,673 45,791

Expenses + 36,580 37,848

Operating Profit 5,093 7,943

OPM % 12% 17%

Other Income + 166 73

Interest 2,094 2,982

Depreciation 900 927

Profit before tax 2,265 4,106

Tax % 40% 34%

Net Profit + 1,359 2,696

EPS in Rs 4.22 8.46

Dividend Payout % 62% 59%

 3. Cash Flow Analysis (FY 2023-24)

Mar-23 Mar-24
PARTICULAR

Cash from Operating Activity + -4,499 -6,258

Cash from Investing Activity + -2,904 1,135

Cash from Financing Activity + 7,281 8,432

Net Cash Flow -122 3,309

 Ratio Formula Value

Financial Gross Profit Margin (%)

(Revenue - COGS) / Revenue *
100 38.51376
Operating Profit Margin

Ratios (%)
Net Profit Margin (%)
Operating Profit / Revenue * 100 17.29325
Net Profit / Revenue * 100 5.869646
Return on Assets (ROA)
(%) Net Profit / Total Assets * 100 3.984602
Return on Equity (ROE) Net Profit / Shareholders Equity *
(%) 100 29.94198
Return on Capital
Employed (ROCE) (%) EBIT / Capital Employed * 100 11.45578
Current Assets / Current
Current Ratio Liabilities 1.091702
(Current Assets - Inventories) /
Quick Ratio Current Liabilities 0.941477
Cash and Cash Equivalents /
Cash Ratio Current Liabilities 0.26537
Debt to Equity Ratio Total Debt / Shareholders Equity 4.505107
Interest Coverage Ratio EBIT / Interest Expense 1.371344
Debt to Asset Ratio Total Debt / Total Assets 0.599528
Inventory Turnover Ratio COGS / Average Inventory 7.583604
Receivables Turnover
Ratio Revenue / Average Receivables 11.36187
Asset Turnover Ratio Revenue / Total Assets 0.678849
TVS MOTOR COPRP
• TVS Motor Company is one of the
largest two-wheeler and three-wheeler
manufacturers in India. It is part of the
TVS Group, which is a prominent
conglomerate in the Indian automotive
sector. TVS Motor has established itself
as a leading player in the global
automobile industry by producing a
wide range of vehicles, including
motorcycles, scooters, mopeds, and
electric vehicles.
Qualitative Analysis
• Business Model
Diverse Product Range: Motorcycles, scooters, mopeds, and electric vehicles (EVs).
R&D and Innovation: Strong focus on technological advancements and fuel efficiency.
After-Sales Services: Extensive network ensures customer loyalty and support.
• Market Position
Brand Strength: Known for quality, reliability, and innovation.
Global Presence: Products sold in over 60 countries; growing international footprint.
Electric Mobility: Early entry into the EV segment with the iQube scooter.
• Strengths
Strong Distribution Network: Extensive reach across urban and rural markets.
Innovation and Brand Loyalty: Known for innovative, technology-driven products.
Global Expansion: Strategic international growth and acquisition of Norton Motorcycles.
Qualitative Analysis
• Opportunities
Electric Vehicle Growth: Strong potential with rising EV demand and
government incentives.
Technological Integration: Increasing use of smart and connected vehicle
features.
Global Market Expansion: Further opportunities in emerging markets and
premium segments.
• Challenges
Intense Competition: Facing pressure from established players like Hero
MotoCorp, Honda, and Bajaj.
Regulatory Compliance: Evolving safety and emission standards.
Economic Sensitivity: Vulnerable to domestic and global economic conditions.
Important Stats
Operating Profit
Revenue: ₹31,974 Net Profit: ₹1,309 Margin: Increased
crores (2023) to crores (2023) to ₹1,779 from 12.59% (2023) to
₹39,145 crores (2024) – crores (2024) – a 14.05% (2024),
a 22.43% growth. 35.89% increase. indicating improved
operational efficiency.

Inventory Turnover
Debt to Equity Ratio:
Ratio: Improved from
Earnings Per Share Reduced from 4.06
13.41 (2023) to 16.13
(EPS): ₹27.97 (2023) (2023) to 3.83 (2024),
(2024), showing
to ₹35.50 (2024). reflecting better
increased efficiency in
leverage management.
managing stock.
Balance Sheet Analysis
Mar-23 Mar-24

• Assets: Increased from ₹35,025

Equity Capital 48 48
Reserves 5,457 6,736
Borrowings - 22,376 26,006

crores (2023) to ₹42,024 crores Long term Borrowings

Short term Borrowings
9,064
12,562
12,629
12,657

(2024). The rise was driven by higher Lease Liabilities

Other Borrowings
749
0
719
0

investments in fixed assets and Other Liabilities -

Non controlling int
7,144
405
9,235
728

working capital, indicating continued Trade Payables

Advance from Customers
5,097
338
6,638
258

expansion and capital expenditure.

Other liability items 1,304 1,611
Total Liabilities 35,025 42,024
Fixed Assets - 5,748 5,891
Land 512 563

• Borrowings: Short-term and long- Building

Plant Machinery
1,159
5,411
1,264
5,683

term borrowings rose from ₹22,376 Equipments

Furniture n fittings
311
171
359
238

crores (2023) to ₹26,006 crores Vehicles

Intangible Assets
99
1,775
121
1,940

(2024), indicating an increased Other fixed assets

Gross Block
1,381
10,820
1,593
11,761

reliance on debt to finance operations.

Accumulated Depreciation 5,072 5,870
CWIP 743 1,033
Investments 967 1,123

• Reserves: Strengthened from ₹5,457

Other Assets - 27,566 33,977
Inventories 1,922 2,248
Trade receivables 1,256 1,839

crores (2023) to ₹6,736 crores (2024), Cash Equivalents

Short term loans
1,879
10,637
2,426
13,921

signaling improved retained earnings Other asset items

Total Assets
11,872
35,025
13,543
42,024

and financial stability.

 Mar-23 Mar-24
Sales - 31,974 39,145
Sales Growth %
Expenses -
31.28%
27,947
22.43%
33,645
Profit and Loss (P&L)
Material Cost % -
Raw material cost
65%
20,987
62%
24,730
Analysis
Change in inventory 141 324
Manufacturing Cost % 1% 1%
Employee Cost % 9% 9%
Other Cost % 12% 14%
Operating Profit 4,027 5,500
OPM % 13% 14%
Sales Growth: Sales grew Material Costs: Material
by 22.43%, down from the cost as a percentage of
Other Income - 136 106
previous year's growth of sales decreased from 65%
Exceptional items 46 93 31.28%, but still reflects (2023) to 62% (2024),
Other income normal 90 13 solid demand for TVS which indicates better cost
Interest 1,368 1,928 products, particularly in the management or possibly
Depreciation 859 975 premium and EV segments. favorable input prices.
Profit before tax 1,936 2,703
Tax % 32% 34%
Net Profit - 1,309 1,779
Profit after tax 1,309 1,779
Profit from Associates 0 0 Profit Before Tax (PBT):
Employee Costs: Improved by 39.63% from
Reported Net Profit 1,309 1,779
Maintained at 9% of sales, ₹1,936 crores (2023) to
Minority share 19 -92
reflecting consistent ₹2,703 crores (2024),
Profit for EPS 1,329 1,686 management of labor highlighting better
Exceptional items AT -30 -58 expenses. profitability before taxation
Profit for PE 1,280 1,631 impacts.
EPS in Rs 27.97 35.5
Dividend Payout % 18% 23%
 Cash Flow Analysis

Operating Cash Flow: Negative at -₹1,253 crores (2024), although

this is an improvement from -₹4,405 crores in 2023. The large negative
figure stems primarily from working capital changes, especially
increases in loans and advances.

Investing Cash Flow: Reduced outflows from -₹1,308 crores (2023) to

-₹1,001 crores (2024) suggest careful capital allocation, with fewer
investments in fixed assets.

Financing Cash Flow: Decreased significantly from ₹6,118 crores

(2023) to ₹2,759 crores (2024), indicating reduced reliance on
borrowings, though still heavily debt-financed.
Interpretation:

• Profitability: TVS Motor's profitability is improving, as

seen by the rise in operating profit margins and net
profit margins. The company is managing its raw
material costs more effectively and benefiting from
economies of scale.
• Leverage: The company's reduction in the debt-to-
equity ratio is a positive sign, indicating that it is
improving its capital structure by relying less on debt
relative to equity.
• Efficiency: The improved inventory turnover ratio
suggests that TVS is efficiently managing its stock, likely
reducing holding costs and increasing the speed at
which inventory is sold.
• Cash Flow Concerns: Although TVS Motor has
improved its cash flow position, particularly in
operations, the continuing negative operating cash flow
suggests challenges in managing working capital,
particularly receivables and advances. It will need to
focus on cash flow management to ensure liquidity.
 • TVS Motor Company exhibits strong
growth in revenue and profits, along
with improvements in efficiency and
Conclusio leverage. However, its cash flow
management, particularly the
n reliance on debt and working
capital, needs careful attention to
ensure long-term financial
sustainability. The company's focus
on electric mobility and global
expansion should provide growth
opportunities moving forward.