Performance Appraisal of Automobile Industry – A Comparative Case Study of Ashok Leyland Ltd and Tata Motors Ltd

Abstract

Demographically and economically, India’s automotive industry is well-positioned for growth, servicing both domestic demand and, increasingly, export opportunities. Automobiles production increased at a Compound Annual Growth Rate (CAGR) of 12.2 percent over FY05-13, while the export volumes increased at a CAGR of 19.1 per cent. Strong demand growth due to rising incomes, growing middle class, and the young population is likely to propel India among the world's top five automobile producers by 2015. India has significant cost advantages, automobile firms save 10-25 percent on operations in India as compared to Europe and Latin America. A large pool of skilled manpower and a growing technology base are some of the leading factors. The government aims to develop India as a global manufacturing as well as research and development (R&D) hub. There has been a wide array of policy support in the form of concessions, taxes and FDI encouragement. Under the Union Budget 2013-14, the government has also proposed to allocate US$ 2.7 billion for Jawaharlal Nehru National Urban Renewal Mission (JNNURM) to boost sales volumes of Medium and Heavy Commercial Vehicles (MHCV). The world's cheapest car (Tata Nano) has directed focus towards the low-income market. Bajaj Auto, Hero Honda and Mahindra & Mahindra (M&M) jointly plan to develop a technology for two-wheelers to run on natural gas. Electric cars are likely to be a sizeable market segment in the coming decade. Ashok Leyland, the flagship company of the Hinduja Group which is originally British-based and Indian originated transnational conglomerate is a commercial vehicle manufacturing company based in Chennai. Founded in 1948, the company is one of the India’s leading manufacturers of commercial vehicles, emergency vehicles and military vehicles. Operating seven plants, Ashok Leyland also makes spare parts and engines for industrial and marine applications. Tata Motors Limited (formerly TELCO, short for Tata Engineering and Locomotive Company) is an Indian multinational automotive manufacturing company headquartered in Mumbai, Maharashtra, India and a subsidiary of the Tata Group, Founded in 1945. Its products include passenger cars, trucks, vans, coaches, buses, construction equipment and military vehicles. It is the world's sixteenth-largest motor vehicle manufacturing company, fourth-largest truck manufacturer and second-largest bus manufacturer by volume. This paper is purely based on secondary data, i.e. Annual Reports of Ashok Leyland Ltd and Tata Motors Ltd from 2008-09 to 2012- 13 and Journals, and Articles. The collected data were analyzed by using the Ratio Analysis. Further, statistical tools like Mean, Standard Deviation, Coefficient of Variation and Growth Rate were also used for the purpose of the study