Professional Documents
Culture Documents
Road development
Continued improvement in road infrastructure is expected to have a positive effect on automobile sales. The Golden
Quadrilateral Project was 99.72% complete as on January 31 , 2012 . The 2nd phase of NS EW road corridors are 81.44% complete by January 2012. Rural connectivity is expected to correspondingly improve which would expand significantl y th e population/markets/supply sources participating in the overall economic growth. These improvements would facilitate faster transportation of goods and passengers, and would in turn create demand for safer, reliable and faster vehicles. The Company is poised to benefit from the same as it has a wide range of goods and passenger transportation vehicles ranging from 0.7 Ton load carrier to large haulage tractors(49T) for goods movement, buses and coaches for public transportation and passenger cars and utility vehicles for personal transportation .
International business
India continues to be a cost effective source for the automotive industry globally, both for vehicles and components. Indias manufacturing base will benefit from these scale economies and technology/quality improvements. Tata Motors exports currently constitute 11.07% of the total sales value and have opportunities to increase significantly, particularly with the new and contemporary product offerings in commercial vehicles and passenger cars. The Company is also setting up/exploring manufacturing footprint overseas that would combine these advantages with local operations and sourcing in these markets.
Threats
Budget 2012
The budget hit a major body blow on the struggling passenger car industry with a 2% increase in excise duty, from 10% to 12%. The government has also increased the excise duty on large cars from 22% to 24% and has done away with additional special duty of Rs. 15,450, but replaced the same with a 3% tax which will take the overall excise duty on large cars to 27%. The body building of commercial vehicles has now got an ad valorem duty of 3% instead of a specific duty of Rs. 10,000 which is likely to be an additional burden on truck makers.
Credit unavailability
The tightened liquidity position and reduction in exposure to vehicle financing by banks/NBFCs would have an adverse impact on the automotive industry. Though in-house vehicle financing has been strengthened by the Company, it would be a challenge for the Company to fully offset the decrease in credit availability from outside sources.
Fuel Prices
T he international crude prices has witnessed steep increase adversely impacting the automotive sales.
Input Costs
Indias rubber and steel industries likely to be affected with the 2% increase in excise duty as the rise in levy is expected to affect the car demand.
Government Regulations
Stringent emission norms and safety regulations could bring new complexities and cost increases for automotive industry, impacting the Companys business. WTO, Free Trade Agreements and other similar policies could make the market more competitive for local manufacturers.
Global Competition
India continues to be an attractive destination for the global automotive players. The global automotive manufacturers present in India have been expanding their product portfolio and enhancing their production capacities.