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Automobile Sector Analysis Bharat Forge

FAS GROUP A2

AUTOMOTIVE INDUSTRY

Key driving sector of the economy Closely tied to other sectors of the economy Prime buyer in basic industries Requires complex and multidisciplinary technology Intense competition in the market Intensive R&D Fastest developing sector in the global economy The Automotive industry is the major end-user of forging

products

10%

20%

70%

Premium SegmentThe Entry SegmentThe Value Segment

Segmentation according to brand & market positioning in different regions

Industry Outlook

After a sustained period of strong steel consumption growth in China, Chinese and world steel demand moderated considerably in 2014 and growth is expected to decline further in 2015

Higher demand is likely to come from India, with forecast growth of 6% in 2015 compared to 1.8% in 2013

Those with output geared more towards consumer markets such as the automotive industry and non-oil infrastructure are likely to gain from Oil price slump

expanded regulatory requireme

nts for safety and

fuel economy

increased availability of

data and information

shifts in consumer demand

Key Growth factors – Automobile Industry

KEY GROWTH FACTORS:-

AUTO COMPONENT

INDUSTRY

Recovery of OEMs in M&HCV and PV

Recovery of the global economy

Improved consumer sentiment

Strong buoyancy in the end-user

industry

Return of adequate

liquidity in the financial system

Government Initiatives

The Government of India’s Automotive Mission Plan (AMP) 2006–2016

It is expected that this sector's contribution to the GDP will double reaching a turnover of US$ 145 billion in 2016

due to the government’s special focus on exports of small cars, multi-utility vehicles (MUVs), two and three-wheelers and auto components

The deregulation of FDI in this sector has helped foreign companies to invest huge amounts in India

SWOT Analysis ofIndian Automobile Industry

Strengths Domestic Market is large Government provides

monetary assistance for manufacturing units

Reduced Labor cost

Weaknesses Infrastructural setbacks Low productivity Too many taxes levied by

government increase the cost of production

Low investments in Research and Development

Opportunities Reduction in Excise Duty Rural Demand is rising Income level is at a

constant increase

Threats Increasing rates of interest Too much competition Rising cost of raw materials

Changes in Vehicles Technology

Autopilot carsDriverless cars also known as autopilot, autonomous vehicle or auto-drive car are intelligent vehicles because of the simple fact that they drive themselves, to put it in a better way they actually do not require drivers to drive them. These vehicles navigate the roads themselves and give you a taxi experience.

Emission StandardsWith the help of the advancement in automobile technology a check can be put on the emission of harmful pollutants like NO 2 , particulate matter (PM) or soot, carbon monoxide (CO) or volatile hydrocarbons which would by far help to save the planet from global warming.

Coming from the first steam engine built by Nicolas-Joseph Cugnot in 1769 the to the modern day four stroke internal combustion engine, the automobile engine has survived a long journey. It is simply the determination and power of the human mind that has kept improving the steam engine and today excelled in making it a fast and smooth running engine.

Automotive Engine

The suspension system of a vehicle consists of springs, shock absorbers and linkages these together connect the vehicle to its wheels. However the main function of the suspension system remains to minimize jerks and to provide a smooth journey to its occupants

Suspension technology

MARKET STRUCTURE

PORTER’S FIVE FORCES MODEL

65%market share in Indian commercial vehicle market in crankshaft and front axle beam, which are its key products.

45%market share in Europe and US in crankshaft and front axle beams.

Company Review

Domestic automotive market grew for the first time in 3 years as total production increased by 3.4% as compared to FY2014

Lower diesel prices and strong freight rates act as tail winds in the resurgence of sector

Revenues from the CV business increased by 26.4% as compared to FY2014 due to ramp up of orders from new customers

US auto industry showed robust economic growth and recorded highest sales since financial crisis

Expected continuation of Eurozone economic recovery bodes well for automotive industry

DOMESTIC INTERNATIONAL

Company Automotive Outlook

Indicative demand outlook for FY16 across various geographies