Factors Determining Profitability in Indian Automobile Industry

Dharmaraj Arumugam ., Ashok Kumar M. ., Preetha R. .

Abstract


Automobile sector has emerged as a sunrise sector.  In April-March 2015, overall automobile exports grew by 14.89 percent over the same period last year. Passenger Vehicles, Commercial Vehicles, Three Wheelers and Two Wheelers grew by 4.42 percent, 11.33 percent, 15.44 percent and 17.93 percent respectively during April-March 2015 over the same period last year(SIAM). The leading local firms have established over 200 technical cooperation agreements with foreign firms to be able to reach international standards in cost and manufacturing. The healthy development and rapid growth of this industry has always been very important for the Indian economy. This paper aims to measure the profitability and also to analyze the effects of various factors on the profitability in Indian Automobile industry. For this purpose 16 companies were taken and 21 variables were analyzed through multiple correlation analysis and step wise multiple regression. It is proved that profitability of the Indian Automobile Industry is highly dependent on Operating Ratio and it contributes 93.40 per cent to variation in Return on Sales.


Keywords


Financial Performance, Ratio Analysis, Profitability, Multiple Correlation Analysis, Regression Analysis and Automobile Industry

Full Text:

PDF

References


A. Dharmaraj, Dr. N.Kathirvel Analysing the Financial Performance of Selected Indian Automobile Companies, Global Journal For Research Analysis, Vol:II, Issue:IV April 2013

A.Dharmaraj, Dr.N.Kathirvel Financial Performance of Indian Automobile Industry– A Comparative Study During Pre and Post Foreign Direct Investment, International Journal of Scientific Research, Vol : 2, Issue : 9 September 2013

Adolphus J.Toby (2008), Liquidity performance relationship with Nigerian manufacturing companies (1990-2002) Finance India, Vol. II, Issue 3, Mar.2008, pp.117-131.

Agarwal, R. N. (1991). Profitability and growth in Indian automobile manufacturing industry. Indian Economic Review, 81-97.

Aggarwal, N. and Singla, S.K. (2001), How to develop a single index for financial performance, Indian Management, Vol .12, No.5, pp.59-62.

Ahmed Arif Almazari (2012) - Financial Performance Analysis of the Jordanian Arab Bank by Using the DuPont System of Financial Analysis - International Journal of Economics and Finance Vol. 4, No. 4; April 2012 Pp. 86 -94.

Burange L.G and Shruti Yamini (2008), Performance of Indian Cement Industry: the Competitive Landscape, the Journal of Finance, Vol.39, No.1, April 2008, pp.127-145.

Chandra H and Selvaraj A (2013), A study on financial health of the selected Indian steel companies”, SMART Journal of Business Management Studies, Vol.9, No.1, pp.36-42.

Debaprosanna Nandy (2011), Multivariate analysis approach of selecting profitability indicators – An empirical study of commercial banks in India, Zenith International Journal of Multidisciplinary Research, Vol.1 Issue 6, October 2011, pp 1-18

Dharmendra S. Mistry (2011), Performance appraisal of Indian two wheeler industry, GITAM Journal of Management Vol.9 No.4, pp 65-82.

Giulio Bottazzi, Angelo Secchi and Federico Tamagni (2008), Productivity, Profitability and financial performance, Published by Oxford University, (2008) pp.45-65.

Hamasalakshmi R (2009), ‘Financial Analysis of Selected Indian Software Companies’, Finance India, Vol. XXVI, No.3, September 2012, pp.955-960

Jagan Mohan Rao, P (1993). Financial Appraisal of Indian Automotive Tyre Industry, Finance India, Vol.VII, No.3, pp.683-685.

Janaki Ramudu P and Parasuraman N.R (2012), Growth in Sales Compared with Changes in Profitability and in Working Capital – A Study of Indian Pharmaceutical Industry, Journal of Accounting and Finance, Vol.26, Issue.1, pp 3-12.

Juliet D’ Souza and William L. Megginson, (1999). Financial and operating performance of privatized firms during the 1990s, The Journal of Finance, Vol. LIV, No.4, pp.1397-1434.

Kamalnath.P (2010), A Study on Working Capital Management and Profitability of Automobile Companies in India, Unpublished Ph.D dissertation submitted to Bharathiyar University, Coimbatore.

Krishnaveni. M (2008), Performance appraisal of an Indian chemical industry after liberalization, Finance India, Sep.2008, Vol. 22, No.3, pp.571-580.

Lind, L., Pirttilä, M., Viskari, S., Schupp, F., & Kärri, T. (2012). Working capital management in the automotive industry: Financial value chain analysis.Journal of purchasing and supply management, 18(2), 92-100.

Muthumoni. A (2008) “A Study on the performance appraisal of Indian Automobile Industry”, Ph.D Dissertation submitted to Bharathidasan University, 2008.

Neha Mittal (2012), Determinants of capital structure of Indian industries, Journal of Accounting and Finance, Volume 25, No: 1, pp.32-40.

Rajalakshmi K and Ramachandran T (2011), Impact of Foreign Direct Investment on India’s Automobile Sector-With Reference to Passenger Car Segment, Research journal of Science and IT Management, Vol.1, Issue 1, Nov 2011, pp. 22-41.

Rakesh Kumar Manjhi and S.R. Kulkarni(2012), Working Capital Analysis and Liquidity Analysis: An Empirical Research on Gujarat Textiles Manufacturing Industry. Indian Journal of Finance, August 2012, pp 25-35.

RBI Bulletin (2005), Financial performance of private corporate business sector, Finance India, Vol. IX, No.4, pp.901-908.

Saranga, H. (2009). The Indian auto component industry–Estimation of operational efficiency and its determinants using DEA. European Journal of Operational Research, 196(2), 707-718.

Sarumathi I (2010) analysed the financial performance of Hero Honda Motors and TVS Motors in Two Wheeler Automobile industry, Unpublished Ph.D dissertation submitted to Bharathiyar University, Coimbatore.

Sharma Manisha and Prashaant Anu (2009), An Analysis of Performance of the Indian Textile Industry in Quota Free Regime. Paradigm (Institute of Management Technology), 2009, Vol. 13, Issue 2, pp.98-109

Shishir Pandey (2012), Financial Structure and Profitability of IFCI Ltd.: An Empirical Analysis, Indian Journal of Finance, October 2012, pp 32-38.

Shurveer S. Bhanawat (2011), “Impact of Financial Crisis on the Financial Performance of the Indian Automobile Industry”, Working paper, ssrn.

Swati Dhaval Modi (2012), A Study on the Adequacy and Efficacy of Working Capital in Automobile Industry in India, The IUP Journal of Accounting Research & Audit Practices, Vol. XI, No. 2, April 2012, pp. 69-90.

Tushkar K. Mahanti (2013) “Saving Spending Splurging”, Business Economics, January 2013, pp 20-25.

Velu Suresh Kumar (2011), “Indian Automotive Industry: Performance Analysis”, Political Economy Journal of India, Vol. 2, No. 2, pp 1-7.

Vijayakumar, D. (2011). Cash Conversion Cycle and Corporate Profitability–An Empirical Enquiry in Indian Automobile Firms. International Journal of Research in Commerce, IT & Management.

Vijayakumar, D. A. (2011). The Determinants of Profitability: An Empirical Investigation Using Indian Automobile Industry. International journal of research in commerce & management.

http://www.ibef.org/industry/india-automobiles.aspx


Refbacks

  • There are currently no refbacks.




Editorial Office:

Educational Research Multimedia & Publications,
S.N. 21, Plot No 24, Mirza Ghalib Road Malegaon Nasik,
Maharashtra India - 423203.
+919764558895 (whatsapp),
editor@scholarshub.net, www.scholarshub.net

Copyrights © 2010-2020 - ERM Publications, India     

This work is licensed under https://creativecommons.org/licenses/by-sa/4.0/