Factors Determining Profitability in Indian Automobile Industry
Keywords:
Financial Performance, Ratio Analysis, Profitability, Multiple Correlation Analysis, Regression Analysis and Automobile IndustryAbstract
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.
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