ashik stats report

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Share value forecasting - Statistics project

Statistics project 1

Post Graduate Programme

Post Graduate Programme in Management:

2010 2012

Statistics Project

Submitted by,

ASHIK ABDULLAH

(10-PG-066)

Section-B


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I owe a great many thanks to a great many people who helped and supported me during the

project.

My deepest thanks to Prof. Viswanathaiah for guiding and correcting various

documents of mine with attention and care. He has taken pain to go through the project and

make necessary correction as and when needed.

I would also thank my Institution and my faculty members without whom this project

would have been a distant reality. I also extend my heartfelt thanks to my friends, family and

well wishers


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EXECUTIVE SUMMARY

The focus of this study is the forecasting of share values of 4 tyre manufacturers,Apollo Tyres Ltd, Ceat Ltd, Balkrishna Industries Ltd and JK Tyre & Industries Ltd for 4

months.

Here the methodology of linear trend is used to forecast the share values. The deviation

from the linear trend can be analysed by the plotting the trend line. Measures of Central

Tendencies such as Mean, Median, Mode and Measures of Dispersion such as Standard

Deviation and others like Skewness, Kurtosis, Regression and Correlation betweencompanies are also estimated to have a better view of the company.

The trend lines are plotted for each company. Linear trend function is used in this case,

and this is used for forecasting the share values. These data is used in interpreting the stability

and growth of each company.


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INT DUCTION:

T E MAKE S HISTORY-AN INDIAN PERSPECTIVE

The Indi n t e indust is around ei ht years old. In the pre-Independence period,the tyre manufacturers were mainly forei n companies. Raw material in the form of naturalrubber was easily available and labour was cheap.

The ori in of the Indian tyre industry dates back to 1926 when Dunlop Rubber

Limited set up the firsttyre company in WestBengal and soon afterthatthe Tyre giants MR followed and set the ball rolling for the tyre industry in India. The Indian tyre industry

produces the complete range of tyres required by the Indian transports except for aero tyresand some specialized tyres. The Indian tyre industry produces tyres for trucks, buses,

passenger cars,jeeps, light trucks, tractors, animal drawn vehicles, scooters, motorcycles,mopeds, bicycles, off-the-road vehicles and special defence vehicles.

The Indian tyre industry registered a 5-year Compounded Annual Growth Rate(CAGR) of 8.02% between 20003-08.

Percentage of differenttyres made in India

The Indian tyre industry is perhaps the only industry that has registered an average

annual growth rate of 6.5%. The reasons for growth are the robust growth ofthe economy

and the automobile industry. India's automotive tyre sectoris the largest consumer of allthe

natural rubber produced in India which is 53%. Today 7 Indian tyre companies feature in the

list ofthe world's top 75 tyre manufacturers. Besides domestic growth, there has been a smart

growth in the export oftyres also. Itis expected thatthe Indian tyre industry will have a very

bright future.


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JK Tyre & Industries Ltd. is an India-based tire company that develops, manufactures,

markets and distributes automotive tires, tubes and flaps for the transportation industry. The

Company manufactures its products in four manufacturing centres in India, and has

marketing operations spread across India and abroad in over 75 countries, including the

United States, Latin America, the Middle East, South East Asia, Africa and Australia. It

markets tires for sale to vehicle manufacturers for mounting as original equipment and for

sale in the replacement markets worldwide.

The Companys subsidiaries include J.K International Ltd, J.K Asia Pacific Ltd, and

J.K Asia Pacific (S) Pte. Ltd. The Companys products include Jet Trak, Jet One, Jet Trak-39,

Jet Trak-39 DX, Jetking-10, Jet Trak XL, Jet Speed, Jet Xtra, JetRib, JetRPlus, Ultima XP,

Tornado, Brute, Steel King, Sona HF and Sona 2001. In June 2008, the Company acquired

100% interestin Tornel, a Mexican tyre company.


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Apollo Tyres Ltd is a high-performance company and the leading Indian tyremanufacturer. Head quartered in Gurgaon, a corporate-hub in the National Capital Region ofIndia, Apollo is a young, ambitious and dynamic organisation, which takes pride in its uniqueidentity. Registered as a company in 1976, Apollo is built around the core principles ofcreating stakeholder value through reliability in its products and dependability in itsrelationships.

Apollo Tyres Ltd is the fastest growing top tier tyre manufacturer, with annualrevenues of over US$ 1.8 billion (2009-10 . Its first plant was commissioned in Perambra inKerala state. It commenced its production in 1977 under the leadership of Raunaq Singh. In2006, the company acquired Dunlop Tyres International of South Africa. The company nowhas four manufacturing units in India, two in South Africa and two in Zimbabwe. It has anetwork of over 4,000 dealerships in India, of which over 2,500 are exclusive outlets. InSouth Africa, it has over 900 dealerships, of which 190 are Dunlop Accredited Dealers.

"Apollo Tyres Ltd." has been pioneer in the implementation of "Six Sigma" among allthe tyre companies in India, and is in the list of top 15 tyre manufacturers of the world interms of Revenues. The construction of fully automated plant at chennai with an initialcapacity of 6000 TBR and 8000 PCR is under progress.

The company currently produces the entire range of automotive tyres for ultra andhigh speed passenger cars, truck and bus, farm, Off-The-Road, industrial and specialtyapplications like mining, retreaded tyres and retreading material. These are produced across

Apollos eight manufacturing locations in India, Netherlands and Southern Africa. A ninthfacility is currently under construction in southern India, and is expected to commence

production towards the end of 2009. The major brands produced across these locations are:Apollo, Dunlop, Kai en, Maloya, Regal and Vredestein.

In the three domestic markets of India, Southern Africa and Europe, Apollo operatesthrough a network of branded, exclusive or multi-product outlets. In South Africa the brandedoutlets are called Dunlop Zones; while in India they are variously named Apollo Tyre World(for commercial vehicles and Apollo Radial World (for passenger cars . Exports out of thesethree key manufacturing locations reach over 70 destinations across the world, with keycomprising Europe, Africa, the Middle East and South-East Asia.

Apollo is one of the largest corporate investors in developing sporting talent through itsMission 2018, which is focused on nurturing and training youngsters in the sport of tennis toenable an Indian to win a Singles Grand Slam Championship by the year 2018


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.

Ceat Ltd, a part ofthe RPG conglomerate is one ofthe leading tyre manufacturers inIndia. The company offers the widest range oftyres to leading Original EquipmentManufacturers across the world. They manufacture a range oftyres catering varioussegments, which includes tires for heavy duty trucks and buses (T&B), light commercialvehicles (LC s), earthmovers and forklifts (specialty segment), tractors, trailers, passengercars (PC), motorcycles, scooters and auto-rickshaws. They produce over 7 million tyres ayear and commands around 13% share ofthe Indian tyre market.

The company operates two plants in Maharashtra, one in Bhandup and the otherinNasik. They have a robust national network consisting of 34 regional offices and over 3,500

dealers among which approximately 100 are exclusive dealers running the CEAT Shoppe

outlets for passenger cars segments and 96 exclusive dealers running the CEAT HUBs forTruck & Bus Segments. The company has their presence in 110 countries. Ceat Ltd wasincorporated in the year 1958 as Ceat Tyres of India Ltd in collaboration with Tata Group.

The company was established with the main objectto construct, produce, prepare,manufacture, press, vulcanize, repair, retread, purchase, sell, import and to dealin tyres,semi-tyres for alltypes of vehicles and innertubes, flaps and repairs materialin general. Overthe last 50 years, the company has established a strong presence in both the domestic and theinternational markets.

Ceatis the firsttyre company in India was awarded the International accreditationISO/TS 16949 - 2002 Quality Standard Certification. The company entered into agreementwith Pirelli of Italy for outsourcing radialtyres, which were marketed in the brand name,CEAT SpiderRadials.


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Part of well known industrial conglomerate in India, namely Siyaram-Poddar Group with

group turnover of US$ 550 million, BKT today is one ofthe worlds leading manufacturers

of OFF-HIGHWAY TYRES. BKT has the widest product range containing more that 1700

SKUs (Stock Keeping Units) and is One Stop Shop for off-highway tyre solutions.

The success story ofBKT, begun in 1995 when it entered into production of cross ply off-

highway tyres, With the help of persistent & intensive market research coupledwith ever

expanding production capabilities, BKT has made its markin the niche segments like

Agricultural, Construction, Industrial, Earthmover, ATV (All Terrain Vehicle) and Turf care

applications.

BKT is continuously developing its production base and has expanded its product range

significantly. With three manufacturing plants and one In-house Hi-tech Mould-

manufacturing facility at differentlocations in India, BKT is very well equipped to feed the

ever-growing demand ofits worldwide customers. 4th Tyre plant a Greenfield projectis

already underway.

About 95% of ourtyre production is exported, out of which 70% is sold in Europe, where

farms are large and scientific methods of farming, requiring tractors with differenttyre types.


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OBJECTIVE OF STUDY:

To forecast the share values of certain specific tyre manufacturing companies which include

J.K Tyres, MRF Tyres, Apollo Tyres and Balakrishna Tyres in order to determine the

financial stability of these companies in the future by using required statistical tools in MS.

Excel.

STATISTICAL TOOLS UTILIZED

y Mean, median and modey Skewnessy

Correlationy Regressiony Trend analysisy Standard deviationy Sample Variancey Kurtosisy Skewnessy Rangey T-testy F-test

PROGRAMME UTILIZED DURING THE RESEARCH

y Microsoft Excel 2007


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INTERPRATION

Correlation: A statistical technique that is used to analyse the strength and direction of the

relationship between two quantative variables is called correlation.

JK TYRES

EXPECTED SHARE VALUE VS ACTUAL SHARE VALUE:

r= 0.133079625

By this value it can be determined that the two share values have positive correlation which

indicates that changes in share value are increasing in the positive direction.

APOLLO TYRES


R = 0.11045013



CEAT TYRES


r= 0.64851435



BALAKRISHNA TYRES

EXPECTED SHARE VALUE VS ACTUAL SHARE VALUE

r= 0.906401892


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Skewness: The statistical technique to indicate the direction and extent of skewness in the

distribution of numerical values in the data set.

JK Tyre & Industries Ltd.

Skewness: 0.83476965

It can be determined that JK Tyre & Industries Ltd.share values are right to the skew of

83.46%

Apollo Tyres Ltd

Skewness: 0.644694043

It can be determined that Apollo Tyres Ltd share values are right to the skew of 64.46%

Ceat Ltd

Skewness: 1.643716655

It can be determined that Ceat Ltd share values are right to the skew of 16.43%

BALAKRISHNA TYRES

Skewness: 0.253013069

It can be determined that BALAKRISHNA TYRES values are right to the skew of 38.4%


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Regression:

Regression studies nature of relationship between variables, regression clearly explains the

cause and effect relationship between the variables. Regression coefficients are absolute

measure indicating the change in the value of one variable for a unit change in the value of

other.

Regression for JK Tyre & Industries Ltd.:

Actual Share Value v/s Volume:

Regression Line y = a+bx where; a = 1951.340125

= 166.2983438 b = 10

Thus Y=166.2983438

So we can say that for a significant change in Actual Share Value there will be a smallsignificant change in Volume

Volume v/s Actual Share Value:


= -2781238.988 b = 20

Thus Y= - 2781238.988

So we can say that for a significant change in Volume there will be small significant change

in Actual Share Value.

Regression for APOLLO TYRES



= 64.59925225 b = 0.00001

Thus Y=64.59925225

So we can say that for a significant change in Actual Share Value there will be a smallsignificant change in Volume


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= -17897723.56 b = 0.00001

Thus Y= -17897723.56

So we can say that for a significant change in Volume there will be significant change in

Actual Share Value

Regression for CEAT TYRES:



= 135.527029 b = 0.00001

Y= 135.527029

So we can say that for a significant change in Actual Share Value there will be a small

significant change in Volume



= -4384066.143 b = 0.00001

Thus Y= -4384066.143


Actual Share Value.


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Regression for BALAKRISHNA TYRES


Regression Line y = a+bx where; a = 11.03056919= 11.03056919 b = 0.00001

Thus Y=11.03056919

So we can say that for a significant change in Actual Share Value there will be a small

significant change in Volume


Regression Line y = a+bx where; a =

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1434693.31= -9110.769724 b = 0.00001

Thus Y= -9110.769724


Actual Share Value


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TREND LINES

JK TYRES

Actual share value is so fluctuating along the trend line.

Financial position of the company is unstable.

It is volatile so trading is not going smoothly.

So it can be said that to trade the share of JK TYRES is very risky

Apollo Tyres Ltd:



It is volatile so trading is not going smoothly

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1 5 9 131721 2529333741454953576165 69

NSE(Y)

EXPECTED (Y)

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00000000000000000000000000000000000

NSE (Y)

EXPECTED (Y)


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Ceat Ltd:

Actual share value is fluctuating along the trend line.

Financial position of the company is moderate stable.

It is not volatile so trading is going on smoothly.

Share of Ceat Ltd is not risky.

Here linear trend forecasting is efficient in the Tata Communication Company.

BALAKRISNA TYRES:



It is volatile so trading is not going smoothly.

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1 4 7 101316192225283134374043464952555861646770

SE (Y)

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GRAPH SHOWING THE COMBINED SHARE VALUES OF THE COMPANYS

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1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70

SHARE VALUE COMPARISON

JK TYRES

APOLLO

CEAT

BALAKRISHNA


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GRAPH SHOWING THE STOCKS OF COMPANYS

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800BALAKRISNA TYRES


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LIMITATIONS OF THE STUDY

Influences of external forces such as occurrence of natural disasters, changes in fiscal policy

(such as tax, subsidies ,incentives, etc ,pricing policies adopted by companies for

competition purpose or political changes in the government, lead to a change in the

forecasted share values. This will render the entire process invaluable as trend analysis is a

process which is highly sensitive to external changes in the business environment.

References:

y Business Statistics, Second Edition, J.K.Sharma.y www.nseindia.comy www.yahoo/finance.comy www.capitalline.comy www.moneycontrol.com.y http://en.wikipedia.org.y http://wikicompany.org/wiki/JK_Tyre_&_Industries_Ltd.y http://venturebeatprofiles.com/company/profile/ceat-ltdy http://www.mrftyres.com/y www.apollotyres.comy www.ceattyres.in

BIBILOGRAPHY:

y Statistics for managers using Microsoft Excel by Levine, Stephan, Krehbiel,Berenson.

y www.nseindia.comy www.yahoo/finance.comy www.capitalline.com

Documents

ashik stats report