Swaraj Mazda (BOM:505192)

The Hindu Business Line  Nov 10  Comment 
SML Isuzu Ltd, formerly known as Swaraj Mazda, has achieved profit of Rs 17.5 crore for the July-September quarter, up by 40 per cent, on a net revenue of Rs 248.6 crore against Rs 200 crore in th...
Business Standard  Dec 8  Comment 
Private equity company Actis is in talks with Isuzu Motors for exiting automobile company Swaraj Mazda.
The Economic Times  Oct 29  Comment 
Commercial vehicle maker Swaraj Mazda today reported an over two-fold jump in its net profit for the quarter ended September 30 to Rs 9.30 crore.
The Economic Times  Apr 1  Comment 
Ranbaxy Laboratories will hire nearly 1,500 marketing executives, expanding its sales team by at least 50%, to spur sales and regain its rank as India’s top drugmaker.
The Economic Times  Mar 31  Comment 
Private equity fund Actis, a key shareholder in the light commercial vehicle maker Swaraj Mazda, has not subscribed to the company rights issue, fuelling speculation that it may exit the company. This will lower Actis’ stake in SML from 17% to...
Reuters  Jan 27  Comment 
Swaraj Mazda said on Wednesday it has convened a board meeting on Jan. 29 to finalise a proposed rights issue.
Sydney Morning Herald  Dec 17  Comment 
Indian commercial vehicle maker Tata Motors has denied it's considering buying Sumitomo's majority stake in Indian truck and bus maker Swaraj Mazda.
Reuters  Dec 16  Comment 
Tata Motors, India's leading vehicle maker, on Wednesday denied it had any interest in acquiring a stake in Indian truck and bus maker Swaraj Mazda.
The Economic Times  Dec 13  Comment 
Tata Motors' likely acquisition of Swaraj Mazda will be a win-win for both the companies.
The Economic Times  Dec 10  Comment 
Tata Motors is negotiating to acquire Sumitomo’s 53.5% stake in Swaraj Mazda as it attempts to strengthen its position in the light commercial vehicle or LCV market.


Swaraj Mazda (NSE:SWARAJMAZD) is the smallest player by volume in the Indian medium and heavy commercial vehicle market (M&HCV) and light commercial vehicle market (LCV). In India, it has a market share of 5.41% in the passenger carriers market and 1.58% in the goods carrier market of M&HCV.[1] In the LCV market, Swaraj Mazda has a market share of 8.07% in passenger carriers and 1.39% in goods carriers.[1]

Over the past five years, Swaraj Mazda's revenues and net profit have grown at average annual growth rates of 10% and 5%, respectively.[2][3] Raw material costs fluctuations affect the net profit and operating margin of Swaraj Mazda as raw material costs comprise about 84.46% of the price of the company's finished products as compared to the industry average of 70% to 74%.[4]

Company Overview

Swaraj Mazda Limited is a light commercial vehicle and medium and heavy commercial vehicle manufacturer in India. The Company's product portfolio caters to specialized sub-segments for cargo and passenger applications.[5] In the passenger segment, the company's products include ambulances, dumper placers, water tankers and troop carriers.[5] It has also developed four wheel drive and compressed natural gas (CNG) vehicles plus airbrake versions.[5]

The company operates through its subsidiaries Punjab Tractors Limited, Swaraj Engines Limited, Swaraj Automotives Limited, Mazda Motor Corporation and Sumitomo Corporation.[5] The company exports its products to various countries like Bangladesh, Kenya, Tanzania, Nepal, Zambia, Ghana, Ivory Coast, Rwanda, Seychelles Syria and Jordan.[6] Its plant is located at Asron, Nawanshahar district in the state of Punjab.[7]

Business and Financial Metrics

First Quarter 2010 Results (ended June 30, 2010)[8]

For the first quarter of 2010, Swaraj Mazda reported total sales of Rs. 192.00 crore, compared to Rs. 156.00 crore in the first quarter of 2009. The company reported operating income of Rs. 1.10 crore compared to Rs. 1.00 crore in the first quarter of 2009. Net profit after tax was Rs. 5.10 crore, compared to Rs. 2.10 crore in the first quarter of 2009. EPS for the quarter was Rs. 3.5, compared to Rs. 2.0 a year ago.

Share holding pattern

Sumitomo owns 39.49% of Swaraj Mazda, whereas Indian promoters, namely Mahindra & Mahindra Ltd through its subsidiary Punjab tractors, owns another 14.04% of the company.[9] On December 31, 2008, Mahindra & Mahindra Ltd announced that it would pull out of Swaraj Mazda as it has a ‘no-compete’ clause with ITEC in its LCV market.[10] Sumitomo Corporation has agreed to purchase the entire Punjab tractors stake.[11] FII's own another 9.31%. No mutual fund has any ownership of the company, but private equity firms like Actis, CDC and Reliance Capital are invested in the company.[10] Banks and Financial Institutions own only a 0.06% share in the company.[9]

Swaraj Mazda share holding pattern [9]
Entity Percentage
Sumitomo Corporation 39.49%
Punjab Tractors 14.04%
General public 13.76%
NRI's/OCB's/Foreign Others 12.23%
FII's 9.31%
Private Corporate Bodies 2.98%
Banks Fin. Inst. and Insurance 0.06%

Business segments

Swaraj Mazda's business involves the manufacture of medium and heavy commercial vehicle and light commercial vehicle. Both of these two segments can be subdivided in to passenger carriers and goods carriers.

Passenger Carriers

Swaraj Mazda sold 2,090 medium and heavy commercial vehicles in FY2008 as compared to 1,422 in FY2007, an increase of 47%.[1] The market share increased from 4.96% to 5.41% within the year in this category.[1] Swaraj Mazda's sales of light commercial vehicles dropped by 10% taking the vehicles produced in FY2008 to 2,234 as compared to 2,492 in FY2007.[1] The market share decreased from 10.5% to 8.07% within the year in this category. Since inception, Swaraj Mazda has sold a total of 42,300 passenger vehicles.[1]

Goods Carriers

Swaraj Mazda sold 3,663 medium and heavy commercial vehicles in FY2008 as compared to 4,300 in FY2007, a decrease in volume of 15% as compared to the industry average of only 6%.[1] The market share decreased from 1.74% to 1.58% within the year in this category.[1] Swaraj Mazda's sales of light commercial vehicles increased by 28% taking the vehicles produced in FY2008 to 2,610 as compared to 2,047 in FY2007.[1] The market share increased from 1.22% to 1.39% within the year in this category.[1] Since inception, Swaraj Mazda has sold a total of 78,000 trucks.[1]

Trends and Forces

Economic slowdown has an adverse impact on sales

The automobile industry is a cyclical industry. It is substantially affected by general economic conditions. The demand is influenced by factors including the growth rate of the economy, easy availability of credit, increase in disposable income, interest rates, freight rates and oil prices.[12] Lack of vehicle finance availability, lower growth of GDP and/or increases in fuel prices lead to a decline in the demand for automobiles.

The Indian economy has shown a sharp decline in GDP from 7.1% in the 2nd quarter of FY2008-09 to 5.3% in 3rd quarter of FY2008-09.[13] The decrease in freight rates due to the slowdown of the economy also leads to a decrease in demand for commercial vehicles as expansion of fleet size is stopped. The freight rates dropped by 9.4% in 2008.[14] Despite the 62% decline in the international gasoline prices, the gasoline prices have dropped by only 10% in India.[15] All this factors have affected the sales of The Company's product portfolio caters to specialized sub-segments for cargo and passenger applications.[5]. In Feb 2009, the sales in commercial vehicles segment showed a decline of 53% as compared to that of Feb 2008.[16]

Raw material price fluctuations directly affect operating margin and net profit margin

Raw material costs comprises of about 84.46% of the price of the finished products.[4] Any price increase of the raw materials have a direct bearing on the overall operating margin. As can be seen from the Amex steel index and the world steel price index, there is high degree of volatility in the steel prices. This volatility not only affects the operating margin but also the inventory management of the steel required for production.[17] In August 2008 steel prices peaked to over 1100$/tonne 40% higher then the steel price in January 2008.[18] Whereas on the other hand in March 2009, the steel prices have fallen to 4 year low of $473/tonne.[19] Tyres are also an important part of the raw material required for manufacturing. Tyre prices are correlated to the rubber prices. The chart above shows the volatility present in the rubber market. The rubber volatility also affects the operating margin and consequently the net profit margin.

Development of the rail network adversely affects sales

Development of Indian rail network and the freight rates has a direct impact on the sales of Medium and heavy commercial vehicles used for long haul. On October 5, 2006 Indian railways began the work of the Railway Freight Corridor.[20] The project plan is to connect all the major cities in India with special track capable of carrying double decker wagon freight trains with greater axle load of 30 tonnes per wagon, each train having around 200 wagons and a speed of 150 km/hr.[21] Successful completion of the project would increase the freight carrying capacity of Indian railways by 78%[22] This would adversely affect the sales of medium and heavy commercial vehicles. On 10th February, 2009 the work on the first phase of eastern freight corridor commenced. The work on the western freight corridor is planned to start in March 2009.[23] The entire project is planned to be completed by Dec 2014.[24]


  • Tata Motors -Based in Mumbai, India, Tata Motors Limited is a part of Tata Group. It manufactures commercial and passenger vehicles primarily in India. It offers passenger cars, multi-utility vehicles, and pick-ups; medium and heavy commercial vehicles, such as rigid trucks, tractor trailers, and tippers; intermediate, light, and small commercial trucks; buses; and defense related vehicles. The company, through its subsidiaries, also provide engineering and automotive products; manufacture of construction equipment; automotive vehicle components manufacturing and supply chain activities; and provision of machine tools and factory automation products, as well as offers high-precision tooling, and plastic and electronic components for automotive and computer applications. In addition, it provides automotive retailing and services, as well as financing for the vehicles sold by the company. The company markets its products in Europe, Africa, the Middle East, south Asia, south east Asia, and Australia.[25]
  • Mahindra & Mahindra Ltd - The company manufactures a range of automotive vehicles, agricultural tractors, implements, and industrial engines. It is also involved in property development and construction activities. The company offers various multi utility vehicles, light commercial vehicles, three-wheelers, and tractors as well as spare parts and related services. It also provides various services related to financing, leasing, and hire purchase of automobiles and tractors. In addition it also offers design and engineering services to the automotive, aerospace, and general engineering industries; and produces automotive components, as well as forgings, gears, steel, stampings, and special polymers. It is headquartered in Mumbai, India.[26]
  • Eicher Motors (EICHERMOT.EQ-IN) -Headquartered in New Delhi, Eicher Motors Limited manufactures and markets trucks, buses, motorcycles, automotive gears, and components in India. It operates in four segments: Commercial Vehicles, Two Wheelers, Components, and Others. The Commercial Vehicles segment offers CNG trucks, cruiser buses, buses on HCB platform, and tippers. The Two Wheelers segment provides motorcycles and bikes. The Components segment offers gears, gear boxes, construction and earthmoving equipment, and forklifts. The Others segment provides engineering products to automotive, aerospace, heavy engineering, consumer durables, power generation, and other segments. Eicher Motors has a joint venture agreement with Volvo AB.[27]
  • Force Motors (FORCEMOT-BY) -The Group's principal activity is to manufacture and market utility and light commercial vehicles, agricultural tractors and diesel engines. Its plant are located at Bombay Pune road, Akurdi, Pune and Pithampur, District Dhar, Madhya Pradesh.[28] With technical collaboration of MAN AG, Germany, Force Motors has a range of heavy commercial vehicles with a payload capacity ranging from 16 to 50 tonnes.[29]

Financial Comparison of the competitors:

Financial metrics
Name Revenue in Rs Crore Net Profit Margin Operating Margin
Tata Motors[30]28,7386.96%10.44%
Ashok Leyland[31]7,7295.83%10.09%
Eicher Motors[32]2,2182.81%5.85%
Mahindra & Mahindra Ltd[33]30,15010.34%11.45%
Force Motors[34]930-8.02%-5.04%

Market share

Market share of Light commercial vehicles in India
Market share of Light commercial vehicles in India[35]
Market share of Medium and Heavy Commercial Vehicles in India
Market share of Medium and Heavy Commercial Vehicles in India[36]


  1. 1.00 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 Scribd, DBS chalomandalam securities,Indian auto sector
  2. moneycontrol,Swaraj Mazda, annual result, P&L
  3. [Average Annual Growth is calculated by dividing the past four years' revenue increase by the number of years]
  4. 4.0 4.1 Rediff money, Swaraj Mazda, Ratios, Component ratios
  5. 5.0 5.1 5.2 5.3 5.4 reuters, Swaraj Mazda Ltd (Bombay Stock Exchange), company overview
  6. auto india mart, Swaraj Mazda Limited
  7. corporate information snapshot,swaraj mazda limited
  9. 9.0 9.1 9.2 Swaraj Mazda share holding pattern, rediff Money wiz
  10. 10.0 10.1 Cyber steering, news, M&M set to drive out of Swaraj Mazda
  11. Mechanist, Punjab Tractors to sell stake in Swaraj Mazda to Sumitomo-Corporation, Japan
  12. Tata Motors, SEC filing, Risk associated with Our Business and the Automotive Industry, Page 10
  13. Times of India, GDP growth at 6-year low
  14. Freight rates begin to fall for World Merchant fleet
  15. Indian express, Petrol to go cheaper by Rs 5 from Wednesday
  16. Wheels un plugged, commercial vehicles sales decline
  17. One steel, steel and tube holdings limited,chairman's address
  18. High Beam, Builders Feel Squeeze as Steel Prices Jump
  19. Purchasing, Steel-market prices reflect lack of demand at OEM, service center levels
  20. PM lays the foundation stone for the Western Rail Freight Corridor
  21. Vedic Instincts, Aspirations : The Indian Railway Freight Corridor
  22. Business line, Low-profile Lalu, Speech on Railway Budget
  23. Trade chakra, Railway Budget
  24. Freight corridor, choice of traction, Motive Power Directorate
  25. Linkedin company profile, tata motors
  26. Linkedin, Manendar and manendra
  27. Linkedin company profile, Eicher Motors
  28. Wright reports, company profile, Force motors
  29. Linkedin company profile, force motors
  30. rediff money, maruti suzuki profile
  31. Ashok Leyland rediff moneyt
  32. Eicher motors rediff moneyt
  33. Mahendra & Mahendra, Presentation
  34. rediff money, force motors
  35. Indian auto sector, Light commercial vehicles market
  36. Indian auto sector, Medium and Heavy Commercial Vehicles market
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