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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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Share value forecasting - Statistics project
Statistics project 5
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
EXPECTED SHARE VALUE VS ACTUAL SHARE VALUE:
R = 0.11045013
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.
CEAT TYRES
EXPECTED SHARE VALUE VS ACTUAL SHARE VALUE:
r= 0.64851435
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.
BALAKRISHNA TYRES
EXPECTED SHARE VALUE VS ACTUAL SHARE VALUE
r= 0.906401892
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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.
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:
Regression Line y = a+bx where; a = 3137077.098
= -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
Actual Share Value v/s Volume:
Regression Line y = a+bx where; a = 2485.164657
= 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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Volume v/s Actual Share Value:
Regression Line y = a+bx where; a = 272733.9375
= -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:
Actual Share Value v/s Volume:
Regression Line y = a+bx where; a = 124.2779106
= 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
Volume v/s Actual Share Value:
Regression Line y = a+bx where; a = 4180403.301
= -4384066.143 b = 0.00001
Thus Y= -4384066.143
So we can say that for a significant change in Volume there will be significant change in
Actual Share Value.
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Regression for BALAKRISHNA TYRES
Actual Share Value v/s Volume:
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
Volume v/s Actual Share Value:
Regression Line y = a+bx where; a =
-
1434693.31= -9110.769724 b = 0.00001
Thus Y= -9110.769724
So we can say that for a significant change in Volume there will be significant change in
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:
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
140
145
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185
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1 5 9 131721 2529333741454953576165 69
NSE(Y)
EXPECTED (Y)
0
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90
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:
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.
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1 6 11 16 21 26 31 36 41 46 51 56 61 66 71
SE (Y)
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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
0
200000
400000
600000
800000
1000000
1200000
1400000
0
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0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
16000000
18000000
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90A OLLO TYRES STOCK VAL E
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0
00000
1000000
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2000000
2 00000
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180CEAT TYRES STOCK VAL E
0
10000
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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