Role of Value Creation in the Indian Industry

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Role of value creation in the Indian Industry

Background: The Indian economy is widely believed to have moved into its next phase of sustainable growth rate of 8-10%. The last five years have seen an unprecedented value creation in Indian stock markets. Aim: This study focuses an analytical valuation perspective of various privileged companies in India. Methods: The data set for the study was collected from the CMIE prowess database. The five industry sectors were chosen for the study. Results: While rapid stock market growth is widely ascribed to a global liquidity glut and re-rating of Indian stocks, our analysis shows that outstanding performance in business fundamentals — sales and profit — growth has been the predominant driver of this spectacular value creation in India. Conclusion: These findings have major implications for any preventative or intervention strategies.

To create sustainable, long-term shareholder value, it is important to explicitly establish an appropriate shareholder value target. It can be argued that value creation is the ultimate measure of performance for a manager. Companies must establish priorities based on value creation; gearing planning, performance measurement and incentive compensation systems towards shareholder value and communicating with investors in terms of value creation. The ability to manage value is an essential part of developing sound corporate and business strategies--strategies that create value for shareholders. A study by (Richard et al., 2000) observed that companies in today's superheated economies are in a race to discover the underlying code of value creation. That is they are trying to find out the greatest amount of assets-tangible and intangible-create the greatest amounts of economic value and to avoid those combinations that destroy it. Value creation

The term "value creation' can be a misnomer, but for procurement professionals it is simple: delivering additional value to the bottom line through new methods. The difficulty only lies in drawing that value out of the plethora of intangible drivers that you have to deal with. Non-financial factors like innovation, people and ideas are difficult to quantify, rarely acknowledged in accounting methods and not adequately measured, managed or reported on by organisations. However, these are some of the critical sources of value that can be utilised by companies to improve their competitive advantage. ANALYTICAL VALUATION PRESPECTIVE:

1.Potential of the Automobile industry
The automobile industry in India happens to be the ninth largest in the world. Following Japan, South Korea and Thailand, in 2009, India emerged as the fourth largest exporter of automobiles. Several Indian automobile manufacturers have spread their operations globally as well, asking for more investments in the Indian automobile sector by the MNCs. In 2008, Hyundai Motors alone exported 240,000 cars made in India. Nissan Motors plans to export 250,000 vehicles manufactured in its India plant by 2011. Similar plans are for General Motors. 2.Communication - Value-Added Services Market

As per a research conducted by Stanford University, Indian mobile value-added services (MVAS) are expected to reach USD 2.74 bn by the FY2010. To benefit from the emerging MVAS market in India, Reliance Communications and Bharti Airtel Limited are all set to introduce online cellular phone applications in Indian retail stores. While Bharti Airtel will offer around 1,250 applications, Reliance Communications' applications will soon be accessible to its GSM customsers by Feb 2010. 3. Success of Indian software companies

There are a number of reasons why the software companies in India have been so successful....
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