Project Presentation (1)

Project Presentation

Submitted by FAIZA RAZZAQ (MCOM0029)

PALWASHA MUSHTAQ(MCOM0030)

Submitted to Prof. Alamdar

Topic

Investment decision in Foreign Sector

Pakistan Brand of AutomobileGhani Automobile Industries: Automobile Industries is a Pakistani manufacturer of motorcycles based in Lahore. The car and automobile brands in America is very successful and if Pakistan Suzuki will invest in car sector in America it will be also successful.

Ghani Automobile

Ghani Automobile is a collaboration of two industrial groups, Ghani Group of Companies & Chongqing Yingang Science and Technology Group Company Limited, and is a public limited company quoted on the stock exchange in Pakistan. Ghani Automobiles is a company of Ghani Group, and is listed on Stock Exchanges. Established in 2004, the company started its commercial production of the two wheelers during 2005. The head office is in Model Town, Lahore, Pakistan while the plant is situated at 49 km Multan Road.

Location of Ghani Automobile in Pakistan

Future Expectation of Ghani Automobile

Car industry or automobile industry in America is an important part of the American economy

The industry makes a significant contribution to the economies of regional areas through service opportunities and through their quality

The agenda of American car and automobile brands is to provide the best and luxury car for people.

So if Ghani will invest hopefully it would be successful.

Sector and Country in which Ghani Industry will Invest

AUTOMOBILE INDUSTRYAMERICA

Competitors of Automobile in AmericaFiat Group with Chrysler

Ford Motors Company

Nissan Motors

F e a s i b i l i t y o f C o m p e t i t o r F I A T W I T H C H R Y S L E R

Fiat Automobiles Fiat Chrysler Automobile is an Italian-

American multinational automobile manufacturer. It is the world’s seventh-largest auto maker. The group was established in 2014 by merging Fiat S.P.A. into a new holding company incorporated in the Netherland and headquartered in London, UK and primary listing on the New York Stock Exchange and secondary on Borsa Italian.

Performance of Fiat in 2014FCA delivered a strong performance in

2014 with 4.6 million cars sold, and the Jeep brand

achieving records sales of more than one million Cars (when FIAT’s involvement in Chrysler

began Jeep was selling just 337,000 units).

FINANCIAL INVESTMENTS (5.5% of GAV)• Their Financial Investments returned 14.3% on average in

2014.• During the year we slightly reduced their exposure to

single equity names (direct investments• returned +14.1%) and they exited a number of third‐party

funds they were invested in.• Their main investment is in the Black Ant Fund (59.16%

of our financial investments) which• returned +12.7% and its allocation at the end of the year

was 36% in listed equities and equity• options, 40% in credit and 24% in cash.• Their fund investments, excluding Black Ant, were the

best performers with a +20.3% return

Fiat passenger car Production

Sales Projection of Fiat with Chrysler

2010 2011 2012 2013 2014

35880 59559 83957 86816 96090

599559-35880 / 35880 * 100

83957-59559 / 59559 *100

86816-83957 / 83957 * 100

96090-86816 / 86816 * 100

= 66% 41% 3% 11%

Average Growth Rate

66%+41%+3%+11% / 4 = 30%

Sales Forecast2015 2016 2017 2018 2019

96090+96090 * 30%

124917+124917 * 30%

162392+162392 * 30%

211110+211110 * 30%

274443+274443 *30 %

=124917 =162392 =211110 =274443 =356776

Cost of sale Projection2010 2011 2012 2013 2014

30716

50704 71474 74570 83146

50704-30716 / 30716 *100

71474-50704 /50704 * 100

74570-71474 /71474 *100

83146-74570/74570 *100

65% 41% 4% 12%

Average Growth Rate 65% + 41% + 4% + 12% / 4 =31%

Average Growth Rate

Cost of sale Forecast2015 2016 2017 2018 2019

83146 +86146 * 31%

108921+108921 * 31%

142687+ 142687 *31%

186920+186920 * 31%

244866 +244866 *31%

108921 142687 186920 244866 320774

Cash Flow Schedule (amount in millions)

2014

2015 2016 2017 2018 2019

Initial investment

(530)

Cash flows 15996 19705 24190 29577 36002Exchange Rates

104.7 104.7 104.7 104.7 104.7

Translate Amount

15996/104.7=153

19705/ 104.7=188

24190/104.7 =231

29577/104.7=282

36002 /104.7=344

Discount Rate

10% 10% 10% 10% 10%

Discount Factor

1.1 1.21 1.331 1.4641 1.61051

Present Value

153 / 1.1=139

188 /1.21=155

231 / 1.31=174

282/ 1.46= 193

344/1.61=214

Calculation of Discount Rate•Discount Rate = net income after tax /

Shareholders equity

•Average of Discount rate = 8+11+16+5 / 4 = 10%

2011 2012 2013 2014

1006/ 12260=8.2%

1411 / 13173= 11%

1951 /12584=16%

632/13738=5%

Net Present Value of Fiat Chrysler •NPV = present Value – Initial Investment

= 875 – 530

= 345

Feasibility of Ford Motors Company

Ford Motors Company Ford is committed to developing great products for

customers around the world. In 2014, they are introducing 23 new vehicles globally.

Ford saw the largest percentage point gain in U.S. market share among automakers in 2013. In addition, Ford F-Series was the best-selling vehicle in the United States for the 32nd year in a row and Ford Focus was the best-selling nameplate in the world.

With the freshest car portfolio in the industry and a commitment to deliver continuous improvement for fuel economy, Ford is well positioned in the global marketplace

Performance in 2014 2014 was a successful step forward in

furthering One Ford plan to deliver profitable growth for all. Despite a challenging environment, particularly in South America and Russia, and an unprecedented number of product launches, the company’s fifth consecutive year of pre-tax profit and positive automotive operating-related cash flow reflects our continued focus on our One Ford plan.

Market Shares in USA Market share represents reported retail

sales of their brands as a percent of total industry sales volume in the relevant market or region. Market share is based, in part, on estimated vehicle registrations; includes medium and heavy trucks.

20 market share was 8.0 percent, 7.8 percent, and 7.9 percent in 2014, 2013, and 2012, respectively. Automotive Segments were reorganized effective January 1, 2014.

Sales projection of Ford Motors company2010 2011 2012 2013 2014

119280 128168 126567 139369 136782

128168- 119280 * 100

126567-128168 * 100

139369- 126567 *100

136782 – 139369 *100

7% (1%) 10% (2%)

Average Growth Rate7-1+10-2 / 4

= 3.5%

Average Growth Rate

Sales forecast of Ford Motors company2015 2016 2017 2018 2019

136782 +136782 * 3.5%

141569 +141569 * 3.5%

146524 +146524 * 3.5%

151652 +151652 *3.5%

156960 +156960 *3.5%

=141569 =146524 =151652 =156960 =162454

Cost of Sales Projection2010 2011 2012 2013 2014

104451 113611 112992 125234 123516

113611 –104451 *100

112992-113611 *100

125234-112992 *100

123516- 125234 *100

9% (0.5%) 11% (1.3%)

•Average Growth Rate = 9-0.5+11-1.3 / 4 =4.5%

Average Growth Rate

Cost of Sales Forecast2015 2016 2017 2018 2019

123516 + 123516 *4.5%

129074 +129074 *4.5%

134882 + 134882 *4.5%

140952+ 140952 *4.5%

147295 +147295 *4.5%

129074 134882 140952 147295 153923

2014

2015 2016 2017 2018 2019

Initial investment

(108)

Cash flows 12495 11642 10700 9665 8531Exchange Rate

104.7 104.7 104.7 104.7 104.7

Translated Amount

12495 /104.7=119

11642/ 104.7=111

10700/104.7= 102

9665?104.7=92

8531/104.7= 81

Discount Rate

52% 52% 52% 52% 52%

Discount Factor

1.52 2.3104 3.5118 5.337 8.113

Present Value

119/1.52= 78

111/2.3104= 48

102/3.511=29

92 /5.33=17

81 /8.113=10

Cash Flow Schedule (amount in millions)

NPV = present Value – Initial Investment

= 182 – 108

= 74

Net Present Value of Ford Motors Company ( amount in millions)

Feasibility of NISSAN Motors

Nissan Motors Company•Since 1999, Nissan has been part of

the Renault–Nissan Alliance, a partnership between Nissan and French automaker Renault. As of 2013, Renault holds a 43.4% voting stake in Nissan, while Nissan holds a 15% non-voting stake in Renault. Carlos Ghosn serves as CEO of both companies.

Market Feasibility•Nissan was the sixth largest automaker in

the world behind Toyota, General Motors, Volkswagen Group, Hyundai Motor Group, and Ford in 2013.

•  Taken together, the Renault–Nissan Alliance would be the world’s fourth largest automaker. Nissan is the leading Japanese brand in China, Russia and Mexico

Performance in 2014Nissan's North American sales increase 12

percent in 2014, more than double overall industry performance; market share rises to 9.3 percent, up 0.6 points

North American production rises 21 percent; U.S. production +24 percent; Mexico +18 percent

Smyrna, Tennessee facility becomes the top-producing automotive manufacturing plant in North America through first

Sales Projection of Nissan Motors Company2010 2011 2012 2013 2014

7517277 8773093 9409026 10482520 11375207

8773093-7517277 / 7517277 *100

9409026-8773093 / 8773093 *100

10482520 –9409026 /9409026 *100

11375207-10482520 /1048252*100

=17% 7% 11% 9%

•Average Growth Rate = 17+7+11+9 / 4 = 11%

Average Growth Rate

Sales forecast of Nissan Motors Company2015 2016 2017 2018 2019

11375207 +11375207 * 11%

12626480 + 12626480 * 11%

14015393+14015393* 11%

15557086+ 15557086*11%

17268365+ 17268365*11%

= 12626480 = 14015393 15557086 17268365 19167885

Cost of Sale Projection2010 2011 2012 2013 2014

6146219 7155100 7772832 8636063 9241341

7155100- 6146219 * 100

7772832-715100 * 100

8636063- 7772832 * 100

9241341- 8636063 * 100

16% 9% 11% 7%

•Average Growth Rate = 16+9+11+7 / 4 =10.7%

Average Growth Rate

Cost of Sales Forecast2015 2016 2017 2018 2019

9241341 +9241341 * 10.7%

10230164 +10230164 * 10.7%

11324792 +11324792 * 10.7%

12457271 +12457271 * 10.7%

13790199 +13790199 * 10.7%

=10230164 =11324792 = 12457271 =13790199 = 15265750

Cash Flow Schedule 2014 2015 2016 2017 2018 2019

Initial Investment

(8045-6)

Cash Flows 2396316

2690601

3099815

3478166

39021335

Exchange Rate

104.7 104.7 104.7 104.7 104.7

Translated Amount

2396316/ 104.7= 22887

2690601/ 104.7= 25698

3099815/ 104.7=29607

3478166/104.7=33220

3902135/104.7=37270

Discount Rate

8% 8% 8% 8% 8%

Discount Factor

1.08 1.1664 1.2597 1.3604 1.4693

Present Value

22887 /1.08=21192

25698/1.1664=22032

29607/1.2597=23503

33220/1.3604=24419

37270/1.4693=25361

Net Present Value of NISSAN MOTORS COMPANY•NPV = present Value – Initial Investment

= 116507- 80456

= 36051

Suggestions after calculation

All these analysis of the competitors shows that their net present value is favorable in automobile industry so the Ghani Automobile company has the opportunity to enhance their business by investing in automobile sector in America it will be successful investment into foreign because these companies also working as a leader into industry due to successful sector of Cars and other automobiles.