1

A PROJECT

ON

“To have an overview of SKODA”

In the subject Economics of Global Trade and Finance

SUBMITTED TO

UNIVERSITY OF MUMBAI

FOR SEMESTER-II OF

MASTER OF COMMERCE

BY

SUNITA KUMARI YADAV

MCOM PART-I AND ROLL NO- 1890

UNDER THE GUIDANCE OF

Mrs. Rinkoo Shantnu

YEAR- 2012-2013

2

DECLARATION BY THE STUDENT

I, SUNITA KUMARI YADAV student of M COM PART-I Roll

Number 1890 hereby declare that the project for the Paper Economics of

Global Trade and Finance titled,

“To have an overview of SKODA”

Submitted by me for semester-II during the academic year 2012-2013, is

based on actual work carried out by me under the guidance and

supervision of Mrs. Rinkoo Shantnu.

I further state that this work is original and not submitted anywhere else

for any examination.

Signature of Student

EVALUATION CERTIFICATE

This is to certify that the undersigned have assessed and evaluated the

project on

“To have an overview of SKODA”

Submitted by SUNITA KUMARI YADAV Student of M COM Part-I.

This project is original to the best of our knowledge and has been

accepted for internal assessment.

Internal Examiner External Examiner vice principle

3

PILLAI’S COLLEGE OF ARTS, COMMERCE & SCIENCE

Internal Assessment: Project 40 Marks

Name of Student Class Division Roll

Number.

First Name: SUNITA KUMARI

M COM

Father’s Name: BBS PART I 1890

Surname: YADAV

Subject: Economics of Global Trade and Finance

Topic for the Project:

“To have an overview of SKODA”

Mark Awarded Signature

DOCUMENTATION

Internal Examiner

(Out of 10 Marks)

External Examiner

(Out of 10 Marks)

Presentation

(Out of 10 Marks)

Viva and Interaction

(Out of 10 Marks)

TOTAL MARKS (Out of 40)

4

CHAPTER

NO.

TOPICS

PAGE

NO.

1. Introduction 1

2. History 2

3. Background In India 3

4. Product

SKODA Model In Production 4

Discontinued SKODA Model 7

5. Seeking The Best

(Interview Mr. Bohdan Wojnar)

8

6. The Financial Year In Review 2011 12

7. Economic And Market Development 14

8. Key Step Toward Strategic Planning 17

9. Conclusion 19

10. Recommendation 20

11. Bibliography 21

5

January 25TH, 2013

The Project coordinator,

Panvel,

Navi Mumbai

Dear Sir,

As a part of Mumbai University curriculum our bonafide student Ms. SUNITA

KUMARI YADAV, Roll No. 1890 studying in MCOM would like to undergo a

project works in the topic of “To have an overview of SKODA”.

Kindly advice and allow her to do the same.

Thank you.

Yours faithfully,

6

INTRODUCTION

Skoda Auto India Pvt Ltd.

Skoda Auto is a part of the International Volkswagen Group whose controlling

stake is owned by Porsche SE . It is one of the premier automobile

manufacturers in Europe, based in Czech Republic. The company introduced

itself on November 16th, 2001. With its Greenfield plant in Aurangabad, the

company has its dealership network spread over Mumbai and Delhi region.

The brand Skoda Auto is globally known for its stylish looks, well built

exterior and its constant endeavor to introduce modern technologies. The

company has already introduced 16 luxury models in Indian market.

It sells cars under the brand name of Skoda. According to an official release,

Skoda Auto India sold more than 16,000 units in the 2008, a 28.5% increase

from 2007 sales totals

Despite a dip in global automobile sales, Skoda India managed to sell 17000

units of its vehicles in 2008, with growth registered 33.2 % from previous year.

7

HISTORY

At the beginning of December 1895 the mechanic Václav Laurin and the book-

seller Václav Klement, both bicyckle enthusiasts, started manufacturing

bicycles of thein own design, patriotically named Slavia in the nationalist

atmosphere of the ond of the 19th century. A few years later, in 1899, the

Laurin & Klement Co. began producing motorcycles, wich were soon succesful

and gained several racing victories. After initial experiments at the turn of

century, producing of motorcycles was gradually replaced by automobiles form

1905 onward.

Based on the traditional production processes and past success, the

Czechoslovak economy managed to maintain a relatively good standard in the

post/socialist period for several decades, in spite of the changes brought about

by planned economy and efforts at unduly rapid growth. This standard only

became questionable towards the end of the 1960’s due to development of new

technology in the western world. The permanent stagnation of the economy

started after the 70’s, also affecting the SKODA automobile manufacturer in

spite of the company’s leading position in the East Europe marker. Production

grew again only when the model range Skoda Favorit went into production in

1987.

After the political changes of 1989, under the new market economy conditions

the Government of the Czechoslovak Republic and the management of Skoda

began to search for a strong foreign partner whose experience and investments

would be capable of securing long-range international competitiveness of the

company. In December 1990, the Government decided on cooperation with the

German Volkswagen Group.

8

BACKGROUND IN INDIA

Skoda Auto India started its operations in India on November 16, 2001. They

opened their manufacturing unit in Shendra, on the outskirts of Aurangabad thus

setting their foot on the Indian soil. The first Skoda car which had hit the Indian

roads was the Skoda Octavia which was priced at 10.6 lakh INR. Skoda Octavia

is a medium sized car and gained popularity for two primary reasons, first being

the fact that the car had 100 percent import content and second reason that the

model was available in both petrol and diesel version. The Octavia is being

imported to India as semi-knocked-down kits and assembled at the company's

Aurangabad plant. The plant currently assembles 10 cars a day and operates on

a single shift. The indigenization level is planned to be around 10 per cent by

2002-end. In spite of being somewhat highly priced, the Skoda has received a

tremendous response in the Indian market. Hence Skoda Auto has plans to

launch its three luxury cars Elegance, Laurin and Klement, and Superb in India

in 2002-03 with the market trend and inclination of the economy to spend

generously to own a luxury car.

Skoda is targeted a 17-18-per cent share of the combined C- and D-segment

volume in India in 2003. Skoda, which made an initial investment of $15

million in the Aurangabad facility, invested $56 million more in due course of

time for higher level of localization which in turn would bring down the cost of

the cars manufactured.

In April 2007 Skoda (VW group) invested $912m to expand its plant at

Aurangabad & Chakan plant at Pune to accommodate the production on

Volkswagen, Audi and Porsche. In 31st march 2009 chakan plant was ready

and Skoda announced localization level increased to 50% from 15%.

9

PRODUCT

10

SKODA INDIA OFFERS THE FOLLOWING CARS,

SKODA FABIA

The sleek looking Fabia is the first Super Hatch in India with a huge passenger

and cargo space designed with premium looks. It has all the comforts and

roominess of a big luxury car and at the same time it is so compact that you can

drive it and park it with utmost ease in the most congested areas.

This super hatch that combines looks with performance and economy is

available in petrol and diesel variants. It packs quite a punch every time it hits

the road.

SKODA OCTAVIA

11

Octavia is an orderly design with no unwanted mass. It’s more about straight

lines than about curves. It looks very European with the subtle nose section and

high waistline. The build quality is as good as it can get and is faintly reflected

in the way the Octavia looks. While seated in the rear, you will have limited

legroom but the story is completely different at the front as the seats at front are

enormously accommodating. The quality of the interior is quite good and it

exudes a tough feel.

SKODA LAURA

Skoda Laura, a stable mate of Skoda Octavia, Laura is popular for its

contemporary, dynamic designer looks. Specially customized, the model has

stood the test of times in Indian conditions with its extraordinary performance

giving results beyond imagination. Skoda (Sedan) The Skoda Laura with its

diesel variants targets the middle class consumer with Skoda car prices between

rupees sixteen and nineteen lakhs, it is available in 3 engine options

12

SERVICE

In India, Skoda parts are not sold in the open market and are only

available from Škoda Auto India authorized dealers; Skoda currently has

61 dealerships across India, but plans to expand to 65 dealerships by the

end of 2009.

Service for Skoda car

Warranty for Skoda products

In accordance with the warranty conditions Skoda offers following warranty

• 2 - Year warranty on New Skoda vehicles for unlimited kms

• 2 - Years warranty on Skoda Genuine Parts and Skoda Genuine

Accessories for unlimited kms.

• The warranty will be honored by authorized Skoda dealership

13

SEEKING THE BEST

Growth and internationalization will determine how

ŠKODA AUTO develops over the coming years.

How will the Company meet the challenges this

creates in the field of human resources?

> An interview with Bohdan Wojnar, member of

the Board of Management of ŠKODA AUTO for

Human Resources Management.

Mr Wojnar, internationalization is central to the ŠKODA AUTO growth

strategy. What does that mean for Human Resources?

> In the future, more than ever before, a company’s competitiveness will be

decided by the capabilities, motivation and loyalty of its employees. Those that

recruit the best talents will have a competitive edge over the long term. You can

see that quite clearly in the automotive industry. Our goal must be to become

one of the most attractive employers – not just in the Czech Republic, not just in

Europe, but worldwide.

How do you recognize an attractive employer?

> There are many different criteria – but you can mostly tell from the number of

people applying for a job on a speculative basis. More than 21,000 people

applied to our Company last year. That means that SKODA AUTO is already an

attractive company for many people today. That‘s good, but it is just the

beginning for us.

We have an ambitious plan – which is why we must continue to work on

becoming more attractive as an employer. It is not just a matter of winning over

potential applicants. Employer branding is built on the reputation of the

14

Company. We are part of society, and so we have always assumed

responsibility at a local level. The quality of life at our locations, maintaining

good relations with our neighbors’ – and, naturally, good cooperation between

management and labour, based on trust – all of those are key aspects that make

a company attractive. And, of course, we also benefit from being part of the

Volkswagen Group: Anyone who works for SKODA AUTO can pursue a

career within one of the world’s largest automotive groups. That benefits both

the Company and its employees equally.

You mentioned a substantial increase in job applicants. What led to

this positive development?

> In recent years, we have deliberately invested in improving our recruitment

quality and have expanded our personal marketing activities significantly. We

are exploiting the opportunities offered by the internet in particular – from

special recruiting websites to YouTube, where our recruiting campaign, for

which we received two awards, is also online.

But, most importantly, we have stepped up our activities outside the Czech

Republic. Although SKODA AUTO has an excellent reputation at home, the

Czech labour market alone is unable to meet our complex personnel

requirements.

For that reason, we are also specifically targeting university graduates in other

countries. In Eastern Europe, in particular, there are many experts we would like

to recruit for SKODA AUTO. And, of course, working closely with prominent

universities and colleges worldwide will continue to be a priority. The most

recent example is our cooperation with Tongji University in Shanghai – which

is set to benefit both parties enormously.

15

Won’t this development be detrimental to employees in the Czech

Republic? Will jobs be transferred to the growth markets?

> No, quite the opposite: It is global growth that secures jobs at our Czech

facilities. The Czech Republic is, and will always remain, our domestic market

– it is, after all, where our Company has its roots. 1,850 new jobs were created

here in 2011, but our future will depend upon opening up more to the rest of the

world. National borders should not prevent us from participating in global

competition. We all need to be open to new ideas and solutions. All of our

employees are required to systematically enhance their skills, which also – at an

individual level – improves their prospects within the Company. That also

includes being prepared to work for our Company abroad for a period of time.

We currently have more than 150 employees doing just that – and that number

will continue to grow over the coming years. At the same time, the

internationalization of SKODA AUTO is also evident at our Czech locations,

where we employ people from 37 different countries. So you see, there are

always two sides to internationalization.

16

17

THE FINANCIAL YEAR IN REVIEW

The 2011 financial year was the most successful in the history of ŠKODA

AUTO Group. The Group achieved new sales, revenue and profit after tax

records. It also reached important milestones in the implementation of its

growth and internationalization strategy.

A total of 879,184 ŠKODA automobiles were delivered to customers in 2011,

exceeding the previous year’s record high by 15.3%.

This sales success is rooted in highly-efficient production. More ŠKODA-brand

vehicles were built in 2011 than ever before in the Company’s history. Global

production of ŠKODA-brand vehicles reached a new record of 900,628 vehicles

– an increase of some 118,000 units over 2010 (+15.0%). ŠKODA AUTO also

delivered numerous parts for other brands the Volkswagen Group and

confirmed its position as an important pillar of the Volkswagen Group’s global

production network.

The number of ŠKODA AUTO Group employees rose to 26,565 by the end of

2011. This represents an increase of 7.5%.

18

Financial strength as the basis for further development

Bolstered by an increase in sales and an improved model mix, the Group’s sales

revenue and earnings also rose. The cost situation was also improved and net

liquidity increased. This provides ŠKODA AUTO with a solid foundation for

further investments in new products, capacity and markets.

ŠKODAAUTO’s Group revenue rose by 15.1% to reach CZK 252.6 billion –

another new record. The operating result reflected this positive development

and, at CZK 18.3 billion, easily exceeded the previous year’s figure, with an

increase of 61.3%.Consolidated profit after tax climbed 81.9% to CZK 16.1

billion. The Group’s net liquidity climbed to CZK 47.3 billion – an

improvement of 17.7% year-on-year. Capital expenditure (without capitalized

development costs) for the year 2011 totaled CZK 14.2 billion.

19

ECONOMIC AND MARKET DEVELOPMENT

World economic situation dominated by debt crisis

Global economic trends were mixed in 2011. First and foremost, the public

finance situation in the major European economies – and the burden it placed on

the financial sector – produced a negative impact over the course of the year.

Highly-volatile financial markets

The downgraded credit rating of leading economies, such as the U.S. and Italy,

led to increasing insecurity on the financial markets and extremely high

volatility.

Strong exchange rate fluctuations

Although the national debt crisis considerably weakened the value of the euro,

the Czech koruna depreciated by 2.9% against the euro over the course of the

year: After starting 2011 at an exchange rate of 25.06 CZK/EUR, the rate

reached between 24.00 and 24.50 CZK/EUR by the middle of the year, before

finishing at 25.80 CZK/EUR by the last trading day of the year.

Although the average exchange rate between the U.S. dollar and the euro

changed little, strong fluctuations were reported over the course of the year: The

U.S. dollar fell by approximately 13% in value against the euro in the first half

of the year(from 1.30to 1.47USD/EUR), but finished the second half year at a

rate of 1.29 USD/EUR.

20

High raw material prices

Strong price fluctuations were also seen on the raw material markets. Although

prices for most industrial raw materials fell towards the end of 2011, price

levels were still relatively high after the strong increase the previous year.

Oil prices rose steeply in the first quarter from approx.USD92 per barrel to a

high for the year of around USD 128 per barrel in May 2011. The average price

per barrel for the year of USD 110 was therefore 37% higher than the previous

year.

The price of copper hovered between USD 9,000 and USD 10,000 per ton up

until September, before falling to USD 7,500 at the end of the year. Aluminum

prices rose to almost USD 2,800 per ton until the middle of the year, but prices

also dropped sharply late in the year. At the end of December aluminum cost

USD 2,000 per ton.

Asia – China and India remain strong

In China, the growth curve flattened somewhat from the previous year, but still

showed a definite upward trend. Overall, the Chinese economy grew by 9.2% in

2011. Political measures and higher wages ensured the positive development of

the domestic market.

India’s strong rate of economic growth remained relatively strong. GDP grew

by 7.0% in 2011. The overall situation was characterized by dynamic growth in

domestic demand. Besides private spending, Indian industry’s willingness to

invest also powered general economic developments.

21

22

KEY STEP TOWARDS STRATEGIC PLANNING

Vision: Skoda Auto is a brand known for its lifestyle value, offering reliability

and European build quality with a constant Endeavour to introduce modern

technologies. The vision of the company is slated by the slogan below: -

Man needs an automobile as well as the nature

Technology focused on safety and environment

Modern engineering

Mission: to develop a brand name and brand following, to set up standards in

production and to be an example of automobile manufacturing in India.

Objectives: the company’s objective is to make India their global production

factory from where they can export their products to the world. Within the

country they want to be the leading premium automobile manufacturer in India.

Value: Skoda Auto philosophy of employing the latest technology to ensure

that our cars are built to the highest standard and are available at attractive

prices has a long tradition.

Goals: Skoda vision is to be the leading premium automobile MFG in India,

customer satisfaction, VFM products.

23

Customers have responded to their products in the following way

1st in Sales satisfaction index 2007

'Most Technologically Advanced Car'

'Executive Car of the Year'

'NFO Voice of customer'

'Best entry luxury car'

Strategy: The current strategies implemented are

Create new market for small cars

Market penetration with dropping prices

To increase Local production percentage of components from 50% to

75%

24

CONCLUSION

Following is the conclusion about Skoda India:-

They make rock solid cars and fuel efficient cars which the customer

desire for and for this the sales speak for them selves

In 2006 and 2007, Skoda India has received a spate of awards which has

been remarkable in terms of achievements like J D POWER ASIA

PACIFIC AWARDS FOR 2007 for being ranked 1st in Sales

satisfaction index 2007

Skoda India also achieved the 'TCS award' in mid size premium

segment against Honda Civic in 2006 along with 'Most Technologically

Advanced Car' for Skoda Laura; 'Best Variant' for Skoda Superb

Turbo Diesel from CNBC-TV18 AUTOCAR AUTO AWARDS 2006

'Executive Car of the Year' from NDTV PROFIT CAR INDIA

AWARDS 2006, and 'Auto tech of the Year' from OVERDRIVE 2006,

both awards for Skoda Laura

25

RECOMMENDATION

Their current strategies in Place takes care of most of the

recommendation I had in mind but few which haven’t been addressed are

High labor cost during A.S.S is heavy on customers’ needs to be brought

down

Reliability problem of Skoda Superb as the advanced engine cannot deal

with our fuel quality

Unethical activities going with dealer and Service centre’s like changing

original parts with duplicate once, hence dealers and service centre have

to be inspected by the company

High price on spare parts need to be brought down

These are a few recommendations given by me, these are the few

problems I feel needs to be addressed by the company for better customer

service.

26

BIBLIOGRAPHY

Skoda Auto Annual Report

Wikipedia

Guidance By Faculty

Www.Skoda-Auto.Co.In/

Information Collected By Visiting SHARAYU MOTOR , Navi

Mumbai