Maruti final3

A FINANCIAL ANALYSIS OF MARUTI SUZUKI INDIA LTD…

1.1 KEY POINTS:

Type Public (BSE 532500 , NSE MARUTI)

IndustryAutomobiles - Passanger

cars

Founded 1981 (as Maruti Udyog Limited)

Headquarters Delhi, India

Key peopleMr. Shinzo Nakanishi,

Managing Director and CEO

CHAIRMAN R C BHARGAVA

Products Automobiles-Passenger cars

MANUFACTURING

PLANTSGurgaon, Manesar

Revenue ▲US$4.8 billion (2009)

Employees 7500

Parent Suzuki Motor Corporation

Website MarutiSuzuki.com

1.2 INTRODUCTION:

S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN.

http://en.wikipedia.org/wiki/Types_of_business_entity

http://www.marutisuzuki.com/

http://en.wikipedia.org/wiki/Website

http://en.wikipedia.org/wiki/Suzuki_Motor_Corporation

http://en.wikipedia.org/wiki/Holding_company

http://en.wikipedia.org/wiki/Employment

http://en.wikipedia.org/wiki/US$

http://en.wikipedia.org/wiki/Revenue

http://en.wikipedia.org/wiki/Automobiles

http://en.wikipedia.org/wiki/Product_(business)

http://en.wikipedia.org/wiki/CEO

http://en.wikipedia.org/wiki/Managing_Director

http://en.wikipedia.org/wiki/India

http://en.wikipedia.org/wiki/Delhi

http://en.wikipedia.org/wiki/Industry

http://www.nse-india.com/marketinfo/equities/quotesearch.jsp?companyname=MARUTI&series=EQ&submit1=Go&flag=0

http://en.wikipedia.org/wiki/National_Stock_Exchange_of_India

http://en.wikipedia.org/wiki/Bombay_Stock_Exchange

http://en.wikipedia.org/wiki/File:Maruti_Suzuki_Logo.svg


Maruti Suzuki India Limited (Hindi: मा�रुति� सु�ज़ूकी� इं ति�या� लि�मिमाटे��) a partial

subsidiary of Suzuki Motor Corporation of Japan, is India's largest passenger car company, accounting for over 45% of the domestic car market. The company offers a complete range of cars from entry level Maruti-800 and Alto, to stylish hatchback Ritz, A star, Swift, Wagon-R, Estillo and sedans DZire, SX4 and Sports Utility vehicle Grand Vitara.

It was the first company in India to mass-produce and sell more than a million cars. It is largely credited for having brought in an automobile revolution to India. Maruti Suzuki is India's number one leading automobile manufacturer and the market leader in the car segment, both in terms of volume of vehicles sold and revenue earned

Maruti Udhyog Limited(MUL) was established in Feb 1981 through an Act of Parliament, to meet the growing demand of a personal mode of transport caused by the lack of an efficient public transport system. It was established with the objectives of – Modernizing the Indian automobile industry, producing fuel efficient vehicles to conserve scarce resources and producing indigenous utility cars for the growing needs of the Indian population.

A license and a Joint venture agreement were signed with the Suzuki Motor Company of Japan in Oct 1983, by which Suzuki acquired 26% of the equity and agreed to provide the latest technology as well as Japanese management practices. Suzuki was preferred for the joint venture because of its track record in manufacturing and selling small cars all over the world. There was an option in the agreement to raise Suzuki’s equity to 40%, which it exercised in 1987.

Five years later, in 1992, Suzuki further increased its equity to 50 % turning into a non government organization managed on the lines of Japanese management practices.

The actual production of Maruti Udyog Limited (MUL) commenced in 1983 with the Maruti 800, based on the Suzuki Alto kei car which at the time was the only modern car available in India, its only competitors- the Hindustan Ambassador and Premier Padmini were both around 25 years out of date at that point.

Maruti 800, till 2004, was the India's largest selling compact car ever since it was launched in 1983. More than a million units of this car have been sold worldwide so far. Due to


http://en.wikipedia.org/wiki/Maruti_800

http://en.wikipedia.org/wiki/Premier_Padmini

http://en.wikipedia.org/wiki/Hindustan_Ambassador

http://en.wikipedia.org/wiki/Hindustan_Ambassador

http://en.wikipedia.org/wiki/Kei_car

http://en.wikipedia.org/wiki/Suzuki_Alto

http://en.wikipedia.org/wiki/Hindi_language


the large number of Maruti 800s sold in the Indian market, the term "Maruti" is commonly used to refer to this compact car model (in India, Hinduism's Hanuman is known as "Maruti").Currently, Maruti Suzuki Alto tops the sales charts and Maruti Suzuki Swift is the largest selling in A2 segment.

on 17 September 2007, Maruti Udyog Limited was renamed Maruti Suzuki India Limited. 18.28% of the company was owned by the Indian government, and 54.2% by Suzuki of Japan. The Indian government held an initial public offering of 25% of the company in June 2003. As of 10 May 2007, Govt. of India sold its complete share to Indian financial institutions. With this, Govt. of India no longer has stake in Maruti Udyog.

Nearly 75,000 people are employed directly by Maruti Suzuki and its partners. It has been rated first in customer satisfaction among all car makers in India from 1999 to 2009 by J D Power Asia Pacific.[3]

1.3 Current sales of automobiles


http://en.wikipedia.org/wiki/Initial_public_offering

http://en.wikipedia.org/wiki/Japan

http://en.wikipedia.org/wiki/Suzuki

http://en.wikipedia.org/wiki/Government_of_India

http://en.wikipedia.org/wiki/Maruti_Alto

http://en.wikipedia.org/wiki/File:Suzuki_SX4_Sport.jpg


Manufactured locally

1. 800 (Launched 1983) 2. Omni (Launched 1984)

3. Gypsy (Launched 1985)

4. WagonR (Launched 2002)

5. Alto (Launched 2000)

6. Swift (Launched 2005)

7. Estilo (Launched 2009)

8. SX4 (Launched 2007)

9. Swift DZire (Launched 2008)

10. A-star (Launched 2008)

11. Ritz (Launched 2009)

12. Eeco (Launched 2010)

13. Maruti New Wagon R (Launched 2010)

14. Maruti Altok10 (Launched 2010)

Imported

1. 1000 (1990–1994) 2. Zen (1993–2006)

3. Esteem (1994–2008)

4. Baleno (1999–2007)

5. Zen Estilo (2006–2009)

6. Versa (2001–2010)

7. Grand Vitara XL7 (2003–2007)

1.4 Milestones :

2009 - MSIL adopts voluntary fuel disclosure.First shipment of A-star leaves Mundra Port-jan 10.A-star bags,Zigwheels”car of the year award”A-star rated best small car of the year-autocar-UTVi.


http://en.wikipedia.org/wiki/Suzuki_XL7

http://en.wikipedia.org/wiki/Maruti_Versa

http://en.wikipedia.org/wiki/Maruti_Zen

http://en.wikipedia.org/wiki/Maruti_Baleno

http://en.wikipedia.org/wiki/Maruti_Esteem

http://en.wikipedia.org/wiki/Maruti_Zen


http://en.wikipedia.org/w/index.php?title=Maruti_Altok10&action=edit&redlink=1

http://en.wikipedia.org/w/index.php?title=Maruti_New_Wagon_R&action=edit&redlink=1

http://en.wikipedia.org/wiki/Maruti_Eeco

http://en.wikipedia.org/wiki/Suzuki_Splash

http://en.wikipedia.org/wiki/Maruti_Suzuki_A-STAR

http://en.wikipedia.org/wiki/Maruti_Suzuki_Swift_DZire

http://en.wikipedia.org/wiki/Maruti_Suzuki_SX4

http://en.wikipedia.org/wiki/Suzuki_MR_Wagon#First_generation

http://en.wikipedia.org/wiki/Suzuki_Swift

http://en.wikipedia.org/wiki/Maruti_Alto

http://en.wikipedia.org/wiki/Maruti_WagonR

http://en.wikipedia.org/wiki/Maruti_Gypsy

http://en.wikipedia.org/wiki/Maruti_Omni



2008 - World Premiere of concept A-star at 9th Auto Expo, New Delhi.

2007 - Swift diesel launched.New car plant and the diesel engine facility commences operations during 2006-07 at manesar,Haryana.SX4-Luxury Sedan Launched with the tag line “Men are black”.Maruti launches Grand Vitara.

2006-J.D.Power Survey award for the sixth year.MSIL has changed its EMS from ISO 14001:1996 version to ISO 14001:2004 version w.e.f.1st july

2005- MSIL was re-certified in 2005 as per ISO 14001:2004 standards.

2004 - A new esteem launched –second successful facelift by maruti engineers.

2003 - Maruti gets listed on BSE and NSE.IPO(issue oversubscribed 11.2 times)New zen launched-first facelift by maruti engineers.

2002 - Divestment –Suzuki Motor Corporation(SMC)acquires majority stake in MUL.Maruti Finance & Insurance launched.

2001 - Turn around with profits Rs104.5 crore.Four new business-True value,Insurance,Finance.Maruti Versa launched.Maruti True Value launched.

2000 - Maruti alto launched. First car company in India to launch call centre .IDTR launched jointly with the Delhi government to promote safe driving habits.

1.5 Achievements/ recognition:

The company takes great pride in sharing that customers have rated Maruti Suzuki first once again in Customer Satisfaction Survey conducted by independent body, J.D.Power Asia Pacific. It is 9th time in a row.

Maruti Suzuki wins 'Golden Peacock Eco-Innovation Award'

Maruti Suzuki Ranks Highest in Automotive Customer Satisfaction in India For Ninth Consecutive Year.

Maruti Suzuki becomes the first Indian car company to export half a million cars.



1.6 BANKERS

Mizuho Corporate BankThe Royal Bank of Scotland N.V.



1.8 SHARE HOLDING PATTERN

Description No. of Shareholders

No. of Shares

% of Share

DEMAT

Promoter and Promoter Group+ Indian Promoters 0.00 0.00 0.00 0.00

+ Foreign Promoters 5.00 156618440 54.21 0.00

Total of Promoter and Promoter Group 5 156618440 54.21Public Shareholding

+ Institutions 540.00 107187371 37.10 107187371

+ Non-Institutions 122054.00 25104249 8.69 25099223

Total Public Shareholding 122594 132291620 45.79 132286594

Total of Promoter and Public Shareholding

122599 288910060 100 132286594

Shares held by Custodians and against which Depository Receipts have been

issued

0 0 0.00 0

American Depository Receipts 0.00 0.00 0.00 0.00GDRs 0.00 0.00 0.00 0.00Others 0.00 0.00 0.00 0.00

Grand Total 122599 288910060 100 132286594



Note :

Please Use ' + ' Symbol For Grouping and ' - ' For Ungrouping

Graph (A-1)

COMMENTS ON SHREHOLDING PATTERN:

Chart shows that In the Shareholding Pattern of Maruti Suzuki, Suzuki Motor Corporation of Japan held major equity(54.21%) of the company. After that foreign institutional investors held 21.12% equity. However, Individual held only 2.24% of the total equity of the company.

We can conclude that Company can take fast decision about the development programme & using latest technology because Major part of equity is held by Promoters Specially Suzuki Motor Corporation of Japan. So Company can manage with Japanese practices and technology.



CHEPTER-2

2.1 Trend analysis of balance sheet

Financial statement presents comparative information for the current year and previous year. A

simple approach to financial statement analysis, known as trend analysis, is percentage changes

from the previous year. Trend analysis is carried out by first assigning a value of 100 to the financial


http://en.wikipedia.org/wiki/File:2007_Suzuki_Splash_01.jpg


statement items in a past financial year used as the base year and then expressing financial statement

items in the following tears as a percentage of the base year value.

BALANCE SHEET(In Million Rs.)

PARTICULARS 31-3-2006 31-3-2007 31-03-08 31-03-09 31-03-10SHRE CAPITAL 1445 1445 1445 1445 1445TOTAL RESERVES 53,081 67,094 82,709 92004 116906TOTAL DEBT 717 6308 9002 6989 8214NET BLOCK 16952 26597 32965 40708 50247INVESTMENTS 20,512 34,092 51,807 31733 71766TOTAL CURRENT ASSETS 37409 38459 30909 55100 37724TOTAL CURRENT LIABILITIES 19771 25015 28187 34165 35678NET CURRENT ASSETS 17,638 13,444 2,722 20935 2046

TREND ANALYSIS OF BALANCE SHEET(base year: Mar-06)

PARTICULARS 31-3-2006 31-3-2007 31-03-08 31-03-09 31-03-10SHRE CAPITAL 100 100 100 100 100TOTAL RESERVES 100 126.40 155.82 173.33 220.24TOTAL DEBT 100 879.78 1255.51 974.76 1145.61NET BLOCK 100 156.90 194.46 240.14 296.41INVESTMENTS 100 166.21 252.57 154.70 349.87TOTAL CURRENT ASSETS 100 102.81 82.62 147.29 100.84TOTAL CURRENT LIABILITIES 100 126.52 142.57 172.80 180.46NET CURRENT ASSETS 100 76.22 15.43 118.69 11.60

(A-2)



INTERPRETATION:

By showing the chart we can interpret that share capital of the company remain same in all five years by taking base year 2006

Total reserves of the company increased 2.2 times in 2010.a rise of 120%

Total debt of company increased 11.45 times in 2010, a rise of 1045%

Net block of the company increased almost 3 times in 2010, a rise of 196%

Investments of the company increased 3.5 times in 2010, a rise of 249%.

There is up-down trend in current assets. But at last in 2010 current assets is same as in 2006.

Current liabilities of the company are continuously increased from 2006 to 2010.it increased by 80%.

Comparing current assets & current liabilities, current assets is lower than current liabilities. It shows the short term finance positions of the company is not good. Company should take step to increase current assets.



Comparing share capital with total reserves, share capital remain same in all five years whether the total reserves increased to almost 2 times. So it is good for company’s total reserves is more than share capital. Company can issue bonus shares from the total reserves or invest in others or increase the productivity by buying new machineries with latest technology

By comparing share capital & net block, net block is almost 3 times more than share capital. It also good for company.

By comparing investments & total debts, total debts is so much higher than investments. It is not good for company. Company should take step to reduce the loans & increase the investments

2.2 VERTICAL ANALYSIS OF BALANCE SHEET


http://en.wikipedia.org/wiki/File:Maruti_Suzuki_Alto.jpg


SOURCES OF FUNDS Mar-06 Mar-07 Mar-08 Mar-09 Mar-10

SHREHOLDERS FUNDS

Capital 2% 2% 2% 1% 1.13%

Reserves & Surplus 95% 88% 87% 90% 91.38%

97% 90% 89% 92% 92.51%

LOAN FUNDS

Secured Loans 1% 1% 0.21%

Unsecured Loans 7% 9% 7% 6.21%

Deferred Tax

Deferred Tax Liabilities 4% 4% 3% 2% 1.72%

Deferred Tax Assets -2% -2% -1% -1% -0.65%

1.07%

Total 100% 100% 100% 100% 100.00%

APPLICATION OF FUNDS

FIXED ASSETS

Gross Block 88% 80% 77% 86% 81.34%

Less: Depreciation -58% -46% -42% -46% -42.07%

30% 35% 35% 40% 39.28%

Capital Work-in-Progress 2% 3% 8% 8% 3.03%

32% 38% 43% 48% 42.31%

INVESTMENTS 37% 45% 55% 31% 56.10%



CURRENT ASSETS,LOANS AND ADVANCES

Inventories 16% 9% 11% 9% 9.45%

Sundry Debtors 12% 10% 7% 9% 6.33%

Cash and Bank Balances 25% 19% 3% 19% 0.77%

Other Current Assets 1% 1% 1% 0.66%

Loans and Advances 14% 12% 11% 16% 12.28%

67% 50% 33% 54% 29.49%

LESS: CURRENT LIABILITIES AND PROVISIONS

Current Liabilities 27% 26% 26% 30% 22.98%

Provisions 8% 6% 4% 4% 4.91%

35% 33% 30% 33% 27.89%

Net Current Assets 31% 17% 3% 21% 1.60%

TOTAL 100% 100% 100% 100% 100.00%

MAR2006 MAR2007 MAR2008 MAR2009 MAR2010

SHREHOLDERS 97% 90% 89% 92% 92.51%



FUNDS

NET BLOCK 30% 35% 35% 40% 39.28%

INVESTMENTS 37% 45% 55% 31% 56.10%

CURRENT ASSETS 67% 50% 33% 54% 29.49%

CURRENT LIABILITIES 35% 33% 30% 33% 27.89%

Net Current Assets 31% 17% 3% 21% 1.60%

(Graph A-3)



INTERPRETATION:

Shareholders’ funds fluctuated from year 2006 to 2010. It was 97% in the year 2006 which was decreased to 90% in the year 2007. But after that it improved to 92.5% in the year 2010.

By showing the chart, we can conclude that Net block increased continuously without fixed assets, company can not increase the productivity.

Investments of the Maruti Suzuki increased continuously from 2006(30%) to 2008(55%) which was fallen to 31% in the year 2009 due to depression period in all over the world. but it jumped to 56% in the year 2010. It is good for the company.

The current assets of the company in the year 2006 was 67%, which was decreased up to 33% in the year 2008.which was raised in next year to 54%.but which is decreased 24% in the year 2010, which was not good for the company. The company should taken effective steps to increased current assets.

The current liabilities of the company decreased continuously from the year 2006 to 2008 which was increased 3% in the year 2009 and after that in the year 2010, it decreased 6% in the year 2010. It is good for the company because it decreased 8% from 2006 to 2010.

Net current assets is very important for liquidity of the company. It is also known as Net working capital which is derived by subtracting current liabilities from current assets. Here, it fluctuated in all five years. It was highest in the year 2006 which was only remained 1.6% in the year 2010.

Comparing current assets & current liabilities, current assets is higher than current liabilities. It shows the short term finance positions of the company is good. But in the year 2010, Current assets decreased so much but current liabilities did not decreased as compared to current assets. So it was not good for the company in the year 2010.

By comparing shareholders’ funds & net block, shareholders’ funds is 52% more than net block.

CHEPTER-3



3.1 Trend analysis of Profit & loss Account

PROFIT & LOSS A/C

(In Million Rs.)

PARTICULARS 31-3-2006 31-3-2007 31-03-08 31-03-09 31-03-2010NET SALES 120034 145922 178603 203583 289585OPERATING PROFIT 17704 23174 19063 15973 30668PROFIT BEFORE TAX 17500 22798 25030 16758 35925PROFIT AFTER TAX 11891 15620 17308 12187 24976TOTAL EXPEDITURE 104256 126635 156425 190205 256688

TREND ANALYSIS OF PROFIT & LOSS A/C

(base year: Mar-06)

PARTICULARS 31-03-06 31-3-07 31-03-08 31-03-09 31-03-10NET SALES 100 121.57 148.79 169.60 241.25OPERATING PROFIT 100 130.90 107.68 90.22 173.23PROFIT BEFORE TAX 100 130.27 143.03 95.76 205.29PROFIT AFTER TAX 100 131.36 145.56 102.49 210.04TOTAL EXPEDITURE 100 121.47 150.04 182.44 246.21



(Graph A-4)

INTERPRETATION: Here Chart Displays that Net sales of the company increased to 2.4 times(A rise of 140%)

by taking base year 2006 which is continuously increased Operating profit of the company increased 1.73 times (A rise of 73%) in 2010. Profit before tax in 2010 is almost 2 times more than PBT OF 2006. A rise of 105%. The profit of the Company in 2009 is lower with compared to all four years due to

recession & depression period. But in 2010 Company doubled the profit. Profit after tax in 2010 is 2.10 times more than the base year Whether the total expenditure increased to almost 2.5 times. By comparing Net sales & operating proft, Net sales increased More than operating

profit which is not much good for company. Company should take action to increase operating profit as compared to net sales.

Comparing Net sales & PBT, Net sales increased more than PBT . So the Profit earn from sales is lower than sales. In 2010 Net sales is increased 2.4 times whether PBT is Only increased to 2 times

Comparing to Net sales With total expenditure, both are continuously almost same increased form 2006 to 2010. Company should take step to reduce total expenditure to make profit higher Because there is no meaning of increasing sales if total expenditure also increase same as net sales

Comparing Net Profit(PAT) & total expenditure, Net profit is not more than total expenditure. So company should take above step of reducing total expenditure.

3.2 TREND ANALYSIS OF BALANCE SHEET & PROFIT & LOSS A/C

(In Million Rs.)

PARTICULAR Mar-06 Mar-07 Mar-08 Mar-09 Mar-10NET BLOCK 16952 26597 32965 40708 50247NET SALES 120034 145922 178603 203583 289585PAT 11891 15620 17308 12187 24976

TREND ANALYSIS OF BALANCE SHEET & PROFIT & LOSS A/C

(base year: Mar-06)

PARTICULAR Mar-06 Mar-07 Mar-08 Mar-09 Mar-10NET BLOCK 100.00 156.90 194.46 240.14 296.41NET SALES 100.00 121.57 148.79 169.60 241.25PAT 100.00 131.36 145.56 102.49 210.04



(Graph A-5)

INTERPRETATION:

By showing the chart we can interpret that Net block is more than Net sales & also Net profit.

Chart shows that in 2009, Net Profit of the company came down but then in 2010 it take over its position. It increased by 110% in 2010 by taking base year 2006

Company grew more in 2010 with respect to growth of 2009.

By comparing Net sales & net block, Net block of the company increased more than net sales. It is not good for company because it shows that some part of net block remain unproductive.



Comparing Net block & PAT, Here also Net block of the company increased more than PAT. It is not good for company that it can not use the available fixed assets optimum to earn maximum profit.

By comparing net sales & Net profit, profit is not much increased according to increase in net sales.

So company should take step to use net block in such a way that Net sales & Net Profit of the company increased more than net block.

3.3 Vertical Analysis of Profit & Loss Account

PROFIT & LOSS A/C

Mar-2006

Mar07 Mar08 Mar09 Mar10

INCOME

Gross Sales 123% 117% 117% 113% 110%

less:Excise Duty 23% 17% 17% 13% 10%

Net Sales 100% 100% 100% 100% 100%



Income from Services

other Income 4% 4% 5% 5% 4%

TOTAL 105% 105% 105% 104%

EXPENDITURE

Consumption of Raw-Material 74% 69% 73% 74% 74%

& Components

Purchase of Traded Goods 4% 4% 4% 4% 3%

Consumption of Stores 1% 1% 1% 1% 1%

Employees Remuneration

& Benefits 2% 2% 2% 2% 2%

Manufacturing,Administrative & other Expencies

5% 6% 6% 8% 6%

Selling & Distribution Expenses 3% 3% 3% 4% 3%

TOTAL 89% 86% 89% 92% 89%

Less: Vehicals for Own Use

Add: Increase/Decrease in Work in Progress

and finished Goods & Spares Parts -2% 1% -2% 1% -1%

0%

Total 87% 87% 88% 93% 89%

EBIDTA 17% 18% 18% 12% 15%



Interest

Depreciation 2% 2% 3% 3% 3%

3% 2% 4% 4% 3%

PROFIT BEFORE TAX 15% 16% 14% 8% 12%

Less: Tax Expense-Current tax 5% 4% 4% 2% 4%

Deferred tax 1%

Fringe Benefit Tax

Previous Years

PROFIT AFTER TAX 10% 11% 10% 6% 9%

MAR2006 MAR2007 MAR2008 MAR2009 MAR2010

NET SALES 100% 100% 100% 100% 100%

TOTAL EXPENDITURE

89% 86% 89% 92% 89%

EBIDTA 17% 18% 18% 12% 15%

PBT 15% 16% 14% 8% 12%

PAT 10% 11% 10% 6% 9%



(Graph A-6)

Vertical Analysis of P & L A\c :

Chart shows that Net sales remain same in all five years because we assume net sales as 100% in the vertical analysis of Profit & Loss account.

Total expenditure remained same(89%) in three years 2006,2008,2010, Which was remained 86% of the sales in the year 2007. It remained 92% in the year due to depression.

PBT of the Maruti Suzuki remained highest in the year 2007 visa versa it remained lowest in the year 2009 due to depression.

Chart shows that company got minimum profit(6%) in the year 2009 because of depression. But it jumped to 9% in the year 2010, Which was good for the company.

CHEPTER-4



RATIO ANALYSIS

INTRODUCTION

Financial analysis is the process identifying the financial strengthen and weakness of the

firm by properly established relationship between the item of the balance sheet and profit

and loss accounts.

Ratio analysis is powerful tool to financial .Ration is defined as the indicated quotient of

two mathematical expressions and as the relationship two or more thing

Ratio analysis involves establishing a relevant financial relationship between components

of financial statement .Using a ration analysis we can easily conclude the position of

industries. The ration can be classified as follows.

Liquidity ratio

Profitability ratio

Asset turnover ratio

Finance structure ratio

Valuation ratio

(A) LIQUIDITY RATIOS:[FINANCIAL STABILITY RATIOS ]



Liquidity refers to the existence of the assets in the cash or near cash form. This ratio indicates the ability of the company to discharge the liabilities as and when they master. The financial resources contributed by owner or supplemented by out side debt primarily come form as under in the balance sheet form.

[A-1] CURRENT RATIO

[A-2] QUICK RATIO

[A-1] CURRENT RATIO

Current ratio = current assets

Current liability

2006 2007 2008 2009 2010

CURRENT RATIO:

CURRENT ASSETS 37409 38459 30909 55100 37724

CURRENT LIABILITIES 19771 25015 28187 34165 35678

RESULT IN (:) 1.89 1.54 1.10 1.61 1.06

CURRENT RATIO

0.00

0.50

1.00

1.50

2.00

2006 2007 2008 2009 2010

YEARS



(Graph A-7)

INTERPRETATION:

This Most widely used ratio shows the proportion of current assets to current liabilities. It is a measure of short-term financial strength of the business and shows whether the business will be able to meet its current liabilities, as and when they mature. It is generally believed that 2:1 ratio shows a comfortable working capital position.

The company’s current ratio is 1.06 in 2010 which is lowest with compare to other four years which is also lower than industry’s ratio. In 2006, current assets is almost 2 times higher than current liabilities. So company is able to pay its debts in the short term. In 2007 & 2008 it is decreased. But in 2009 Company recover its short-term financial strength. Whereas In 2010 current assets remain almost same as current liabilities. So Company is not successfully able to pay its debts in the short term in 2010.If immediate steps are not taken to remedy the situation, the company will be put to considerable trouble.

[A-2]. QUICK RATIO

Quick ratio = current assets – inventories

Current liabilities

QUICK RATIO: 2006 2007 2008 2009 2010



QUICK ASSETS: 28597 31327 20529 46077 25636

(Current assets-Inventories)

QUICK LIABILITIES: 18825 24087 24662 33616 35003

(Current Liabilities-Bod)

RESULT (:) 1.52 1.30 0.83 1.37 0.73

QUICK RATIO

0.00

0.50

1.00

1.50

2.00

2006 2007 2008 2009 2010

(Graph A-8)

INTEPRETATION:

The quick ratio is a better indication of liquid positions of the company and shows whether the company will be able to meet its current obligations due for immediate payment at a short notice. No standard norm is available for this ratio. However, it is belived that liquid assets should be 1:1.

The graph shows that quick ratio decreased from 2006 to 2010 continuously, but in 2009 it is quite so good. In 2006, quick ratio is highest with comparing to all four years. Company’s liquid position was very comfortable in all years excluding 2008 & 2010 years. In the year 2010, Company’s liquid position is not good. Company should take immediate step to recover its liquid position.

(B). PROFITABILITY RATIO



Profitability is the measure of the earning ability of the business. Profitability ratio is generally measured in percentage based on the calculation of the absolute profit figures. Profit is the positive difference between the sales and the expenses.

[B-1] GROSS PROFIT RATIO

[B-2] OPERATING PROFIT

[B-3] NET PROFIT RATIO

[B-4] RATE OF RETURN ON INVESTMENT

[B-5] RATE OF RETURN ON EQUITY

[B-1] GROSS PROFIT RATIO

Gross profit ratio = gross profit x 100

Sales

( In percentage)

(B) PROFABILITY RATIOS:

(Margin & Performance) 2006 2007 2008 2009 2010

GROSS PROFIT RATIO:

GROSS PROFIT 22278 32931 32631 35588 53921

Net Sales 120034 145922 178603 203583 289585



result in (%) 18.55% 22.56% 18.27% 21.18% 18.62%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

GROSS PROFIT RATIO

Series1 18.55 22.56 18.27 21.18 18.62

2006 2007 2008 2009 2010

(Graph A-9)

INTERPRETATION:

The gross profit ratio is the measures of earning ability of business. The ratio shows whether the mark-up obtained on cost of production is sufficient. There is no standard showing reasonableness of gross profit ratio. However, it must be enough to cover operating activities.

The gross profit ratio is in 2006 18.55%, which is 18.62% in 2010. There is no very difference in it. In the year 2007 gross profit is highest with comparing to all four years. Comparing to industry gross profit ratio, the company ratio is very high in all years.

[B-2] OPERATING PROFIT RATIO:

Operating profit ratio = operating profit x 100



Sales

( In percentage)

OPERATING PROFIT RATIO: 2006 2007 2008 2009 2010

SALES 120034 145922 178603 203583 289585

OPERATING PROFIT 17704 23174 19063 15973 30668

Result in (%) 14.75% 15.88% 10.67% 7.85% 10.59%

(Graph A-10)

INTERPRETATION:-

OPR measures the percentage of sales rupees remaining after all costs & expenses including interest & taxes. This ratio indicates management

ability to operate the business activities.


0.00%

5.00%

10.00%

15.00%

20.00%

2006 2007 2008 2009 2010

OPERATING RATIO


Company operating ratio in 2006 was 14.75%, while in 2010 it is 10.59% means it is decreasing compare to 2006. In 2007 compny’s operating profit ratio is highest with comparing to all four years.Industry ratio in 2009 is 3.94% and company ratio is 7.85%, which is quite good with compare to industry ratio.

[B-3] NET PROFIT RATIO:

Net profit ratio = net profit x 100

Sales

NET PROFIT RATIO: 2006 2007 2008 2009 2010

NET PROFIT 11891 15620 17308 12187 24976

SALES 120034 145922 178603 203583 289585

RESULT IN % 9.91% 10.70% 9.69% 5.99% 8.62%

NET PROFIT RATIO

9.91%

10.70%

9.69%

5.99%

8.62%

2006

2007

2008

2009

2010



(Graph A-11)

INTERPRETATION:

The net profit ratio is the measures of earning ability of business. The net profit ratio in 2006 was 9.91%, which is 8.62 % in 2010, means it is decrease compare to 2006.It is high in 2007

comparing to all years. Industry ratio in 2010 is 7.49% and company ratio is 8.62%, which is good .

[B-4] RATE OF RETURN ON INVESTMENT:

Rate of return on investment = EBIT x 100

Total assets

( In percentage)

RATE OF RETURN ON INVESTMENT(ROI)

2006 2007 2008 2009 2010

EBIT 17704 23174 19063 15973 30668

TOTAL ASSETS 56022 76522 94857 101989 127935

RESULT (%) 31.60% 30.28% 20.10% 15.66% 23.97%

The rate of return on investment ratio measures the profitability of total funds/investment of the firm. Which is not affected by interest changes & tax burden?. Profit margin and Asset Turnover are the two drivers of return on assets



0.00%

10.00%

20.00%

30.00%

40.00%

ROI

Series1 31.60 30.28 20.10 15.66 23.97

2006 2007 2008 2009 2010

(Graph A-12)

INTERPRETATION:

Chart shows that ROI decreased continuously from the year 2006 to 2009 but in the year 2010, It starts to recover its position. Maruti Suzuki’s return on assets increased from 15.66% in 2009 to 23.97% in 2010, indicating a rise in the overall profitability of the company.

Automobile industry’s ROI is as follows:

Year:

2010: 21.22%

2009: 5.37%

2008: 20.57%

Comparing to Company’s ROI with Industry, we can interpret that company’s ROI is better than Industry.

[B-5] RATE OF RETURN ON EQUITY:

Rate of return on Equity = Profit for the Equity x 100

Net Worth



RATE OF RETURN ON EQUITY(ROE)

MAR-06 MAR-07 MAR-08 MAR-09 MAR-10

NET PROFIT(PAT) 11891 15620 17308 12187 24976

NET WORTH 54526 68539 84154 93449 118351

RESULT IN (%) 21.81% 22.79% 20.57% 13.04% 21.10%

ROE is a measure of profitability from the standpoint of the shareholders. The ratio measures with which shareholders’ funds are employed. Since Shareholders’ equity changes over the year due to factors such as share issues and buy-backs, analysts generally use the average of beginning and ending amounts for the year. Shareholders expect managers to earn a ROE higher than a ROE higher than the firm’s cost of capital.

(Graph A-13)

INTERPRETATION:



ROE is remain from 21% to 23% in all years exculding the year 2009. It remained only 13% in 2009 but in 2010 it recoverd form 13% to 21%. So Compnay earned 21 Rs. Out of 100 Rs. Of Shareholders’s funds.

Automobile industry’s ROI is as follows:

Year:

2010: 22.99%2009: 7.68%2008: 22.78%

Comparing with industry, Company’s ROE is 2% lower than industry in the years 2010 & 2008. But in 2009, Comapany’s ROE is around 5% higher than industry.

(C) ASSET TURN OVER RATIO


http://en.wikipedia.org/wiki/File:Maruti_Suzuki_Swift_2092.JPG


Asset turnover ratio is basically productivity ratio which measure the output produced from the given input deployed.

[C-1] TOTAL ASSET TURNOVER

[C-2] NET FIXED TURNOVER

[C-3] INVENTORY TURNOVER

[C-4] DEBTORS TURNOVER

[C-1]. TOTAL ASSET TURNOVER

Total asset turnover = Sales

Total asset

( In time)

TOTAL ASSETS TURNOVER: 2006 2007 2008 2009 2010

SALES 120034 145922 178603 203583 289585

TOTAL ASSETS 56022 76522 94857 101989 127935

RESULT IN TIMES 2.14 1.91 1.88 2.00 2.26

The amount invested in business are invested in all assets jointly and sales are affected through them to earn profits. So in order to find out relation between total assets to sales.Total assets tunover is calculated.



(Graph A-14)

INTERPRETATION:

In 2010, Maruti Suzuki had sales of about Rs. 2.26 per rupee of investment in assets as compared to about Rs. 2.00 in 2009.The rise of 26 paise in sales per rupee of investment indicates a significant rise in utilisation of assets in 2010. Company maintained around 2 times total assets turnover ratio which is good for the company.

Automobile industry’s Total Assets turnover is as follows:

Year:

2010: 2.83

2009: 2.39

2008: 2.77

Comparing with industry, Company’s Assets turnover is low. So Company should taken step to maintain assets turnover with the industry.



[C-2]. NET FIXED TURNOVER:

Net Fixed Turnover = Sales

Net Fixed Assets

( In time)

NET FIXED TURNOVER: 2006 2007 2008 2009 2010

SALES 120034 145922 178603 203583 289585

NET FIXED ASSETS 16952 26597 32965 40708 50247

RESULT IN TIMES: 7.08 5.49 5.42 5.00 5.76

(Graph A-15)

INTERPRETATION:

It is almost same as Total assets tunover. In 2006, Net Fixed Turnover is highest with compare to all four years. From 2007 to 2010, it remained between 5 to 6 times.it means it indicates company’s Significant Utilisation of Net fixed assets.

Automobile industry’s Total Assets turnover is as follows:

Year:2010: 3.252009: 2.552008: 3.25Comparing with industry, Company’s net fixed assets turnover is higher than industry which is good for the company.



[C-3]. INVENTORY TURNOVER:

(a). Inventory Turnover = Cost of goods Sold

Average Inventories

( In time)

(b).Average age of inventory = Average inventory x 360

Cost of good sold

This ratio shows the number of times a company’s inventory is turned into sales. Investments in inventory represents idle cash. The lesser the inventory, the greater the cash available for meeting operating needs.Besides, a lean, fast-moving inventory runs a lower risk of obsolescence and reduces interest and storage charges.

INVENTORY TURNOVER 2007 2008 2009 2010

Cost of Goods Sold 112991 145972 167995 235664

Average Inventories 7972 8756 9701.5 10555.5

Result in Times 14.17 16.67 17.32 22.33

AVERAGE AGE OF INVENTORIES 25.40 21.59 20.79 16.12



(Graph A-16)

INTERPRETATION

(a). INVENTORY TURNOVER:

Chart shows that Inventory turnover ratio increased continuously increased from 2007 to 2010. In the year 2010, Inventory rotated 22 times which was 14 times in the year 2007. It indicates efficient inventory management. Company can earn better profits because of efficient inventory management as comapared to the year 2007.

(b). AVERAGE AGE OF INVENTORY

Chart shows that inventory holding days continuously decreased from 2007 to 2010. Average inventory holding days for Maruti suzuji was 16.12 days in 2010 which was 25.40 days in the year 2007.It is good for the comapany because it increased company’s profits and reduced interest and storage charges.



[C-4]. DEBTORS’ TURNOVER RATIO

(a). Debtors’ turnover = Sales

Average Debtors

(IN TIMES)

(b). Average age of Debtors = 360 days

Debtors’ turnover

(IN DAYS)

The debtors turnover suggests the number of times the amount of credit sale is collected during the year,while debtors ratio indicates the number of days during which dues for credit sales are collected.The Debtors turnover ratiomeasures the efficiency of a company’s credit and collection policy.

DEBTORS' TURNOVER 2007 2008 2009 2010

Sales 145922 178603 203583 289585

Average debtors 6968 7014 7967 8738

Resultin Times 20.94 25.46 25.55 33.14

AVERAGE AGE OF DEBTORS 17.19 14.14 14.09 10.86

(Graph A-17)



INTERPRETATION:

(a).DEBTORS’S RATIO:

Chart shows that Debtors’s turnover ratio increased continuously from 2007 to 2010.In the year 2010, Company collected cash of sales 33 times as compared to 20.94 times in the year 2007. It indicates increased efficiency of the company’s credit and collection policy.

(b). AVERAGE AGE OF DEBTORS:

Chart show that Average days of debtors continuously decreased from 2007 to 2010. In the year 2010, Debtors paid their dues for credit sales after 11 days of making credit sales which was 17 days in the year 2007.It is benificial for the company because Company’s liquidity boosts.

Automobile industry’s Debtors’s turnover is as follows in days:

Year:

2010: 10 days2009: 19 days2008: 10 days

Comparing to industry, companys average age of debtors was slightly change in the year 2010. But in the year 2009, Company’s debtors turnover ratio was better than industry.



(D) FINANCE STRUCTURE RATIO

Finance structure ratio indicates the relative mix or blending of owner’s funds and outsiders’ debt funds in the total capital employed in the business. It should be noted that equity funds are the prime fund which increase progressively through reinvestment of profits, while outside debt funds are supplementary funds and are added at the discretion of the management. Management prefers to choose debt only when it helps enhancing the earnings of equity. The debt funds carry fixed committed interest costs on debt, the equity earning is enhanced, but if the interest costs are higher than the ROI, it adversely affects the earnings of owners. This ratio is popularly described as Debt-equity ratio. Higher debt-equity ratio is (1) good if ROI, it adversely affects the earnings of owners. This ratio is popularly described as Debt-equity ratio. Higher debt-equity ratio is(1)good if ROI is greater than interest on debt and it is (2)bad if ROI less than the interest of debt. Thus use of debt (or leverage) is considered as a “double-edged”.

[D-1] EQUITY RATIO

[D-2] DEBT RATIO

[D-3] DEBT-EQUITY RATIO

[D-4] INTEREST COVERAGE RATIO



[D-1] EQUITY RATIO (PROPRIETARY RATIO)

EQUITY RATIO = NET WORTH TOTAL CAPITAL EMPLOYED

EQITY RATIO 2006 2007 2008 2009 2010

NET WORTH 54526 68539 84154 93449 118351

TOTAL CAPITAL EMPLOYED

55326 74212 89156 99777 122550

RESULTIN (:) 0.99 0.92 0.94 0.94 0.97

(Graph A-18)

INTERPRETATION:

Equity ratio shows the owners’ fund in total capital employed. High equity ratio means company is more relaying on internal funds and less on external debts. Here, company highly relay on internal funds in all five years. Company use less external debts.



[D-2] DEBT RATIO

DEBT RATIO = LONG-TERM DEBT

TOTAL CAPITAL EMPLOYED

(Graph A-19)Column1 Column2 Column3 Column4 Column5 Column6

DEBT RATIO:

LONG-TERM DEBT 400 5673 5002 6328 4199

TOTAL CAPITAL EMPLOYED 54926 74212 89156 99777 122550

RESULT IN (:) 0.01 0.08 0.06 0.06 0.03

INTERPRETATION:

The debt ratio of the company useful for determine the how much total long debt varies with total capital employed. It is also helpful for the company for knowing the how Much capital employed gets return agianst long debt. In the year 2006, it was 0.1. according to knoldge if it is low , it good for the company. As per see the above calculation from 2007 to 2009, it was high comparing to all year. It declares that the company had inreased its long term loans. I t had taken loans from forign banks. In the year 2010, it is decreased up to 0.03, which is good for the company



[D-3] DEBT –EQUITY RATIO :

DEBT –EQUITY RATIO = TOTAL LONG TERM DEBT

NET WORTH

(Graph A-20)INTERPRETATION:

The debt equity ratio measures the relationship of capital provided by creditors to the amount provided by the shareholders. The ratio indicates the extent use of financial leverage. A high debt equity ratio indicates an aggressive use of leverage and a highly leveraged company is more risky for creditors. A low ratio on the other hand suggests that the company is making little use of leverage and is too conservative.

The debt equity ratio remained lowest in the year 2006 because company had only secured loans.In the year 2007, company take unsecured loans. So the debt equity ratio increased in the year 2007. Company repaid some amount of loans to creditors. So it decreased slightly. In the year 2010, it decreased because company paid 2200 million Rs. to creditors.



[D-4]. INTEREST COVERAGE RATIO:

Interest coverage ratio = EBIT

Interest

(In times)

This is a measure of the protection available to creditors for payment of interest charges by the company. The ratio shows whether the company has sufficient income to cover its interest requirements by a wide margin.Higher is the ratio ,better is the utilization of debt funds.

INTEREST COVERAGE RATIO: 2006 2007 2008 2009 2010

EBIT 17704 23174 19063 15973 30668

INTEREST 204 376 596 510 335

RESULT 86.78 61.63 31.98 31.32 91.55

(Graph A-21)

INTERPRETATION:



Chart shows that From 2006 to 2009, Interest coverage ratio decreased continuously. In the year 2006, it was 86.78 times and in the year it decreased to 31.32 times. It indicates a major drop in utilization of debt funds. But in the year 2010, it jumped to 91.55 times because of EBIT increased form 15973 million Rs. in 2009 to 30976 million Rs. In 2010. And also interest decreased. We can conclude that company can easily pay interest charges to creditors.



(E)VALUATION RATIO

Valuation ratios are the results of the management of above four categories of the functional ratios. Valuation ratios are generally presented on generally presented on per share basis and thus are more useful to the equity investors. The per share valuation are popularly presented as.

[E-1]. EARNING PER RATIO

[E-2]. DIVIDEND PAY-OUT RATIO

[E-3] DIVIDEND YIELD

[E-4] P/E RATIO

[E-1]. EARNING PER RATIO :

Earning per ratio = Net profit for equity share

No. of equity shares

EPS is important measure of corporate performance of shareholder & potential investors. Any company can make impression through handsome EPS.

EARNING PER SHARE(EPS)

2006 2007 2008 2009

2010NET PROFIT 11891 15620 17308 12187 24976

TOTAL NO. 288.91 288.91 288.91 288.91 288.91

RESULT IN PER SHARE 41.16 54.07 59.91 42.18 86.45



(Graph A-22)

INTERPRETAION:

Chart shows that EPS Increased for all years excluding the year 2009. In the year 2006, it remained 41.16 Rs. Which increased to 59.91 Rs. In the year 2008. But in the year, it decreased to 42.18 Rs..Major reason for this was recession in all over the world. But in the year 2010, it jumped to 86.45 Rs. Because of huge sales of the cars of the company which resulted in 2 times increased in profits from the year 2009.



[E-2]. DIVIDEND PAY –OUT RATIO

Dividend pay – out ratio = dividend per share in Rs.

EPS

(In time)

This ratio indicator the split of EPS between cash dividend & reinvestment of profit. If company has profitable projects than it will prefer to keep D/P ratio lower.i.e. it will reinvest higher proportion of profits in the business. it indicate what percentage at total earnings are paid to the share holders. Consistency at dividend payment is important for the share holders.

DIVIDEND PAY-OUT RATIO(DPS)

2006 2007 2008 2009

2010DIVIDEND PER SHARE 3.5 4.5 5 3.5 6

EARNIG PER SHARE 41.16 54.07 59.91 42.18 86.45

Result 0.09 0.08 0.08 0.08 0.07



(Graph A-23)

INTERPRETATION:

Chart shows that Dividend Pay-out Ratio remained same in three financial years 2007,2008,2009. It remained highest in the year 2006. At last it remained 0.07 times in the year 2010.Here overall we can conclude that Company reinvested higher proportion of profits in the business which was also beneficial for the company and sharehoders also for the long term.



[E-3] DIVIDEND YIELD RATIO

Dividend yield ratio = dividend per share in Rs x 100

Average market price of share

(In percentage)

Dividend Yield ratio of Maruti Suzuki in the Year 2009/10 was as follows.

Dividend Yield ratio = 6/1250 * 100

= 0.48%

Dividend yield ratio indicates the relationship between dividend per share & average market price of share. This is mainly of interest of the investors, who are desires of getting income from dividend.


http://en.wikipedia.org/wiki/File:Omni_Lpg.jpg


[E-4] PRICE-EARNING RATIO:

P / E ratio = current market price of share

EPS (In times)

P /E ratio measures the amount investors are willing to pay for each rupees of earning; the higher the ratio, firm’s future.

It is closely related to the earning yield/ earning price ratio. This ratio is computed dividing the market price of the share by the EPS.

P/E ratio of Maruti Suzuki in the Year 2009/10 was as follows.

P/E ratio = 1450/86.45

=16.77



CHEPTER -5


PROFIT MARGIN (in %) 2008 2009 201010.67% 7.85% 10.59%

PROFIT MARGIN (in %) 2008 2009 201010.67% 7.85% 10.59%

TATO (TOTAL ASSET TURNOVER IN TIMES) 2008 2009 2010 1.88 2.00 2.26

TATO (TOTAL ASSET TURNOVER IN TIMES) 2008 2009 2010 1.88 2.00 2.26

EBIT(in RS.) 2008 2009 201019063 15973 30668

EBIT(in RS.) 2008 2009 201019063 15973 30668

TOTAL SALE (in RS) 2008 2009 2010178603 203583 289585

TOTAL SALE (in RS) 2008 2009 2010178603 203583 289585

NET FIXED ASSETS (in RS) 2008 2009 2010 32965 40708 50247

NET FIXED ASSETS (in RS) 2008 2009 2010 32965 40708 50247

NET WORKING (in RS) 2008 2009 2010 2722 20935 2046

NET WORKING (in RS) 2008 2009 2010 2722 20935 2046

INVESTMENT (in RS) 2008 2009 2010 51807 31733 71766

INVESTMENT (in RS) 2008 2009 2010 51807 31733 71766

TOTAL FIXED ASSETS 2008 2009 2010 72853 87206 104067

TOTAL FIXED ASSETS 2008 2009 2010 72853 87206 104067

ACCUMULATED DEPRECIATION 2008 2009 2010 39888 46498 53820

ACCUMULATED DEPRECIATION 2008 2009 2010 39888 46498 53820

TOTAL CURRENT ASSETS2008 = 20506+10403=309092009 = 38772+16328=551002010 = 22017+15707=37724

TOTAL CURRENT ASSETS2008 = 20506+10403=309092009 = 38772+16328=551002010 = 22017+15707=37724

CURRENT LIABILITIES + PROVISIONS 2008 =24492+3695=281872009 = 30358+3807=341652010 = 29394+6284=35678

CURRENT LIABILITIES + PROVISIONS 2008 =24492+3695=281872009 = 30358+3807=341652010 = 29394+6284=35678

X

÷

–

–

ROI (in %) 2008 2009 2010 20.10% 15.66% 23.95%

ROI (in %) 2008 2009 2010 20.10% 15.66% 23.95%

5. DU PONT CHART


INTERPRETATION:

The Du- Pont chart shows how return on assets is influenced by profit margin and asset turnover. Profit margin and asset turnover are the two drivers of return on assets. The Du Pont chart system of financial analysis clearly brings out the effect of these two drivers on return on assets. It combines the profitability of the company and efficiency of the company. In short, it is excellent indicator of overall performance of the company.

To achieve a certain rate of return on assets, business enterprises can choose between various combinations of profit margin rates and asset turnover times. Companies that operate in the “mass” market, such as supermarkets, typically have low profit margins, but keep high asset turnovers. Companies that sell premium products such as designer dresses, or operate in a “niche” market enjoy high profit margins, but have low asset turnovers.

Maruti Suzuki’s return on assets remained 20.10% in the year 2008 which is decreased to 15.66% in the year 2009 due to depression in the all over the world but it recovered and jumped to 23.95% in the year 2010, indicating a rise in the overall profitability of the company. It is very useful for the “mass” market & “niche” market.

The profit margin is the measures of earning ability of business. In the year 2010, it remained 10.67% which decreased 2.82 % in the year 2009 due to main reason of depression in the auto mobile industry. But it recovered and remained 10.59% in the year 2010.

In 2010, Maruti Suzuki had sales of about Rs. 2.26 per rupee of investment in assets as compared to about Rs. 2.00 in 2009.The rise of 26 paise in sales per rupee of investment indicates a significant rise in utilisation of assets in 2010. Company maintained around 2 times total assets turnover ratio which is good for the company.

EBIT of the Maruti Suzuki remained 19063 million Rs. in the year 2007 which remained 15973 million Rs. in the year 2009, a fall of 16.20%. but in the year 2010 it improved and increased 92 % (30668 mln Rs.)

Total sale of the company increased continuously from year 2008 to 2010. It remained 178603 million Rs. in the year 2008 which increased 14%(203583 million Rs.)in the year 2009. And in the year 2010, it increased 42.24%.

Net fixed assets increased continuously from year 2008 to 2010. It remained 32965 million Rs. in the year 2008 which increased 23.5% in the year 2009. It also increased same(23.5%) in the year 2010.

Net working capital is very important for the liquidation of the firm. It is gotten by subtracting current assets and current liabities. Here, it remained 2722 million Rs. in the year 2008 which increased to 20935(mill) in the year 2009, and it decreased to 2046(mill) in the year 2010.



The investment of the company is the parameter for knowing, how much company gets return in its progression. In the year 2008, the investment of company was 51807(mill),which was decreased in 2009 up to 31733(mill),while it was raised in 2010 up to 71766(mill).it shows company’s improvement in 2010.

The current assets of the company measures the liquidation of the company. Here the current assets of the company was 30909(mill) in the year 2008, while it was increased up to 55100(mill) in the year 2009, which is decreased to 37724(mill) in the year 2010.it shows very fluctuation in the current assets.

The current liabilities of the company relates to the short term liability. The current liability of the company increased continuously from 2008 to 2010. It was 28187(mill) in 2008, which was raised up to 34165(mill) in the year 2009, and the next year it is increased up to 35678(mill).



CHEPTER-6

COMPARISON WITH PEER AND FUTURE DEVELOPMENT

Year 2010

PARTICULARMARUTI SUZUKI

TATA MOTORS MAH & MAH

Gross Profit Margin (%) 18.62 8.84 14.29

Net Profit Margin (%) 8.62 6.28 11.08

Return On Net Worth (%) 21.10 14.96 26.74

Current Ratio 1.06 0.62 1.11

Quick Ratio 0.73 0.46 0.86

Interest Cover 91.55 2.77 18.90

Inventory Turnover Ratio(times) 22.33 13.07 17.91

Debtors Turnover Ratio(times) 33.14 18.02 16.09

Total Assets Turnover Ratio 2.26 1.13 1.74

EPS 86.45 39.26 36.89

INTERPRETATION:

Here we have compare the Maruti Suzuki India ltd with its peer group company. We can find some analysis from that peer group company. By this way we can compare the progress of Maruti Suzuki India ltd with its competitor company. Peer group comparison indicates the progress of company by this way company makes its strategies to compete with that company.

Maruti Suzuki’s Gross profit ratio compares with its peer group companies Tata Motors and Mahindra & Mahindra. We can conclude that gross profit ratio of Maruti Suzuki is more than its peer companies. Maruti Suzuki’s gross profit ratio remained 18.62% in the



year 2010. Mah & Mah take the second position in gross profit ratio comparison with 14.29%. Tata Motors remained last in the gross profit ratio with only 8.84%.

Net profit ratio of Maruti Suzuki compares with its peer group. We can conclude that net profit ratio of Mah & Mah was highest with 11.08%. while Maruti Suzuki’s net profit ratio remained only 8.62%. So company should take step to increase profit.

Comaparing with peer group companies, Maruti Suzuki’s Return on equity remained 5.5% less than Mah & Mah. While Tata motors’s return on equity remained 6% less than Maruti Suzuki. It indicates that Mah & Mah earned more profit out of shareholders’ funds.

Current ratio measures short-term financial strength of the business and shows whether the business will be able to meet its current liabilities. Here, The current ratio of Maruti Suzuki remained 1.11 times in the year 2010.comaparing with other peer companies, Mah & Mah 0.05 times more than it while tata motors 0.44 times less than Maruti Suzuki.

The quick ratio of Maruti Suzuki remained 0.73 times in the year 2010. Comparing with its peer companies, it less than 0.13 times than Mah & Mah while it 0.26 times higher than Tata motors. It indicates that Mah & Mah’s liquid positions was good.

Interest coverage ratio of the Maruti Suzuki was very high with compare to its peer companies. It indicates that the utilization of debt funds is very much good.

Inventory turnover ratio of the Maruti Suzuki was highest with compare to its peer companies. Maruti rotated inventory 22 times in the year while Mah & Mah rotated it 18 times and Tata motors rotate it only 13 times. It indicates Maruti Suzuki’s efficient inventory management.

Debtors’ turnover ratio of the Maruti Suzuki was also highest with compare to its peer companies. It indicates that the efficiency of a company’s credit and collection policy is much better than peer companies.



EPS is important measure of corporate performance of shareholder & potential investors. Any company can make impression through handsome EPS. Here, EPS of Maruti Suzuki was very high with compare to peer companies.

CHEPTER- 7

FINDINGS & RECOMMENDATIONS

FINDINGS:

Maruti Suzuki India Ltd. is a profit making company but less in the year 2009.

It produced and sold over a million vehicles. This is a first for any automobile company in India

Company invested more money in upcoming R & D center facility in Rohtak and new technology development.

Maruti Suzuki India Ltd. has a good market position in the entire automobile industry.

Company gave high dividend in the year 2010 because of high profit.

Company manages inventory efficiently

Company can easily pay interest charges to creditors.

Company’s credit and collection policy



RECOMMENDATIONS AND SUGGESTIONS

Company should reduce its production expenses

Company is not successfully able to pay its debts in the short term in 2010.If immediate steps are not taken to remedy the situation, the company will be put to considerable trouble.

Company should take step to use net block in such a way that Net sales & Net Profit of the company will increase more than net block.

CONCLUSION

By analyzing all the data, information and figures, we can conclude that there is more profit making as compared to others and it is also more reliable for investing money in it for potential investors.



ANNEXURE

[A.] BALANCE SHEET

[B.]PROFIT & LOSS STATEMENT



[A.] BALANCE SHEET OF 5 YEARS

SOURCES OF FUNDS 2006 2007 2008 2009 2010SHREHOLDERS FUNDSCapital 1445 1445 1445 1445 1445Reserves & Surplus 53081 67094 82709 92004 116906

54526 68539 84154 93449 118351LOAN FUNDSSecured Loans 717 635 1 1 265Unsecured Loans 5673 9001 6988 7949

6308 9002 6989 8214Deferred TaxDeferred Tax Liabilities 1990 2776 2697 2340 2206Deferred Tax Assets -1211 -1101 -996 -789 -836

779 1675 1701 1551 1370

Total 56022 76522 94857 101989 127935

APPLICATION OF FUNDSFIXED ASSETSGross Block 49546 61468 72853 87206 104067Less: Depreciation -32594 -34871 -39888 -46498 -53820

16952 26597 32965 40708 50247Capital Work-in-Progress 920 2389 7363 8613 3876

17872 28986 40328 49321 54123

INVESTMENTS 20512 34092 51807 31733 71766CURRENT ASSETS,LOANS AND ADVANCESInventories 8812 7132 10380 9023 12088Sundry Debtors 6461 7474 6555 9378 8099Cash and Bank Balances 14016 14228 3240 19390 982Other Current Assets 458 384 331 981 848Loans and Advances 7662 9241 10403 16328 15707

37409 38459 30909 55100 37724



LESS: CURRENT LIABILITIES AND PROVISIONSCurrent Liabilities 15058 20110 24492 30358 29394Provisions 4713 4905 3695 3807 6284

19771 25015 28187 34165 35678

Net Current Assets 17638 13444 2722 20935 2046

TOTAL 56022 76522 94857 101989 127935

[B.] PROFIT & LOSS A/C2006 2007 2008 2009 2010

INCOMEGross Sales 147043 171442 209493 230852 318073less:Excise Duty 27009 25520 30890 27269 28488Net Sales 120034 145922 178603 203583 289585Income from Services 488 617 759 954 1404other Income 4292 5984 8371 10001 10209 TOTAL INCOME 128814 152523 187733 214538 301198EXPENDITUREConsumption of Raw-Material 88779 101374 130342 150598 214881& ComponentsPurchase of Traded Goods 4644 6159 7771 7256 9050Consumption of Stores 824 1097 1470 1978 2432Employees Remuneration& Benefits 2287 2884 3562 4711 5456Manufacturing,Administrative & other Expencies 6226 8298 10793 15685 17938Selling & Distribution Expences 3560 4999 5602 7382 9160TOTAL EXPENDITURE 106320 124771 159540 187610 258917Less:Vehicals for Own Use 67 143 198 223 296Add: Increase/Decrease in Work in Progressand finished Goods & Spares Parts -1997 2007 -2917 2818 -1933Total 104256 126635 156425 190205 256688EBIDTA 20558 25888 31308 24333 44510Interest 204 376 596 510 335Depreciation 2854 2714 5682 7065 8250

3058 3090 6278 7575 8585PROFIT BEFORE TAX 17500 22798 25030 16758 35925Less: Tax Expence-Current tax 5873 6089 7509 4592 11230 Deferred tax -321 897 26 -118 -281 Fringe Benefit Tax 57 67 98 97 - Previous Years 125 89PROFIT AFTER TAX 11891 15620 17308 12187 24976Add:Brought forward from previous year's account 34421 43939 56373 70257 80042less: Loss of Maruti Suzuki on amalgamation 84



less:Impact of transtion adjustment for 'Employee Benefit 4Profit available for appropriation 46312 50471 73681 82444 105018Less:AppropriationDebenture Redemption Reserve 31 17General Reserve 1189 1562 1731 1219 2498Proposed Dividend 1011 1300 1445 1011 1733Corporate Dividend Tax 142 219 248 172 288Balance Carriend Forward to Balance Sheet 43939 56373 70257 80042 100499

BIBLIOGRAPHY

BOOKS:

“Financial Accounting” A Managerial Perspective- Narayan Swami R.

Management Accounting B.S.SHAH PRAKASHAN

REPORT:

Annual Report of Maruti Suzuki India Ltd.

For the years:2006,2007,2008,2009,2010.

NEWSPAPERS:

Business Standard

The Times of India

REFERENCE:

Websites:

www.google.com


http://www.google.com/


www.marutisuzuki.com

www.moneycontrol.com

www.aceanalyser.com


http://www.aceanalyser.com/

http://www.moneycontrol.com/

http://www.marutisuzuki.com/

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