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A FINANCIAL ANALYSIS OF MARUTI SUZUKI INDIA LTD 1.

1 KEY POINTS:

Type

Public (BSE532500, NSE MARUTI)


Automobiles - Passanger cars

Industry

Founded Headquarters

1981 (as Maruti Udyog Limited) Delhi, India Mr. Shinzo Nakanishi, Managing Director and CEO R C BHARGAVA Automobiles-Passenger

Key people

CHAIRMAN

Products

cars

MANUFACTURING PLANTS

Gurgaon, Manesar

Revenue Employees Parent Website

US$4.8 billion (2009)


7500 Suzuki Motor Corporation MarutiSuzuki.com

1.2 INTRODUCTION:

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A FINANCIAL ANALYSIS OF MARUTI SUZUKI INDIA LTD


Maruti Suzuki India Limited (Hindi: ) 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 Suzukis 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.

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A FINANCIAL ANALYSIS OF MARUTI SUZUKI INDIA LTD


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 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]

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A FINANCIAL ANALYSIS OF MARUTI SUZUKI INDIA LTD


1.3 Current sales of automobiles
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. 2. 3. 4. 5. 6. 7.

1000 (19901994) Zen (19932006) Esteem (19942008) Baleno (19992007) Zen Estilo (20062009) Versa (20012010) Grand Vitara XL7 (20032007)

1.4 Milestones :
2009 - MSIL adopts voluntary fuel disclosure.First shipment of A-star leaves Mundra Port-jan 10.A-star bags,Zigwheelscar of the year awardA-star rated best small car of the year-autocar-UTVi. 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

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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 Bank The Royal Bank of Scotland N.V.

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A FINANCIAL ANALYSIS OF MARUTI SUZUKI INDIA LTD

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A FINANCIAL ANALYSIS OF MARUTI SUZUKI INDIA LTD 1.8 SHARE HOLDING PATTERN
Description
+

No. of Shareholders 0.00

No. of Shares 0.00

% of Share 0.00

DEMAT 0.00

Promoter and Promoter Group Indian Promoters

Foreign Promoters

5.00

156618440

54.21

0.00

Total of Promoter and Promoter Group Public Shareholding Institutions

5 540.00

156618440 107187371

54.21 37.10 107187371

Non-Institutions

122054.00

25104249

8.69

25099223

Total Public Shareholding Total of Promoter and Public Shareholding Shares held by Custodians and against which Depository Receipts have been issued American Depository Receipts GDRs Others

122594 122599 0 0.00 0.00 0.00

132291620 288910060 0 0.00 0.00 0.00

45.79 100 0.00 0.00 0.00 0.00

132286594 132286594 0 0.00 0.00 0.00

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Grand Total Note Please Use ' + ' Symbol For : Grouping and ' - ' For Ungrouping 122599 288910060 100 132286594

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.

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A FINANCIAL ANALYSIS OF MARUTI SUZUKI INDIA LTD

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

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A FINANCIAL ANALYSIS OF MARUTI SUZUKI INDIA LTD


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

TREND ANALYSIS OF BALANCE SHEET


PARTICULARS SHRE CAPITAL TOTAL RESERVES TOTAL DEBT NET BLOCK INVESTMENTS TOTAL CURRENT ASSETS TOTAL CURRENT LIABILITIES NET CURRENT ASSETS (base year: Mar-06) 31-3-2006 31-3-2007 31-03-08 31-03-09 31-03-10 100 100 100 100 100 100 126.40 155.82 173.33 220.24 100 879.78 1255.51 974.76 1145.61 100 156.90 194.46 240.14 296.41 100 166.21 252.57 154.70 349.87 100 100 100 102.81 126.52 76.22 82.62 142.57 15.43 147.29 172.80 118.69 (A-2) 100.84 180.46 11.60

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A FINANCIAL ANALYSIS OF MARUTI SUZUKI INDIA LTD

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.

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A FINANCIAL ANALYSIS OF MARUTI SUZUKI INDIA LTD

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 companys 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

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SOURCES OF FUNDS SHREHOLDERS FUNDS Capital Reserves & Surplus 2% 95% 97% LOAN FUNDS Secured Loans Unsecured Loans 1% 1% 7% 9% 7% 0.21% 6.21% 2% 88% 90% 2% 87% 89% 1% 90% 92% 1.13% 91.38% 92.51% Mar-06 Mar-07 Mar-08 Mar-09 Mar-10

Deferred Tax Deferred Tax Liabilities Deferred Tax Assets 4% -2% 4% -2% 3% -1% 2% -1% 1.72% -0.65% 1.07%

Total

100%

100%

100%

100% 100.00%

APPLICATION OF FUNDS FIXED ASSETS Gross Block Less: Depreciation 88% -58% 30% Capital Work-in-Progress 2% 32% 80% -46% 35% 3% 38% 77% -42% 35% 8% 43% 86% -46% 40% 8% 48% 81.34% -42.07% 39.28% 3.03% 42.31%

INVESTMENTS

37%

45%

55%

31%

56.10%

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CURRENT ASSETS,LOANS AND ADVANCES Inventories Sundry Debtors Cash and Bank Balances Other Current Assets Loans and Advances 16% 12% 25% 1% 14% 67% LESS: CURRENT LIABILITIES AND PROVISIONS Current Liabilities Provisions 27% 8% 35% 26% 6% 33% 26% 4% 30% 30% 4% 33% 22.98% 4.91% 27.89% 9% 10% 19% 1% 12% 50% 11% 33% 11% 7% 3% 9% 9% 19% 1% 16% 54% 9.45% 6.33% 0.77% 0.66% 12.28% 29.49%

Net Current Assets

31%

17%

3%

21%

1.60%

TOTAL

100%

100%

100%

100% 100.00%

MAR2006 SHREHOLDERS FUNDS NET BLOCK INVESTMENTS 97% 30% 37%

MAR2007 90% 35% 45%

MAR2008 89% 35% 55%

MAR2009 92% 40% 31%

MAR2010 92.51% 39.28% 56.10%

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CURRENT ASSETS CURRENT LIABILITIES Net Current Assets

67% 35% 31%

50% 33% 17%

33% 30% 3%

54% 33% 21%

29.49% 27.89% 1.60%

(Graph A-3)

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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.

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CHEPTER-3
3.1

Trend analysis of Profit & loss Account

PROFIT & LOSS A/C


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

TREND ANALYSIS OF PROFIT & LOSS A/C (base year: Mar-06)


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

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(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.

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3.2 TREND ANALYSIS OF BALANCE SHEET & PROFIT & LOSS A/C (In Million Rs.) PARTICULAR NET BLOCK NET SALES PAT Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 16952 26597 32965 40708 50247 120034 145922 178603 203583 289585 11891 15620 17308 12187 24976

TREND ANALYSIS OF BALANCE SHEET & PROFIT & LOSS A/C (base year: Mar-06) PARTICULAR NET BLOCK NET SALES PAT Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 100.00 156.90 194.46 240.14 296.41 100.00 121.57 148.79 169.60 241.25 100.00 131.36 145.56 102.49 210.04

(Graph A-5)

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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.

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3.3 Vertical Analysis of Profit & Loss Account


PROFIT & LOSS A/C Mar2006 INCOME Gross Sales less:Excise Duty 123% 23% 117% 17% 117% 17% 113% 13% 110% 10% Mar07 Mar08 Mar09 Mar10

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 & Components Purchase of Traded Goods Consumption of Stores Employees Remuneration & Benefits Manufacturing,Administrative & other Expencies Selling & Distribution Expenses 2% 5% 3% 2% 6% 3% 2% 6% 3% 2% 8% 4% 2% 6% 3% 4% 1% 4% 1% 4% 1% 4% 1% 3% 1% 74% 69% 73% 74% 74%

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TOTAL Less: Vehicals for Own Use Add: Increase/Decrease in Work in Progress and finished Goods & Spares Parts

89%

86%

89%

92%

89%

-2%

1%

-2%

1%

-1% 0%

Total

87%

87%

88%

93%

89%

EBIDTA Interest Depreciation

17%

18%

18%

12%

15%

2% 3%

2% 2%

3% 4%

3% 4%

3% 3%

PROFIT BEFORE TAX Less: Tax Expense-Current tax Deferred tax Fringe Benefit Tax Previous Years

15% 5%

16% 4% 1%

14% 4%

8% 2%

12% 4%

PROFIT AFTER TAX

10%

11%

10%

6%

9%

MAR2006 MAR2007 NET SALES 100% 100%

MAR2008 MAR2009 100% 100%

MAR2010 100%

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TOTAL EXPENDITURE EBIDTA PBT PAT 89% 17% 15% 10% 86% 18% 16% 11% 89% 18% 14% 10% 92% 12% 8% 6% 89% 15% 12% 9%

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(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

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A FINANCIAL ANALYSIS OF MARUTI SUZUKI INDIA LTD 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]

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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 CURRENT RATIO: CURRENT ASSETS CURRENT LIABILITIES 37409 19771 38459 25015 30909 28187 55100 34165 37724 35678 2007 2008 2009 2010

RESULT IN (:)

1.89

1.54

1.10

1.61

1.06

C R E TR T U R N A IO 2 0 .0 1 0 .5 1 0 .0 0 0 .5 0 0 .0 20 06 20 07 20 08 YA S ER 20 09 21 00

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(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 companys current ratio is 1.06 in 2010 which is lowest with compare to other four years which is also lower than industrys 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

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QUICK ASSETS: (Current assets-Inventories) QUICK LIABILITIES: (Current Liabilities-Bod) RESULT (:) 1.52 1.30 0.83 1.37 0.73 18825 24087 24662 33616 35003 28597 31327 20529 46077 25636

Q IC R T U K A IO
2 0 .0 1 0 .5 1 0 .0 0 0 .5 0 0 .0 20 06 20 07 20 08 20 09 21 00

(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. Companys liquid position was very comfortable in all years excluding 2008 & 2010 years. In the year 2010, Companys liquid position is not good. Company should take immediate step to recover its liquid position.

(B). PROFITABILITY RATIO

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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) GROSS PROFIT RATIO: GROSS PROFIT Net Sales result in (%) 22278 120034 18.55% 32931 145922 22.56% 32631 178603 18.27% 35588 203583 21.18% 53921 289585 18.62% 2006 2007 2008 2009 2010

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GROSS PROFIT RATIO


25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 2006 2007 2008 2009 2010

Series1 18.55 22.56 18.27 21.18 18.62

(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

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OPERATING PROFIT RATIO: SALES OPERATING PROFIT Result in (%) 2006 120034 17704 14.75% 2007 145922 23174 15.88% 2008 178603 19063 10.67% 2009 203583 15973 7.85% 2010 289585 30668 10.59%

OPERATING RATIO
20.00% 15.00% 10.00% 5.00% 0.00% 2006 2007 2008 2009 2010

(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.

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A FINANCIAL ANALYSIS OF MARUTI SUZUKI INDIA LTD Company operating ratio in 2006 was 14.75%, while in 2010 it is 10.59% means it is decreasing compare to 2006. In 2007 compnys 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 Sales


NET PROFIT RATIO: NET PROFIT SALES RESULT IN % 2006 11891 120034 9.91%

x 100

2007 15620 145922 10.70%

2008 17308 178603 9.69%

2009 12187 203583 5.99%

2010 24976 289585 8.62%

NET PROFIT RATIO


2010 2009 2008 2007 2006
5.99% 9.69% 10.70% 9.91% 8.62%

(Graph A-11)

INTERPRETATION:
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A FINANCIAL ANALYSIS OF MARUTI SUZUKI INDIA LTD 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 EBIT TOTAL ASSETS RESULT (%) 17704 56022 31.60% 2007 23174 76522 30.28% 2008 19063 94857 20.10% 2009 15973 101989 15.66% 2010 30668 127935 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

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ROI
40.00% 30.00% 20.00% 10.00% 0.00% 2006 2007 2008 2009 2010

Series1 31.60 30.28

20.10 15.66 23.97

(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 Suzukis 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 industrys ROI is as follows: Year: 2010: 21.22% 2009: 5.37% 2008: 20.57% Comparing to Companys ROI with Industry, we can interpret that companys 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

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RATE OF RETURN ON EQUITY(ROE) MAR-06 NET PROFIT(PAT) NET WORTH RESULT IN (%) MAR-07 11891 54526 21.81% MAR-08 15620 68539 22.79% MAR-09 17308 84154 20.57% MAR-10 12187 93449 13.04% 24976 118351 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 firms 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 Shareholderss funds.

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Automobile industrys ROI is as follows: Year: 2010: 22.99% 2009: 7.68% 2008: 22.78% Comparing with industry, Companys ROE is 2% lower than industry in the years 2010 & 2008. But in 2009, Comapanys ROE is around 5% higher than industry.

(C) ASSET TURN OVER RATIO


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 S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN.
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[C-3] INVENTORY TURNOVER [C-4] DEBTORS TURNOVER

[C-1]. TOTAL ASSET TURNOVER


Total asset turnover = Sales Total asset ( In time)
TOTAL ASSETS TURNOVER: SALES TOTAL ASSETS RESULT IN TIMES 2006 120034 56022 2.14 2007 145922 76522 1.91 2008 178603 94857 1.88 2009 203583 101989 2.00 2010 289585 127935 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.

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(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 industrys Total Assets turnover is as follows: Year: 2010: 2.83 2009: 2.39 2008: 2.77 Comparing with industry, Companys Assets turnover is low. So Company should taken step to maintain assets turnover with the industry.

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A FINANCIAL ANALYSIS OF MARUTI SUZUKI INDIA LTD [C-2]. NET FIXED TURNOVER: Net Fixed Turnover = Sales Net Fixed Assets ( In time)
NET FIXED TURNOVER: SALES NET FIXED ASSETS RESULT IN TIMES: 2006 120034 16952 7.08 2007 145922 26597 5.49 2008 178603 32965 5.42 2009 203583 40708 5.00 2010 289585 50247 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 companys Significant Utilisation of Net fixed assets. Automobile industrys Total Assets turnover is as follows: Year: 2010: 3.25 2009: 2.55 2008: 3.25 Comparing with industry, Companys net fixed assets turnover is higher than industry which is good for the company.

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A FINANCIAL ANALYSIS OF MARUTI SUZUKI INDIA LTD [C-3]. INVENTORY TURNOVER: (a). Inventory Turnover = Cost of goods Sold Average Inventories ( In time)

(b).Average age of inventory = Average inventory Cost of good sold

x 360

This ratio shows the number of times a companys 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 Cost of Goods Sold Average Inventories Result in Times AVERAGE AGE OF INVENTORIES

2007 112991 7972 14.17 25.40

2008 145972 8756 16.67 21.59

2009 167995 9701.5 17.32 20.79

2010 235664 10555.5 22.33 16.12

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(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 companys profits and reduced interest and storage charges.

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[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 companys credit and collection policy.
DEBTORS' TURNOVER Sales Average debtors Resultin Times AVERAGE AGE OF DEBTORS 2007 145922 6968 20.94 17.19 2008 178603 7014 25.46 14.14 2009 203583 7967 25.55 14.09 2010 289585 8738 33.14 10.86

(Graph A-17)

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INTERPRETATION:
(a).DEBTORSS RATIO: Chart shows that Debtorss 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 companys 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 Companys liquidity boosts. Automobile industrys Debtorss turnover is as follows in days: Year: 2010: 10 days 2009: 19 days 2008: 10 days Comparing to industry, companys average age of debtors was slightly change in the year 2010. But in the year 2009, Companys debtors turnover ratio was better than industry.

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(D) FINANCE STRUCTURE RATIO


Finance structure ratio indicates the relative mix or blending of owners 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 debtequity 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

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[D-1] EQUITY RATIO (PROPRIETARY RATIO)


EQUITY RATIO = NET WORTH TOTAL CAPITAL EMPLOYED
EQITY RATIO NET WORTH TOTAL CAPITAL EMPLOYED RESULTIN (:) 2006 54526 55326 0.99 2007 68539 74212 0.92 2008 84154 89156 0.94 2009 93449 99777 0.94 2010 118351 122550 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.

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[D-2] DEBT RATIO


DEBT RATIO = LONG-TERM DEBT TOTAL CAPITAL EMPLOYED
Column1 DEBT RATIO: LONG-TERM DEBT TOTAL CAPITAL EMPLOYED RESULT IN (:) 400 54926 0.01 5673 74212 0.08 5002 89156 0.06 6328 99777 0.06 4199 122550 0.03 Column2 Column3 Column4 Column5 Column6

(Graph A-19)

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

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[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.

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A FINANCIAL ANALYSIS OF MARUTI SUZUKI INDIA LTD [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: EBIT INTEREST RESULT 2006 17704 204 86.78 2007 23174 376 61.63 2008 19063 596 31.98 2009 15973 510 31.32 2010 30668 335 91.55

(Graph A-21)

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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.

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(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.

2006 EARNING PER SHARE(EP S) 2010NET PROFIT TOTAL NO. 11891 288.91 15620 288.91

2007

2008

2009

17308 288.91

12187 288.91

24976 288.91

RESULT IN PER SHARE

41.16

54.07

59.91

42.18

86.45

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(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.
2006 2007 2008 2009

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DIVIDEND PAY-OUT RATIO(DP S) 2010DIVIDEND PER SHARE EARNIG PER SHARE 3.5 41.16 4.5 54.07 5 59.91 3.5 42.18 6 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.

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[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

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= 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.

[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, firms 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

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5. DU PONT CHART ROI (in %) 2009 2010 15.66% 23.95%

2008 20.10%

PROFIT MARGIN (in %) 2008 2009 2010 10.67% 7.85% 10.59%

EBIT(in RS.) 2008 2009 19063 15973

TATO (TOTAL ASSET TURNOVER IN TIMES) 2008 2009 2010 1.88 2.00 2.26
2010 289585

2010 30668

TOTAL SALE (in RS) 2008 2009 178603 203583

NET FIXED ASSETS (in RS) 2008 2009 32965 40708

2010 50247

NET WORKING (in RS) 2008 2009 2722 20935

2010 2046

INVESTMENT (in RS) 2008 2009 2010 51807 31733 71766

TOTAL FIXED ASSETS 2008 2009 2010 72853 87206 104067

ACCUMULATED DEPRECIATION 2008 2009 2010 39888 46498 53820

TOTAL CURRENT ASSETS 2008 = 20506+10403=30909 2009 = 38772+16328=55100 2010 = 22017+15707=37724

CURRENT LIABILITIES + PROVISIONS 2008 =24492+3695=28187 2009 = 30358+3807=34165 2010 = 29394+6284=35678

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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 Suzukis 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

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was 51807(mill),which was decreased in 2009 up to 31733(mill),while it was raised in 2010 up to 71766(mill).it shows companys 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

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COMPARISON WITH PEER AND FUTURE DEVELOPMENT
Year 2010

PARTICULAR Gross Profit Margin (%) Net Profit Margin (%) Return On Net Worth (%) Current Ratio Quick Ratio Interest Cover Inventory Turnover Ratio(times) Debtors Turnover Ratio(times) Total Assets Turnover Ratio EPS

MARUTI SUZUKI 18.62 8.62 21.10 1.06 0.73 91.55 22.33 33.14 2.26 86.45

TATA MOTORS 8.84 6.28 14.96 0.62 0.46 2.77 13.07 18.02 1.13 39.26

MAH & MAH 14.29 11.08 26.74 1.11 0.86 18.90 17.91 16.09 1.74 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 Suzukis 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 Suzukis 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%.

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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 Suzukis net profit ratio remained only 8.62%. So company should take step to increase profit. Comaparing with peer group companies, Maruti Suzukis Return on equity remained 5.5% less than Mah & Mah. While Tata motorss 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 & Mahs 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 Suzukis 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 companys 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.

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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. Companys credit and collection policy

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A FINANCIAL ANALYSIS OF MARUTI SUZUKI INDIA LTD

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.

S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN.

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A FINANCIAL ANALYSIS OF MARUTI SUZUKI INDIA LTD

ANNEXURE

[A.] BALANCE SHEET

[B.]PROFIT & LOSS STATEMENT

S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN.

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A FINANCIAL ANALYSIS OF MARUTI SUZUKI INDIA LTD

[A.] BALANCE SHEET OF 5 YEARS


SOURCES OF FUNDS
SHREHOLDERS FUNDS Capital Reserves & Surplus LOAN FUNDS Secured Loans Unsecured Loans Deferred Tax Deferred Tax Liabilities Deferred Tax Assets

2006
1445 53081 54526 717

2007
1445 67094 68539 635 5673 6308 2776 -1101 1675 76522

2008
1445 82709 84154 1 9001 9002 2697 -996 1701 94857

2009
1445 92004 93449 1 6988 6989 2340 -789 1551 101989

2010
1445 116906 118351 265 7949 8214 2206 -836 1370 127935

1990 -1211 779 56022

Total APPLICATION OF FUNDS FIXED ASSETS Gross Block Less: Depreciation Capital Work-in-Progress

49546 -32594 16952 920 17872 20512 8812 6461 14016 458 7662 37409

61468 -34871 26597 2389 28986 34092 7132 7474 14228 384 9241 38459 20110 4905 25015 13444 76522

72853 -39888 32965 7363 40328 51807 10380 6555 3240 331 10403 30909 24492 3695 28187 2722 94857

87206 -46498 40708 8613 49321 31733 9023 9378 19390 981 16328 55100 30358 3807 34165 20935 101989

104067 -53820 50247 3876 54123 71766 12088 8099 982 848 15707 37724 29394 6284 35678 2046 127935

INVESTMENTS CURRENT ASSETS,LOANS AND ADVANCES Inventories Sundry Debtors Cash and Bank Balances Other Current Assets Loans and Advances

LESS: CURRENT LIABILITIES AND PROVISIONS Current Liabilities 15058 Provisions 4713 19771 Net Current Assets TOTAL 17638 56022

S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN.

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A FINANCIAL ANALYSIS OF MARUTI SUZUKI INDIA LTD [B.] PROFIT & LOSS A/C
2006 INCOME Gross Sales less:Excise Duty Net Sales Income from Services other Income TOTAL INCOME EXPENDITURE Consumption of Raw-Material & Components Purchase of Traded Goods Consumption of Stores Employees Remuneration & Benefits Manufacturing,Administrative & other Expencies Selling & Distribution Expences TOTAL EXPENDITURE Less:Vehicals for Own Use Add: Increase/Decrease in Work in Progress and finished Goods & Spares Parts Total EBIDTA Interest Depreciation PROFIT BEFORE TAX Less: Tax Expence-Current tax Deferred tax Fringe Benefit Tax Previous Years PROFIT AFTER TAX Add: Brought forward from previous year's account less: Loss of Maruti Suzuki on amalgamation less:Impact of transtion adjustment for 'Employee Benefit Profit available for appropriation Less:Appropriation Debenture Redemption Reserve General Reserve Proposed Dividend Corporate Dividend Tax Balance Carriend Forward to Balance Sheet 147043 27009 120034 488 4292 128814 88779 4644 824 2287 6226 3560 106320 67 -1997 104256 20558 204 2854 3058 17500 5873 -321 57 11891 34421 2007 171442 25520 145922 617 5984 152523 101374 6159 1097 2884 8298 4999 124771 143 2007 126635 25888 376 2714 3090 22798 6089 897 67 125 15620 43939 84 4 50471 17 1562 1300 219 56373 2008 209493 30890 178603 759 8371 187733 130342 7771 1470 3562 10793 5602 159540 198 -2917 156425 31308 596 5682 6278 25030 7509 26 98 89 17308 56373 2009 230852 27269 203583 954 10001 214538 150598 7256 1978 4711 15685 7382 187610 223 2818 190205 24333 510 7065 7575 16758 4592 -118 97 12187 70257 2010 318073 28488 289585 1404 10209 301198 214881 9050 2432 5456 17938 9160 258917 296 -1933 256688 44510 335 8250 8585 35925 11230 -281 24976 80042

46312 31 1189 1011 142 43939

73681

82444

105018

1731 1445 248 70257

1219 1011 172 80042

2498 1733 288 100499

BIBLIOGRAPHY

S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN.

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A FINANCIAL ANALYSIS OF MARUTI SUZUKI INDIA LTD 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 www.marutisuzuki.com www.moneycontrol.com www.aceanalyser.com

S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN.

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