WORKING CAPITAL MANAGEMENT OF MARUTI UZUKI INDIA LTD

A PROJECT REPORT

Under the guidance of SOUVIK GUHA

Submitted by SUSMITA BISWAS

ROLL NO. : 1521000681

In partial fulfillment of the requirement for the award of the degree Post Graduate Diploma
Management in Finance.

[Study Center Kolkata Center]

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ACKNOWLEDGEMENT:

I thank to the people who helped and supported me during the making of this Project and
the report.

My deepest thanks to lecturer as per name you mentioned in Synopsis the guide of the
project for guiding and correcting various documents of mine with attention and care.

I express my thanks to the Learning Centre and my faculties for their guidance, help and
support.

Student Name: SUSMITA BISWAS

Date: 23/07/2016

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DECLARATION:

I, THE UNDERSIGNED SUSMITA BISWAS, HERE BY DECLARETHAT THE PROJECT Working

Capital Ma age e t i Maruti Suzuki I dia LTD IS A RECORD OF INDEPENDENT RESEARCH

WORK CARRIED OUT BY ME UNDER THE SUPERVISION AND GUIDANCE OF

Mr. SOUVIK GUHA.

DATE: 23/07/2016 (SUSMITA BISWAS)

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TABLE OF CONTENTS: Page no.

Certificate

Declaration

Acknowledgement

CHAPTER CONTENTS:

Chapter- 1

a) Introduction 6
b) Objectives 16
c) Problem statement 17

Chapter- 2

a) Company profile 19

Chapter- 3

Research Methodology 31

Chapter 4

Analysis and Interpretation 34

Chapter- 5

a) Recommendations 59
b) Conclusion 60
c) Limitation 60
d) Bibliography 61

Appendix 62

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CHAPTER 1

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INTRODUCTION TO THE STUDY:

THEORY OF WORKING CAPITAL:

Financial Management is that managerial activity which is concerned with the planning and
o t olli g of the fi s fi a ial esou es. Fi a ial a age e t fo uses o fi a e
manager performing various tasks as Budgeting, Financial Forecasting, Cash Management,
Credit Administration, Investment Analysis, Funds Management, etc. which help in the
process of decision making. Financial management includes management of assets and
liabilities in the long run and the short run.

The management of fixed and current assets, however, differs in three important ways:
Firstly, in managing fixed assets, time is very important; consequently discounting and
compounding aspects of time element play an important role in capital budgeting and a
minor one in the management of current assets. Secondly, the large holdings of current
assets, espe iall ash, st e gthe fi s li uidit positio ut it also edu es its o e all
profitability. Thirdly, the level of fixed as well as current assets depends upon the expected
sales, but it is only the current assets, which can be adjusted with sales fluctuation in the
short run. Here, we will be focusing mainly on management of current assets and current
liabilities. Management of current assets needs to seek an answer to the following question:

1. Why should you invest in current assets?

2. How much should be invested in each type of current assets?
3. What should be the proportion of short term and long-term funds to finance the current
assets?
4. What sources of funds should be used to finance current assets?

WORKING CAPITAL MANAGEMENT:

Working Capital is the lifeblood and controlling nerve of an organization. ONGC being a large
organization, dealing in exploration and exploitation of hydrocarbons requires a large
amount of funds. The complexity and risks involved in exploration business like whole
procedure of search of oil, geographical and physical conditions, day to day reduction in oil
reserves and many other things tend to maintain a substantial amount of working capital.
Hence, there is a need for proper management of working capital, so that day by day
operations do not hamper; at the same time there would not be any idle investment in
working capital. Working Capital is the amount of capital that a business has available to
meet the day to day cash requirements of its operations. It is concerned with the problem
arise in attempting to manage the current assets, the current liabilities and the inter
relationship that exist between them. Working Capital is the difference between resources
in cash or readily convertible into cash and organizational commitments for which cash will
soon be required or within one year without undergoing a diminution in value and without
disrupting the operation of the firm. It also refers to the amount of current Assets that
exceeds current Liabilities.

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Working Capital refers to that part of the firm capital, which is required for financing Short-
Term or Current Assets such as Cash, Marketable Securities, Debtors and Inventories.
Working Capital is also known as Revolving or Circulating Capital or Short Term Capital. The
goal of o ki g apital a age e t is to a age the fi s u e t assets a d u e t
liabilities in such way that the satisfactory level of working capital is mentioned. The current
should be large enough to cover its current liabilities in order to ensure a reasonable margin
of the safety.

Capital required for a business can be classifies under two main categories:

Fi ed Capital

Wo ki g Capital

Every business needs funds for two purposes for its establishments and to carry out day to
day operations. Long term funds are required to create production facilities through
purchase of fixed assets such as plant and machinery, land and building, furniture etc.
I est e ts i these assets a e ep ese ti g that pa t of fi s apital hi h is lo ked o a
permanent or fixed basis and is called fixed capital. Funds are also needed for short term
purposes for the purchasing of raw materials, payments of wages and other day to day
expenses etc. These funds are known as working capital. In simple words, Working capital
efe s to that pa t of the fi s apital hi h is e ui ed fo fi a i g sho t te o u e t
assets such as cash, marketable securities, debtors and inventories.

CONCEPTS OF WORKING CAPITAL:

There are two concepts of working capital:

Bala e heet o epts

Ope ati g C le o i ula flo o ept

BALANCE SHEET CONCEPT:

There are two interpretation of working capital under the balance sheet concept:

G oss Wo ki g Capital
Net Wo ki g Capital

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The term working capital refers to the Gross working capital and represents the amount of
funds invested in current assets. Thus, the gross working capital is the capital invested in
total current assets of the enterprises. Current assets are those assets which are converted
into cash within short periods of normally one accounting year. Example of current assets is:

Constituents of Current Assets:

Cash i ha d a d Bank balance

Bills e ei a le
u d De to s
ho t te Loa s a d Ad a es

Inventories of Stock as:

a) Raw Materials
b) Work in Process
c) Stores and Spaces
d) Finished Goods

Te po a I est e ts of u plus Fu ds
P epaid E pe ses
A ued I comes

The term working capital refers to the net working capital. Net working capital is the excess
of current assets over current liabilities or say:

Net Working Capital = Current Assets Current Liabilities.

NET WORKING CAPITAL MAY BE NEGATIVE OR POSITIVE:

When the current assets exceed the current liabilities, the working capital is positive and the
negative working capital results when the current liabilities are more than the current
assets. Current liabilities are those liabilities which are intended to be paid in the ordinary
course of business within a short period of normally one accounting year of the current
assets or the income of the business. Examples of current liabilities are:

CONSTITUENTS OF CURRENT LIBILITIES:

Bills Pa a le
u d C editors or Account Payable
A ued o Outsta di g E pe ses
ho t te Loa s, Ad a es a d Deposits
Di ide ds Pa a le
Ba k O e d aft
P o isio fo Ta atio , If does ot a ou t to app op iatio of p ofits.

The gross working capital concept is financial or going concern concept whereas net working
capital is an accounting concept of working capital.

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OPERATING CYCLE OR CIRCULATING CASH FORMAT:

Wo ki g Capital efe s to that pa t of fi s apital hi h is e ui ed fo fi a i g sho t

term or current assets such as cash, marketable securities, debtors and inventories. Funds
thus invested in current assets keep revolving fast and being constantly converted into cash
and these cash flows out again in exchange for other current assets. Hence it is also known
as revolving or circulating capital. The circular flow concept of working capital is based upon
this operating or working capital cycle of a firm. The cycle starts with the purchase of raw
material and other resources.

And ends with the realization of cash from the sales of finished goods. It involves purchase
of raw material and stores, its conversion into stocks of finished goods through work in
progress with progressive increment of labor and service cost, conversion of finished stocks
into sales, debtors and receivables and ultimately realization of cash and this cycle
continuous again from cash to purchase of raw materials and so on. The speed time of
duration required to complete one cycle determines the requirements of working capital
longer the period of cycle, larger is the requirement of working capital.

Receivable conversion period (RCP) Raw material storage conversion period (RMSCP)

Cash received form Debtors and paid to suppliers of raw materials.

Sales of finished Raw materials

Goods introduced into process

Finished Goods Produced

Finished goods conversion period (FGCP) Work in process Period Conversion period
(WIPCP)

The gross operating cycle of a firm is equal to the length of the inventories and receivables
conversion periods. Thus,

Where,

RMCP = Raw Material Conversion Period

WIPCP = Work in- Process Conversion Period

FGCP = Finished Goods Conversion Period

RCP = Receivables Conversion Period

However, a firm may acquire some resources on credit and thus defer payments for certain
period. In that case, net operating cycle period can be calculated as below:

Further, following formula can be used to determine the conversion periods.

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Raw Material Conversion Period = Average Stock of Raw Material/Raw Material
Consumption per day

Work in process Conversion Period = Average Stock of Work-in-Progress/Total Cost of

Production per day

Finished Goods Conversion Period = Average Stock of Finished Goods/Total Cost of Goods
sold per day

Receivables Conversion Period = Average Accounts Receivables/Net Credit Sales per day

Payable Deferral Period = Average Payable/Net Credit Purchase per day

IMPORATNCE OR ADVANTAGE OF ADEQUATE WORKING CAPITAL:

Working capital is the life blood and nerve centre of a business. Just a circulation of a blood
is essential in the human body for maintaining life, working capital is very essential to
maintain the smooth running of a business. No business can run successfully without an
adequate amount of working capital. The main advantages of maintaining adequate amount
of working capital are as follows:

ol e of the Busi ess

Good ill
Eas Loa s
Cash dis ou ts
egula suppl of a Mate ials
egula pa e ts of sala ies, ages & othe da to da o it e ts.
E ploitatio of favorable market conditions
A ilit of isis
Qui k a d egula etu o i est e ts
High o als

DISADVANTAGES OF INADEQUATE WORKING CAPITAL:

Every business needs some amounts of working capital. The need for working capital arises
due to the time gap between production and realization of cash from sales. There is an
operating cycle involved in sales and realization of cash. There are time gaps in purchase of
raw material and production; production and sales; and realization of cash.
Thus working capital is needed for the following purposes:

Fo the pu pose of a ate ial, o po e ts a d spa es.

To pa ages a d sala ies
To i u da -to-day expenses and overload costs such as office expenses.
To eet the selli g osts as pa ki g, ad e tisi g, etc.
To p o ide edit fa ilities to the usto e .
To ai tai the i e to ies of the a ate ial, o k-in-progress, stores and spares and
finished stock.

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For studying the need of working capital in a business, one has to study the business under
varying circumstances such as a new concern requires a lot of funds to meet its initial
requirements such as promotion and formation etc. These expenses are called preliminary
expenses and are capitalized. The amount needed for working capital depends upon the size
of the company and ambitions of its promoters. Greater the size of the business unit,
generally larger will be the requirements of the working capital.[3]
The requirement of the working capital goes on increasing with the growth and expensing of
the business till it gains maturity. At maturity the amount of working capital required is
called normal working capital.
There are others factors also influence the need of working capital in a business.

Need of working capital management

The need for working capital gross or current assets cannot be over emphasized. As already
observed, the objective of financial decision making is to maximize the shareholders wealth.
To achieve this, it is necessary to generate sufficient profits can be earned will naturally
depend upon the magnitude of the sales among other things but sales cannot convert into
cash. There is a need for working capital in the form of current assets to deal with the
problem arising out of lack of immediate realization of cash against goods sold. Therefore
sufficient working capital is necessary to sustain sales activity. Technically this is refers to
operating or cash cycle. If the company has certain amount of cash, it will be required for
purchasing the raw material may be available on credit basis. Then the company has to
spend some amount for labour and factory overhead to convert the raw material in work in
progress, and ultimately finished goods. These finished goods convert in to sales on credit
basis in the form of sundry debtors. Sundry debtors are converting into cash after expiry of
credit period. Thus some amount of cash is blocked in raw materials, WIP, finished goods,
and sundry debtors and day to day cash requirements. However some part of current assets
may be financed by the current liabilities also. The amount required to be invested in this
current assets is always higher than the funds available from current liabilities. This is the
precise reason why the needs for working capital arise.

Gross working capital and Net wo ki g Capital

There are two concepts of working capital management.

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1. Gross working capital

G oss o ki g apital efe s to the fi s i est e t. Cu e t assets a e the assets hi h

can be convert in to cash within year includes cash, short term securities, debtors, bills
receivable and inventory.

2. Net working capital

Net working capital refers to the difference between current assets and current liabilities.
Current liabilities are those claims of outsiders which are expected to mature for payment
within an accounting year and include creditors, bills payable and outstanding expenses. Net
working capital can be positive or negative.

Efficient working capital management requires that firms should operate with some amount
of net working capital, the exact amount varying from firm to firm and depending, among
other things; on the nature of industries.net working capital is necessary because the cash
outflows and inflows do not coincide. The cash outflows resulting from payment of current
liabilities are relatively predictable. The cash inflow are however difficult to predict. The
more predictable the cash inflows are, the less networking capital will be required.

The concept of working capital was, first evolved by Karl Marx. Ma used the te a ia le
apital ea s outla s fo pa olls ad a ed to o ke s efo e the o pletion of work. He
o pa ed this ith o sta t apital hi h a o di g to hi is othi g ut dead la ou .
This a ia le apital is othi g age fu d hi h e ai s lo ked i te s of fi a ial
management, in work-in- process along with other operating expenses until it is released
through sale of finished goods. Although Marx did not mentioned that workers also gave
credit to the firm by accepting periodical payment of wages which funded a portioned of
W.I.P, the concept of working capital, as we understand today was embedded in his
a ia le apital .

CLASSIFICATION OR KIND OF WORKING CAPITAL:

Working capital may be classified in two ways:

O the asis of o ept
O the asis of ti e

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On the basis of concept, working capital is classified as gross working capital and net
working capital. The classification is important from the point of view of the financial
manager.
On the basis of time, working capital may be classified as:
Pe a e t o Fi ed o ki g apital.
Te po a o Va ia le o ki g apital.

The operating cycle creates the need for current assets (working capital). However the need
does not come to an end after the cycle is completed to explain this continuing need of
current assets a destination should be drawn between permanent and temporary working
capital.

1) Permanent working capital

The need for current assets arises, as already observed, because of the cash cycle. To carry
on business certain minimum level of working capital is necessary on continues and
uninterrupted basis. For all practical purpose, this requirement will have to be met
permanent as with other fixed assets. This requirement refers to as permanent or fixed
working capital.

2) Temporary working capital

Any amount over and above the permanent level of working capital is temporary,
fluctuating or variable, working capital. This portion of the required working capital is
needed to meet fluctuation in demand consequent upon changes in production and sales as
result of seasonal changes.

Graph shows that the permanent level is fairly castanet; while temporary working capital is
fluctuating in the case of an expanding firm the permanent working capital line may not be
horizontal.

This may be because of changes in demand for permanent current assets might be
increasing to support a rising level of activity.

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Determinants of working capital

The amount of working capital is depends upon a following factors.

1. Nature of business
Some businesses are such, due to their very nature, that their requirement of fixed capital is
more rather than working capital. These businesses sell services and not the commodities
and that too on cash basis. As such, no founds are blocked in piling inventories and also no
funds are blocked in receivables. E.g. public utility services like railways, infrastructure
oriented project etc. there requirement of working capital is less. On the other hand, there
are some businesses like trading activity, where requirement of fixed capital is less but more
money is blocked in inventories and debtors.

2. Length of production cycle

In some business like machine tools industry, the time gap between the acquisition of raw
material till the end of final production of finished products itself is quite high. As such
amount may be blocked either in raw material or work in progress or finished goods or even
in debtors. Naturally there need of working capital is high.

3. Size and growth of business

In very small company the working capital requirement is quit high due to high overhead,
higher buying and selling cost etc. as such medium size business positively has edge over the
small companies. But if the business start growing after certain limit, the working capital
requirements may adversely affect by the increasing size.

4. Business/ Trade cycle

If the company is the operating in the time of boom, the working capital requirement may
be more as the company may like to buy more raw material, may increase the production
and sales to take the benefit of favorable market, due to increase in the sales, there may
more and more amount of funds blocked in stock and debtors etc. similarly in the case of
depressions also, working capital may be high as the sales terms of value and quantity may
be reducing, there may be unnecessary piling up of stack without getting sold, the
receivable may not be recovered in time etc.

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5. Terms of purchase and sales
Some time due to competition or custom, it may be necessary for the company to
extend more and more credit to customers, as result which more and more amount
is locked up in debtors or bills receivables which increase the working capital
requirement. On the other hand, in the case of purchase, if the credit is offered by
suppliers of goods and services, a part of working capital requirement may be
financed by them, but it is necessary to purchase on cash basis, the working capital
requirement will be higher.

6. Profitability
The profitability of the business may be vary in each and every individual case, which
is in turn its depend on numerous factors, but high profitability will positively reduce
the strain on working capital requirement of the company, because the profits to the
extent that they earned in cash may be used to meet the working capital
requirement of the company.

7. Operating efficiency
If the business is carried on more efficiently, it can operate in profits which may
reduce the strain on working capital; it may ensure proper utilization of existing
resources by eliminating the waste and improved coordination etc.

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 1. OBJECTIVES OF THE STUDY

Study of the working capital management is important because unless the working capital is
managed effectively, monitored efficiently planed properly and reviewed periodically at
regular intervals to remove bottlenecks if any the company cannot earn profits and increase
its turnover. With this primary objective of the study, the following further objectives are
framed for a depth analysis.

1. To analyze the various components of working capital of Maruti Suzuki India Limited.

2. To study the optimum level of current assets and current liabilities of the company.

3. To study the liquidity position through various working capital related ratios.

4. To study the working capital components such as receivables accounts, cash

management, Inventory position.

5. To study the way and means of working capital finance of the Maruti Suzuki India Ltd.

6. To estimate the working capital requirement of Maruti Suzuki India Ltd.

7. To study the operating and cash cycle of the company.

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 2. STATEMENT ABOUT THE PROBLEM

1. To pay wages and salaries.

2. To incur day-to-day expenses and overhead costs such as fuel, power, office expenses,
etc.

3. To meet the selling costs as packing, advertising, etc.

4. To provide credit facilities to the customers.

5. To maintain the inventories of raw material, work-in-progress, stores and spares and
finished stock.

Business needs funds for short-term purposes to finance current Operations. Investment in
sho t te a d lo g te assets like ash, i e to ies, a d de to s et as alled ho t-term
Fu ds o Wo ki g Capital . The Wo ki g Capital a e atego ized, as fu ds eeded fo
carrying out day-to-day operations of the business smoothly. The management of the
working capital is equally important as the management of long-term financial investment.
Adequate working capital enables the organization to face business crisis in emergencies
such as depression because during such periods, generally, there is much pressure on
working capital.

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CHAPTER-2

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 COMPANY PROFILE:

Maruti Suzuki India Limited (MSIL), formerly known as Maruti Udyog Limited, a subsidiary
of Suzuki Motor Corporation of Japan, is India's largest passenger car company. Maruti
Udyog Limited was incorporated in 1981 under the provisions of Indian Companies Act 1956
and the government of India selected Suzuki Motor Corporation as the joint venture.

Maruti Suzuki India Limited (MSIL) started out in 1982 in Gurgaon, Haryana. Little did the
then quiet suburb of New Delhi know that it was going to become the epicenter of the
automobile revolution in India. The year marked the birth of the Maruti Suzuki factory. India
turned out 40,000 cars every year. The new Maruti Suzuki 800 hit the streets to begin a
whole new chapter in the Indian automobile industry.

They set out with an obsession for customer delight, one that was unheard in the corridors
of automobile manufacturers then. It was about a commitment to create value through
innovation, quality, creativity, partnerships, openness and learning. It created a road that
was going to lead the world in to a whole new direction, laid out by Maruti Suzuki.

Toda , Ma uti uzuki alo e akes . illio Ma uti uzuki fa il a s e e ea . That s

one car every 12 seconds. Maruti Suzuki drove up head and shoulders above every major
global auto company.

Maruti Suzuki India Ltd operates within the Motor vehicles and car bodies sector. In addition
to historical fundamental analyses, the complete report available to purchase compares
Maruti Suzuki India Ltd with three other companies in this sector in India: Mahindra &
Mahindra Limited (2016 sales of 780.16 billion Indian Rupees [US $11.65 billion]), Ashok
Leyland Limited (206.59 billion Indian Rupees [US $3.08 billion]), and Eicher Motors Ltd
(123.36 billion Indian Rupees [US $1.84 billion] of which 100% was Automobile Products).

Current sales of automobiles

1. Maruti Suzuki Alto 800

2. Maruti Suzuki Omni

3. Maruti Suzuki Alto K10

4. Maruti Suzuki Celerio

5. Maruti Suzuki Wagon R 1.0

6. Maruti Suzuki Stingray

7. Maruti Suzuki Ritz

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8. Maruti Suzuki Swift

9. Maruti Suzuki Baleno

10. Maruti Suzuki Swift Dzire

11. Maruti Suzuki Gypsy

12. Maruti Suzuki Ertiga

13. Maruti Suzuki VitaraBrezza

14. Maruti Suzuki Ciaz

15. Maruti Suzuki S-Cross

Maruti Insurance
Launched in 2002 Maruti Suzuki provides vehicle insurance to its customers with the help
of the National Insurance Company, Bajaj Allianz, New India Assurance and Royal
Sundaram. The service was set up the company with the inception of two subsidiaries
Maruti Insurance Distributors Services Pvt. Ltd and Maruti Insurance Brokers Pvt.
Limited This service started as a benefit or value addition to customers and was able to
ramp up easily. By December 2005 they were able to sell more than two million insurance
policies since its inception.

Maruti Finance:-

To promote its bottom line growth, Maruti Suzuki launched Maruti Finance in January 2002.
Prior to the start of this service Maruti Suzuki had started two
joint ventures Citicorp Maruti and Maruti Countrywide with Citi Group and GE
Countrywide respectively to assist its client in securing loan. Maruti Suzuki tied up with
ABN Amro Bank, HDFC Bank, ICICI Limited, Kotak Mahindra, Standard Chartered
Bank, and Sundaram to start this venture including its strategic partners in car finance.
Again the company entered into a strategic partnership with SBI in March 2003 Since
March 2003, Maruti has sold over 12,000 vehicles through SBI-Maruti Finance. SBI Maruti
Finance is currently available in 166 cities across India.

Maruti True Value:-

Maruti True service offered by Maruti Suzuki to its customers. It is a market place for
Used Maruti Suzuki Vehicles. One can buy, sell or exchange used Maruti Suzuki vehicles
with the help of this service in India. As of 31 March 2010 there are 341 Maruti True Value
outlets.

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N2N Fleet Management:-

N2N is the short form of End to End Fleet Management and provides lease and fleet
management solution to corporate. Clients who have signed up of this service include
Gas Authority of India Ltd, DuPont, Reckitt Benckiser, Sona Steering, Doordarshan,
Singer India, National Stock Exchange and Transworld. This fleet management service
includes end-to-end solutions across the vehicle's life, which includes Leasing Maintenance,
Convenience services and Remarketing.

Accessories:
Many of the auto component companies other than Maruti Suzuki started to offer
components and accessories that were compatible. This caused a serious threat and loss of
revenue to Maruti Suzuki. Maruti Suzuki started a new initiative under the brand name
Maruti Genuine Accessories to offer accessories like alloy wheels, body cover, carpets,
door visors, fog lamps, stereo systems, seat covers and other car care products. These
products are sold through dealer outlets and authorized service stations throughout India.

A Maruti Driving School in Chennai:

As part of its corporate social responsibility Maruti Suzuki launched the Maruti Driving
School in Delhi. Later the services were extended to other cities of India as well. These
schools are modeled on international standards, where learners go through classroom and
practical sessions. Many international practices like road behavior and attitudes are also
taught in these schools. Before driving actual vehicles participants are trained on simulators.

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COMPANYS HISTORY

Maruti Suzuki India Limited (MSIL, formerly known as Maruti Udyog Limited) is a
Subsidiary of Suzuki Motor Corporation, Japan. Maruti Suzuki has been the leader of the
Indian car market for over two and a half decades. The company has two manufacturing
Facilities located at Gurgaon and Manesar, south of New Delhi, India. Both the facilities
Have a combined capability to produce over a 1.5 million (1,500,000) vehicles annually.
The Company offers 15 brands and over 150 variants ranging from people's car Maruti 800
to the latest Life Utility Vehicle, Ertiga. The portfolio includes Maruti 800, Alto, Alto K10,
A-star, Estilo, WagonR, Ritz, Swift, Swift DZire, SX4, Omni, Eeco, Kizashi, Grand
Vitara, Gypsy and Ertiga. In an environment friendly initiative, in August 2010 Maruti
Suzuki introduced factory fitted CNG option on 5 models across vehicle segments. These
includeEeco, Alto, Estilo, Wagon R and Sx4. With this Maruti Suzuki became the first
company in India to introduce factory fitted CNG vehicles. In terms of number of cars
produced and sold, the Company is the largest subsidiary of Suzuki Motor Corporation.
Cumulatively, the Company has produced over 10 million vehicles since the roll out of its
first vehicle on 14th December, 1983.Maruti Suzuki's sales and service network is the
largest among car manufacturers in India. Besides serving the Indian market, Maruti Suzuki
also exports cars to several countries in Europe, Asia, Latin America, Africa and Oceania.

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The name of Chairman, CEO, C FO, Management Team , Boar d of Director s and Key Executives of Marut i Suzuk i
India Lt d. :

Management

Name Designation

A Ganguli Independent Director

A K Tomer Executive Officer

A Seth Executive Officer

Ajay Seth Chief Financial Officer

C S Raju Executive Officer

C V Raman Executive Officer

D K Sethi Executive Officer

D S Brar Independent Director

K Ayabe Whole Time Director

K Ayukawa CEO

K Ayukawa Managing Director & CEO

K Saito Director

K Suzuki Executive Officer

M Nishio Executive Officer

M Suzuki Executive Officer

O Suzuki Director

P Narula Executive Officer

P Shroff Independent Director

R C Bhargava Chairman

R Gandhi Executive Officer

R P Singh Independent Director

R S Kalsi Executive Officer

R Uppal Executive Officer

S Ravi Aiyar Executive Director (Legal) & Co. Secretary

S Ravi Aiyar Secretary

S Srivastava Executive Officer

S Torii Director - Production

S Y Siddiqui Chief Mentor

T Hashimoto Executive Officer

T Hasuike Joint Managing Director

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T Suzuki Director

Y Kojima Executive Officer

Y Ozawa Executive Officer

Y Suzuki Executive Officer

SALES ANALYSIS: MARCH 2016:

During the year ended March of 2016, sales at Maruti Suzuki India Ltd were 586.12 billion
Indian Rupees (US$8.75 billion). This is an increase of 15.4% versus 2015, when the
company's sales were 508.01 billion Indian Rupees. This was the fourth straight year of sales
growth at Maruti Suzuki India Ltd.

sold 118,895 units in March 2016, up 14.6% year on year (March 2015: 103,719) with new
models like the Baleno and Vitara Brezza making their impact. While the entry level duo of
the Alto and Wagon R sold 36,678 units, down 8.7 percent (March 2015: 40,159), the
compact car quintet of the Swift, Ritz, Dzire, Celerio and Baleno sold 46,786 units, up 20.9
percent (March 2015: 38,710). Demand for the premium Ciaz sedan is on the rise, having
sold 5,480 units, up 28.9 percent (March 2015: 4,251). Another solid contribution came
f o Ma uti s UVs the Gypsy, S-Cross, Ertiga and Vitara Brezza which together sold
13,894 units, up 123.4% YoY (March 2015: 6,218) and also the Omni and Eeco vans, which
sold 12,896 units, up 9.6 percent (March 2015: 11,768).

With this, the company has ended 2015-16 with its highest-ever sales of 1,305,351 units, a
growth of 11.5% YoY in the domestic market (2014-15: 1,170,702). Yet another high is that,
for the fourth year in a row, the top four best-selling models in in the country are from
Maruti cars: the Alto, Dzire, Swift and the Wagon R. On the export front too, the carmaker
has notched its highest numbers yet: 123,897 units, up 1.8% (2014-15: 121,173).

Page 24
Sales Volume:2015-2016:

Page 25
Net Sales Position:2015-2016

Page 26
Profit and Loss Ratio:2015-2016

Page 27
MSILS OPERATIONS - a) Pressing and Blanking

Steel coils, procured from steel makers, are cut into sheets.
These sheets are pressed into various parts of the car like doors, body etc.
b) Welding

The separate parts are welded together using a process called spot welding.
The o pletel elded WHITE BODY is ead fo its e t jou e .
c) Painting

CATHODE ELECTRO DEPOSITION: 1st coat of paint on white body.

INTERMEDIATE/TOP COAT: 2nd and 3rd paint of coat after 1st coat.
TOUCH UP LINE/ FINAL INSPECTION: Final inspection of the painted body
d) Machining

BAIC ENGINE COMPONENT: C li de blockhead, crank shaft, camshaft, trans

ase
MACHINING PROCESS: Different machining processes to manufacture machined
components
OPERATION INSPECTION: Inspection of critical dimension of components
e) Engine Assembly

ENGINE ASSEMBLY: Assembling of 5 basic components and various other parts of

engine
FIRING TEST: Adjustment of rpm and checking of other parameters
f) Assembly

TRIM LINE: Fitment of lighter components viz wiring harnesses, head lamp, AC etc
CHASSIS LINE: Fitment of heavier components viz engine, axle, breaks, etc
FINAL LINE: Fitment of seats, AC gas filling, and final adjustments

Page 28
g) Vehicle Inspection

FIRST APPEARANCE: Initial inspection of vehicle to check appearance and adjustment

related problems
DRUM TESTER: Inspection of break performance and other functions of the vehicle
EMISSION CHECK: checking of emission conformity as per government regulations
SHOWER TESTER: Endurance testing of the vehicle to pass the water shower at 1.5
kg/cm2 pressure.
FINAL INSPECTION: Final roll out of the vehicles after final inspection
h) Sales and Dispatch

HANDOVER TO SALES AND DESPATCH: for delivery to dealers

Page 29
CHAPTER-3

Page 30
 Research methodology

Research methodology is a way to systematically solve the research problem. It may be

understood as a science of studying now research is done systematically. In that various
steps, those are generally adopted by a researcher in studying his problem along with the
logic behind them.

It is important for research to know not only the research method but also know
ethodolog . The p o edu es y which researcher go about their work of describing,
e plai i g a d p edi ti g phe o e o a e alled ethodolog . Methods o p ise the
procedures used for generating, collecting and evaluating data. All this means that it is
necessary for the researcher to design his methodology for his problem as the same may
differ from problem to problem.

Data collection is important step in any project and success of any project will be largely
depend upon now much accurate you will be able to collect and how much time, money and
effort will be required to collect that necessary data, this is also important step.

Data collection plays an important role in research work. Without proper data available for
analysis you cannot do the research work accurately.

Page 31
Data source & Collection Methods:

Secondary Data:

The secondary data are those which have already collected and stored. Secondary data
easily get those secondary data from records, journals, annual reports of the company etc. It
will save the time, money and efforts to collect the data. Secondary data also made
available through trade magazines, balance sheets, books etc.

This project is based on primary data collected through personal interview of head of
account department, head of SQC department and other concerned staff member of
finance department. But primary data collection had limitations such as matter confidential
information thus project is based on secondary information collected through five years
annual report of the company, supported by various books and internet sides.

The data collection was aimed at study of working capital management of the company
Project is based on:

1 .Co pa sA ual epo t

2 .Co pa s Qua te l epo t

3. Balance Sheet of company

4. Profit and loss A/C of the Company.

Page 32
CHAPTER-4

Page 33
 Analysis of the Problem under Study

Funds available for period of one year or less is called short term finance. In India short term
finance is used as working capital finance. Two most significant short term sources of
finance for working capital are trade credit and bank borrowing. Trade credit ratio of current
assets is about 40%, it is indicated by Reserve Bank of India data that trade credit has grown
faster than the growth in sales. Bank borrowing is the next source of working capital
finance. The relative importance of this varies from time to time depending on the
prevailing environment. In India the primary source of working capital financing are trade
credit and short term bank credit. After determine the level of working capital, a firm has to
consider how it will finance. Following are sources of working capital finance.

Sources of working Capital Finance

1) Trade credit

2) Bank Finance

3) Letter of credit

1) Trade credit

Trade credit refers to the credit that a customer gets from suppliers of goods in the normal
course of business. The buying firms do not have to pay cash immediately for the purchase
made. This deferral of payments is a short term financing called trade credit. It is major
source of financing for firm. Particularly small firms are heavily depend on trade credit as a
source of finance since they find it difficult to raised funds from banks or other sources in
the capital market. Trade credit is mostly an informal arrangement, and it granted on an
open account basis. A supplier sends goods to the buyers accept, and thus, in effect, agrees
to pay the amount due as per sales terms in the invoice. Trade credit may take the form of
bills payable. Credit terms refer to the condition under which the supplier sells on credit to
the buyer, and the buyer required repaying the credit. Trade credit is the spontaneous
source of the fi a i g. As the olu e of the fi s pu hase i ease t ade edit also
expand. It appears to be cost free since it does not involve explicit interest charges, but in

Page 34
practice, it involves implicit cost. The cost of credit may be transferred to the buyer via the
increased price of goods supplied by him.

2) Bank finance for working capital

Banks are main institutional source of working capital finance in India. After trade credit,
bank credit is the most important source of financing working capital in India. A bank
considers a firms sales and production plane and desirable levels of current assets in
dete i i g its o ki g apital e ui e e ts. The a ou t app o ed a k fo the fi s
working capital is called credit limit. Credit limit is the maximum funds which a firm can
obtain from the banking system. In practice banks do not lend 100% credit limit; they
deduct margin money.

Forms of bank finance:-

Term Loan
Overdraft
Cash credit
Purchase or discounting of bills

Term Loan
In this case, the entire amount of assistance is disbursed at one time only, either in cash or
the o pa s a ou t. The loa a e paid epaid i i stall e ts ill ha ged o
outstanding balance.

Overdraft
In this case, the company is allowed to withdraw in excess of the balance standing in its
Bank account. However, a fixed limit is stipulated by the Bank beyond which the company
will not able to overdraw the account. Legally, overdraft is a demand assistance given by the
bank i.e. bank can ask repayment at any point of time.

Page 35
 Cash credit
In practice, the operations in cash credit facility are similar to those of those of overdraft
facility except the fact that the company need not have a formal current account. Here also
a fixed limit is stipulated beyond which the company is not able to withdraw the amount.

Bills purchased / discounted

This form of assistance is comparatively of recent origin. This facility enables the company to
get the immediate payment against the credit bills / invoice raised by the company. The
banks hold the bills as a security till the payment is made by the customer. The entire
amount of bill is not paid to the company. The company gets only the present worth of
amount of bill from of discount charges. On maturity, bank collects the full amount of bill
from the customer.

3) Letter of credit

In this case the exporter and the importer are unknown to each other. Under these
circumstances, exporter is worried about getting the payment from the importer and
importer is worried as to whether he will get goods or not. In this case, the importer applies
to his bank in his country to open a letter of credit in favor of the exporter whereby the
importers bank undertakes to pay the exporter or accept the bills or draft drawn by the
exporter on the exporter fulfilling the terms and conditions specified in the letter of credit.
Banks have been certain norms in granting working capital finance to companies. These
norms have been greatly influenced by the recommendation of various committees
appointed by the Reserve Bank of India from time to time. The norms of working capital
finance followed by bank since mid-70 were mainly based on the recommendations of the
Tendon committee. The Chore committee made further recommendations to strengthen
the procedure and norms for working capital finance by banks.

Page 36
FY 2016 and FY 2015 Financial Growth:

Page 37
FY 2016 and FY 2015 Key Ratio Analysis:

Page 38
FY 2016 and FY 2015 Sales Volumes Analysis:

Page 39
Q4 2016 and Q4 2015 Financial Growth:

Page 40
Q4 2016 and Q4 2015 Key Ratio Analysis:

Page 41
Page 42
NET PROFIT RATIO FROM 2012 TO 2016

1 2 3 4 5

MARUTI 2011-12(in 2012-13(in 2013-14(in 2014-15(in 2015-16(in

SUZUKI Million) Million) Million) Million) Million)
NET PROFIT 16,352 23921 27,830 37,112 45,714

NET SALES 347,059 426,126 426,448 486,055 563,504

NET PROFIT 4.71 5.61 6.53 7.64 8.11

RATIO(%)

NET PROFIT RATIO(%)

9
8
7
6
5
4 NET PROFIT RATIO(%)
3
2
1
0
2011-12 2012-13 2013-14 2014-15 2015-16

Observations:-

It was observed that the Net Profit Ratio of Maruti Suzuki India Limited has average of
6.52% in the Year 2016 and therefore MARUTI SUZUKI INDIA LTD. is in average position as
average the ratio.

Page 43
NET WORKING CAPITAL SIZE FROM 2012 TO 2016

1 2 3 4 5

MARUTI 2011-12(in 2012-13(in 2013-14(in 2014-15(in 2015-16(in

SUZUKI Million) Million) Million) Million) Million)
TOTAL 110,790 109,248 141,717 81,979 71,495
CURRENT
ASSETS
TOTAL 65,476 68,280 80,741 88,230 112,900
CURRENT
LIABILITIES
NET 45,314 40,968 60,976 -6,251 -41,405
WORKING
CAPITAL

NET WORKING CAPITAL

80,000

60,000

40,000

20,000
NET WORKING
CAPITAL
0
2011-12 2012-13 2013-14 2014-15 2015-16
-20,000

-40,000

-60,000

Observations:-

It was observed that major source of liquidity problem is not the mismatch between current
payments and current receipts from the Comparison of funds flow statements of Maruti
Suzuki Limited for five years. This company net working capital is continue decrease and to
the present level is not good. The growth in working capital is a clear indication that the
company does utilizing its short term resources with efficiency. In year 2011-12 the
company net working capital was 45,314 millions. and after 3 years it decreasing and 2015-
16 the company net working capital is-41,405 millions.

Page 44
CURRENT ASSETS

Total assets are basically classified in two parts as fixed assets and current assets. Fixed
assets are in the nature of long term or life time for the organization. Current assets convert
in the cash in the period of one year. It means that current assets are liquid assets or assets
which can convert in to cash within a year.

CURRENT ASSETS SIZE FROM 2012 TO 2016

1 2 3 4 5
MARUTI 2011-12(in 2012-13(in 2013-14(in 2014-15(in 2015-16(in
SUZUKI Million) Million) Million) Million) Million)
Current 47,541 52,298 88,131 29,964 8,703
Investments

Inventories 17,965 18,407 17,059 26,150 31,321

Trade 9,376 14,237 14,137 10,698 12,986

Receivables

Cash and 24,361 7,750 6,297 183 391

Bank
Balances

Short Term 7,783 11,153 12,511 11,728 15,565

Loans and
Advances

Other 3,764 5,403 3,582 3,256 2,502

Current
Assets

TOTAL 110,790 109,248 141,717 81,979 71,468

CURRENT
ASSETS

Page 45
 TOTAL CURRENT ASSETS
160,000

140,000

120,000

100,000

80,000
TOTAL CURRENT ASSETS
60,000

40,000

20,000

0
2011-12 2012-13 2013-14 2014-15 2015-16

Observations:-

It was observed that the size of current assets is increasing from 2011-12 to 2013-14 and in
the Cu e t Assets a ou t is i eased e t e e ut afte that it s falli g, it may
adversely affects on profitability. Current assets include some funds investments for which
company pay interest.

Page 46
CURRENT LIABILITIES

Current liabilities mean the liabilities which have to pay in current year. It includes sundry
edito s ea s supplie hose pa e t is due ut ot paid et, thus edito s alled as
current liabilities. Current liabilities also include short term loan and provision as tax
provision. Current liabilities also includes bank overdraft. For some current assets like bank
overdrafts and short term loan, company has to pay interest thus the management of
current liabilities has importance.

CURRENT LIABILITIES SIZE FROM 2012 TO 2016

1 2 3 4 5

MARUTI 2011-12(in 2012-13(in 2013-14(in 2014-15(in 2015-16(in

SUZUKI Million) Million) Million) Million) Million)
Short Term 10,783 8,463 12,247 354 774
Borrowings

Trade 33,499 41,674 48,975 55,614 70,133

Payables

Other 15,892 11,661 12,742 18,658 23,648

Current
Liabilities

Short Term 5,302 6,482 6,777 13,604 18,345

Provisions

Total 65,476 68,280 80,741 88,230 112,900

Current
liabilities

Page 47
 Total Current liabilities
120,000

100,000

80,000

60,000 Total Current liabilities

40,000

20,000

0
2011-12 2012-13 2013-14 2014-15 2015-16

Observations:-

Current liabilities show continues growth and slightly changes each year because company
creates the credit in the market by good transaction. To get maximum credit from supplier
which is profitable to the company it reduces the need of working capital of firm. As a
current liability increase in the year 2011-12to 65,476 million And Company enjoyed over
creditors this may include indirect cost of credit terms.

Page 48
CHANGES IN WORKING CAPITAL

There are so many reasons to changes in working capital as follow

1. Changes in sales and operating expanses

The changes in sales and operating expenses may be due to two reasons

a. Policy changes

The second major case of changes in the level of working capital is because of policy

b. Technology changes

1 2 3

MARUTI 2015-16(in Million) 2014-15(in Million) Increase/(Decrease)

SUZUKI
TOTAL 71,468 81,979 (10,511)
CURRENT
ASSETS

TOTAL 112,900 88,230 24,670

CURRENT
LIABILITIES

WORKING -41,432 -6,251 (35,181)

CAPITAL

Page 49
WORKING CAPITAL TURNOVER RATIO

It signifies that for an amount of sales, a relative amount of working capital is needed. If any
increase in sales contemplated working capital should be adequate and thus this ratio helps
management to maintain the adequate level of working capital. The ratio measures the
efficiency with which the working capital is being used by a firm. It may thus computer net
working capital turnover by dividing sales by working capital.

Working Capital Turnover Ratio= Net Working Capital/Sales

1 2 3 4 5

MARUTI 2011-12(in 2012-13(in 2013-14(in 2014-15(in 2015-16(in

SUZUKI Million) Million) Million) Million) Million)
NET 45,314 40,968 60,976 -6,251 -41,405
WORKING
CAPITAL
NET 347,059 426,126 426,448 486,055 563,504
SALES
Working 13.06 9.61 14.30 -1.29 -7.35
Capital
Turnover
Ratio

Working Capital Turnover Ratio

20.00

15.00

10.00

Working Capital
5.00
Turnover Ratio

0.00
2011-12 2012-13 2013-14 2014-15 2015-16
-5.00

-10.00

Observations:-

High working capital ratio indicates the capability of the organization to achieve maximum
sales with the minimum investment in working capital. Company working capital ratio
shows mostly decrease, except for the year 2013-14, In the year 2014-15 the ratio was
around -4.8, it indicates that the capability of the company to achieve maximum sales with
the minimum investment in working capital.

Page 50
CURRENT RATIO

Current ratio may be defined as the relationship between current assets and current
liabilities. This ratio, also known as working capital ratio, is a measure of liquidity and is
most widely used to make the analysis of short-term financial position or liquidity of affirm
it is calculated with the help of following formula:

FORMULA= Current Assets/Current liabilities

1 2 3 4 5

MARUTI 2011-12(in 2012-13(in 2013-14(in 2014-15(in 2015-16(in

SUZUKI Million) Million) Million) Million) Million)
TOTAL 110,790 109,248 141,717 81,979 71,495
CURRENT
ASSETS
TOTAL 65,476 68,280 80,741 88,230 112,900
CURRENT
LIABILITIES
CURRENT 1.69 1.60 1.76 0.93 0.63
RATIO

CURRENT RATIO
1.80
1.60
1.40
1.20
1.00
0.80 CURRENT RATIO
0.60
0.40
0.20
0.00
2011-12 2012-13 2013-14 2014-15 2015-16

INTERPRETATION:

A relatively high current ratio is an indication that the firm is liquid and has the ability to pay
its current obligations in time and when they become due. On the other hand, a low current
ratio represents that the liquidity position of the firm is not good and the firm shall not be
able to pay its current liabilities in time. The above table indicates that there are also
fluctuations in the current ratio of Maruti Suzuki. In FY 2013-14 it was 1.76 and in FY 2015-
16 is 0.63, the current ratio decrease.

Page 51
QUICK/ LIQUID/ OR ACID TEST RATIO:

Quick Ratio, also known as Acid Test or Liquid Ratio, is a more rigorous test of liquidity than
the u e t atio. The te li uidit efe s to the a ilit of a fi to pa sho t-term
obligations as and when they become due. An asset is said to be liquid if it can be converted
into cash within a short period without loss of value. Quick ratio can be calculated with the
help of following formula:

FORMULA= Quick or Liquid Assets/Current Liabilities

1 2 3 4 5

MARUTI 2011-12(in 2012-13(in 2013-14(in 2014-15(in 2015-16(in

SUZUKI Million) Million) Million) Million) Million)
QUICK ASSETS 92,825 90,841 124,658 55,829 40,147

CURRENT 65,476 68,280 80,741 88,230 112,900

LIABILITIES

QUICK/LIQUID/ACID 1.42 1.33 1.54 0.63 0.36

TEST RATIO

QUICK/LIQUID/ACID TEST RATIO

1.60
1.40
1.20
1.00
0.80
0.60 QUICK/LIQUID/ACID TEST
RATIO
0.40
0.20
0.00

INTERPRETATION:

The ideal Quick Ratio is 1:1. The liquid or quick ratio indicates the liquid financial position of
an enterprise. From 2011-12 to 2013-14 the liquid ratio is slightly different, which is better
for the company to meet the urgency. The liquid ratio of the company has shown 0.63 to
0.36 in year 2014-15 to 2015-16. Day to day solvency is sounder for company. Liquid ratio of
Company is favorable because the quick assets of the company are more than the quick
lia ilities. The li uid atio sho s the o pa s a ilit to eet its i ediate o ligatio s
promptly.

Page 52
TOTAL ASSETS TURNOVER RATIO

This ratio is useful to determine the amount of sales that are generated from each dollar of
assets. For companies in the retail industry it would expect a very high turnover ratio.

Total assets turnover ratio = Net Sales / Total Assets

1 2 3 4 5
MARUTI 2011-12(in 2012-13(in 2013-14(in 2014-15(in 2015-16(in
SUZUKI Million) Million) Million) Million) Million)
NET SALES 347,059 426,126 426,448 486,055 563,504

TOTAL 223,022 266,880 305,357 335,510 391,956

ASSETS

TOTAL 1.56 1.60 1.40 1.45 1.44

ASSETS
TURNOVER
RATIO

TOTAL ASSETS TURNOVER RATIO

1.60
1.55
1.50
1.45
1.40 TOTAL ASSETS TURNOVER
1.35 RATIO
1.30
1.25

Page 53
DEBT EQUITY RATIO

Definition: The Debt to Equity Ratio measures how much money a company should safely be
a le to o o o e lo g pe iods of ti e. It does this o pa i g the o pa s total de t
(including short term and long term obligations) and dividing it by the amou t of o e s
equity.

1 2 3 4 5
MARUTI 2011-12(in 2012-13(in 2013-14(in 2014-15(in 2015-16(in
SUZUKI Million) Million) Million) Million) Million)
TOTAL 223,022 266,880 305,357 335,510 391,956
LIABILITIES

SHAREHOLDERS 151,874 185,789 209,780 237,042 270,071

EQUITY

DEBT EQUITY 1.47 1.44 1.46 1.42 1.45

RATIO

DEBT EQUITY RATIO

1.47
1.46
1.45
1.44
1.43
1.42 DEBT EQUITY RATIO
1.41
1.40
1.39
1.38
2011-12 2012-13 2013-14 2014-15 2015-16

Observations:-

The debt-equity ratio is normally defined as the long term debts divided by shareholders
equity, which is the sum of theequity capital, any preference capital issued, and free
reserves and surplus.

Page 54
Management of Cash

Cash is common purchasing power or medium of exchange. As such, it forms the most
important component of working capital. The term cash with reference to cash
management is used in two senses, in narrow sense it is used broadly to cover cash and
generally accepted equivalent of cash such as cheques , draft and demand deposits in banks.
The broader view of cash also induce hear- cash assets, such as marketable sense as
marketable securities and time deposits in banks. The main characteristics of this deposits
that they can be really sold and convert in to cash in short term. They also provide short
term investment outlet for excess and are also useful for meeting planned outflow of funds.
We employ the term cash management in the broader sense. Irrespective of the form in
which it is held, a distinguishing feature of cash as assets is that it was no earning power.
Company have to always maintain the cash balance to fulfill the dally requirement of
expenses.

Motive of holding cash

There are four motives for holding cash as follow

1. Transaction motive

2. Precautionary motive

3. Speculative motive

4. Compensating motive

Transaction motive

Cash balance is necessary to meet day-to-day transaction for carrying on with the operation
of firms. Ordinarily, these transactions include payment for material, wages, expenses,
dividends, taxation etc. there is a regular inflow of cash from operating sources, thus in case
of Maruti Suzuki there will be two-way flow of cash- receipts and payments. But since they
do not perfectly synchronize, a minimum cash balance is necessary to uphold the operations
for the firm if cash payments exceed receipts.

Page 55
Always a major part of transaction balances is held in cash, a part may be held in the form of
marketable securities whose maturity conforms to the timing of anticipated payments of
certain items, such as taxation, dividend etc.

Precautionary Motive

Cash flows are somewhat unpredictable, with the degree of predictability varying among
firms and industries. Unexpected cash needs at short notice may also be the result of
following:

1. Uncontrollable circumstances such as strike and natural calamities.

2. Unexpected delay in collection of trade dues.

3. Cancellation of some order for goods due unsatisfactory quality.

4. Increase in cost of raw material, rise in wages, etc.

Speculative motive:

Speculative cash balances may be defined as cash balances that are held to enable the firm
to take advantages of any bargain purchases that might arise. While the precautionary
motive is defensive in nature, the speculative motive is aggressive in approach. However, as
with precautionary balances, firms today are more likely to rely on reserve borrowing power
and on marketable securities portfolios than on actual cash holdings for speculative
purposes.

Advantages of cash management

Cash does not enter in to the profit and loss account of an enterprise, hence cash is neither
profit nor losses but without cash, profit remains meaningless for an enterprise owner.

1. A sufficient of cash can keep an unsuccessful firm going despite losses

2. An efficient cash management through a relevant and timely cash budget may enable a
firm to obtain optimum working capital and ease the strains of cash shortage, fascinating
temporary investment of cash and providing funds normal growth.

Page 56
3. Cash management involves balance sheet changes and other cash flow that does not
appear in the profit and loss account such as capital expenditure.

Size and indices of cash in Maruti Suzuki India Ltd.

1 2 3 4 5

MARUTI 2011-12(in 2012-13(in 2013-14(in 2014-15(in 2015-16(in

SUZUKI Million) Million) Million) Million) Million)
Cash And 24,361 7750 6,297 183 391
Bank
Balance
Indices 100 31.81 25.85 0.75 1.61

Indices
120.00

100.00

80.00

60.00
Indices
40.00

20.00

0.00
2011-12 2012-13 2013-14 2014-15 2015-16

Page 57
CHAPTER-5

Page 58
Recommendations

Recommendation can be use by the firm for the betterment increased of the firm after study and
analysis of project report on study and analysis of working capital. I would like to recommend.

1. Company should raise funds through short term sources for short term requirement of funds,
which comparatively economical as compare to long term funds.

. Co pa should take o t ol o de to s olle tio pe iod hi h is ajo pa t of u e t assets.

3. Company has to take control on cash balance because cash is non earning assets and increasing
cost of funds.

4. Instate their credit on the basis of certain well recognized and established principle of credit
administration.

5. Company should take steps to increase the level of current assets to current liabilities. If this
procession could be increased, Maruti Suzuki can get more credit from its suppliers, as suppliers look
into the ability of the firm to pay its cash.

Over all company has good liquidity position and sufficient funds to repayment of liabilities.
Company has accepted conservative financial policy and thus maintaining more current assets
balance. Company is increasing sales volume per year which supported to company for sustain 2nd
position in the world and number one position in Asia.

Page 59
Conclusion
1. The growth in working capital is a clear indication that the company does utilizing its short term
resources with efficiency.

2. In the year 2014-15 to 2015-16 working capitals continuous decrease because expenses as
manufacturing expenses and increases.

Limitations of the study

Even though every effort will be taken to minimize the variation and present a factual picture with
the help of statistical methods, but still there are some limitations, which are as follows:

The p epa atio a d i te p etatio of data a ot e % f ee f o e o sa d a e affe ted

by the Respondents based mindset to some extent.

The stud ill e ased o the ala e sheet of the company and depends directly on balance
sheet and annual reports of the company.

1) Limited data:-

This project has completed with annual reports; it just constitutes one part of data collection i.e.
secondary.

2) Limited period:-

This project is based on five year annual reports. Conclusions and recommendations are based on
such limited data. The trend of last five year may or may not reflect the real working capital position
of the company

3) Limited area:-

Also it was difficult to collect the data regarding the competitors and their financial information.
Industry figures were also difficult to get.

Page 60
 BIBLIOGRAPHY

JOURNALS AND ANNUAL REPORT OF MARUTI SUZUKI INDIA LTD.

IMT STUDY MATERIAL.

COST AND MANAGEMENT ACCOUNTING; PRINCIPLES,PRACTICE; DEY; DUTTA; CHATTERJEE

Websites References

http://www.google.com

http://www.marutisuzuki.com

http://www.moneycontrol.com

Wikipedia

http://economictimes.indiatimes.com

www.autocarpro.in

Page 61
APPENDIX

Page 62
Profile of Project Guide

Name : SOUVIK GUHA

Age : 34

Educational Qualification : M.Sc , PGDBA

Years of Experience : 9

Current organization : SHRIRAM INSIGHT SHARE BROKERS LTD

Current designation : SENIOR RESEARCH EXECUTIVE

Brief profile

Address:

House No : 361

Street : NILACHAL, BIRATI

City : KOLKATA

State : WEST BENGAL

Phone Number (Residence) :

Phone Number (Office) :

Mobile : 9830018304

Email : souvikishere@gmail.com

Page 63
Certification of Project Guide:

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Thank You

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