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ACKNOWLEDGEMENT
I would like to express my deep and sincere gratitude to our Professor ,
Mrs. Neha Bhatia, Her wide knowledge and her logical way of
thinking have been of great value for us. Her understanding,
encouraging and personal guidance have provided a good basis for the
Project.
I wish to express my warm and sincere thanks to Professor who
introduced us to the field of Financial Management & Management
Accounting. The ideals and concepts will have a remarkable influence
on our entire career
MARUTI SUZUKI INDIA LIMITED 2009 -2010
Contents
Automobile Sector
Why Maruti Suzuki ??
Company Analysis
Tools for Company analysis
Comments on Balance Sheet 09 - 10
Pie Chart
Comments on Profit & Loss 09 - 10
Ratio Analysis & Comments
Common size Statement
Comparative Statement
Trend Analysis
Working Capital
Cash Flow
Valuation of Shares
Investment In Maruti Suzuki Ltd.
Future Comments
Effect of Budget on Share Price
Conclusion
Bibliography
AUTOMOBILE SECTOR
The data obtained from ministry of commerce and industry, shows high growth obtained since
2008- 09 in automobile production continuing in the first three quarters of the 2004-05.
Annual growth was 16.0 per cent in April-December, 2009; the growth rate in 2003-04 was
MARUTI SUZUKI INDIA LIMITED 2009 -2010
15.1 per cent The automobile industry grew at a compound annual growth rate (CAGR) of 22
per cent between 2000- 2010 With investment exceeding Rs. 50,000 crore, the turnover of the
automobile industry exceeded Rs. 59,518 crore in 2009-10. Including turnover of the auto-
component sector, the automotive industry's turnover, which was above Rs. 84,000 crore in
2009-10, is estimated to have exceeded Rs.1,00,000 crore ( USD 22. 74 billion) in 2003-04.
In terms of Car dealer networks and authorized service stations, Maruti leads the pack with
Dealer networks and workshops across the country. The other leading automobile
manufactures are also trying to cope up and are opening their service stations and dealer
workshops in all the metros and major cities of the country. Dealers offer varying kind of
discount of finances who in tern pass it on to the customers in the form of reduced interest
rates.
In fiscal 2009-10 Maruti Suzuki became the only Indian company to manufacture and sell One
Million cars in a year. Maruti Suzuki has employee strength over 7,600 (as at end March
2010), In 2009-10, the company sold a record 10,18,365 vehicles including 1,47,575 units of
exports. With this, at the end of March 2010, Maruti Suzuki had a market share of 53.3 per
cent of the Indian passenger car market (including C segment).
Maruti Suzuki's revenue has grown consistently over the years.
COMPANY ANALYSIS
Ultimately, Company analysis want to achieve the following outcomes:
Reduce waste
Create solutions
Complete projects on time
MARUTI SUZUKI INDIA LIMITED 2009 -2010
Improve efficiency
Document the right requirements
Helps Investor
Helps in interpretation of Future Price
Rework is a common industry headache and it has become so common at many organizations
that it is often built into project budgets and time lines. It generally refers to extra work needed
in a project to fix errors due to incomplete or missing requirements and can impact the entire
software development process from definition to coding and testing. The need for rework can
be reduced by ensuring that the requirements gathering and definition processes are thorough
and by ensuring that the business and technical members of a project are involved in these
processes from an early stage.
I Sources of funds
The company acquires fund in two ways shareholders (owner of the company) and other in
form of Borrowed fund (from banks, debentures)
Borrowed funds
The funds which are raised from the outsiders who are not the owner of the firm is termed as
borrowed funds . Borrowed funds are of two types secured and unsecured loans.
Investment (Schedule 7)
Company has invested in many subsidiaries like Equity Shares Fully Paid up, Mutual Funds,
Bonds. Total investments are increased from Rs.1,087 in Mar’09 to Rs.2,151 in Mar’10 by
Rs.1,064
The Company have not sold any Investment in the current Year, There have been only
addition, No deduction.
Working capital
Working capital is equal to Current Assets less Current liabilities.
WC = CA – CL
Working capital has Increased from Rs.34,165 in Mar’09 to Rs.35,678 in Mar’10.
Current Assets
Current assets include inventories, cash and bank balance, loan and advances. Current assets
decrease from Rs.55,100 in Mar’09 to Rs.37,724 in Mar’10.
The current assets is decreased By 17,376
Current Liabilities
Current liabilities include sundry creditors, Provision for Tax, unclaimed share application
money refunds. Current liabilities decrease from Rs.20,935 in Mar’09 to Rs.2046 in Mar’10.
Capital Employed
It includes fixed assets, investment, capital work in progress, and working capital and the total
capital employed have increase from Rs.13792.81 in Mar’09 to Rs.14066.04. in Mar’10 by
273.23.
MARUTI SUZUKI INDIA LIMITED 2009 -2010
Pie Charts
The Above Pie Chart Shows the Sources of Fund, & How is the application made of that.
Sources of Funds
64% are from the source of Reserve & Surplus
30% From Unsecured Loan
5% From shareholders
& 1% From Secured Loans
Application of Funds
40% of Total Fund is Employed in Fixed assets
32% of fund is invested in Shares, Mutual Fund, and Government Securities.
28% of Fund is for Working Capital, For running of Day to day Business
Profit and Loss Account shows how much profit or losses have the bank incurred from its
income after providing for all its expenditure within a particular financial year. This gives an
idea how much profit is available for appropriation and to calculate dividend given to
MARUTI SUZUKI INDIA LIMITED 2009 -2010
shareholder. The income of the bank includes interest, discount on advances .commission, and
income of investment.
The Company Earns Maximum from Sales & rest from Other Income
The Company’s income from sales has increased in the current year as we can see in
the above graph. But the Income from other sources remains almost constant no major
changes have been seen in the income from other sources
Expenditure
The expenses which form high proportion are personal expenses, manufacturing expenses,
interest, financial charges, and depreciation. All expenses during the year 2009 were
Rs.187,610 has increase to Rs.258,917 in Mar’10 by Rs.71,307
TOTAL EXPENDITURE
MARUTI SUZUKI INDIA LIMITED 2009 -2010
The Above Graph Clearly explains the expenses which are inquired in the financial
year 2008-2009 & 2009-2010
The Expenses of the Company have increased in the current year
The major expenses are on manufacturing & Administrative
RATIO ANALYSIS
Liquidity Ratios
1 Current Ratio = Current Assets 1.53 : 1 1.02 :1 The standard Current Ratio
Current Liability is 2:1, it tells about the
short term in solvency of
the Company.
2 Quick Ratio = Quick Assets 1.26 : 1 0.67 : 1 The standard Quick Ratio
Quick Liability is 1:1, it tells about the
Immediate obligation of
the company
Leverage Ratios
7 Debt Equity Ratio = Total Debt 0..06 0.03 The Standard Debt Equity
Equity Ratio is 2:1
It Shows that how much
does a Firm depend on
borrowing Funds.
8 Debt Assets Ratio = Total Debt 0.07 0.06 The Debt Assets Ratio,
Total Assets help us to find out what the
total Debt Compared to
total Assets of the Firm.
Profitability Ratios
Return on Capital
13 Return on Capital Employed = 14.63 19.78 Employed, shows that what
Net Profit After Tax return are the shareholders
Total Capital Employed going to get on Capital
Employed by them
MARUTI SUZUKI INDIA LIMITED 2009 -2010
COMMON SIZE
Sources of Fund
1) Owner’s Fund
Equity Share Capital 1445 1.41% 1445 1.78%
Preference Share Capital - - - -
Reserve & Surplus 92004 90.20% 116906 91.37%
Net Worth 93449 92.19% 118351 93.83%
2) Loan Fund
Secured Loan 1 0.001% 265 0.20%
Unsecured Loan 6988 6.85% 7949 6.21%
Borrowed Fund 6989 6.86% 8214 6.42%
Application Of Funds
4) Working Capital
(CA – CL )
Current Assets 55100 54.02% 37724 29.48%
(-) Current Liability (34165) 33.49% (35678) 27.88%
WC 20935 20.52% 2046 1.59%
(-) Expenditure
Raw Material 1,50,598 70.19 2,14,881 71.34%
Employees Remuneration 4,711 2.19 5,456 1.81%
Manufacturing, Administrative 15,685 7.31% 17,938 5.95%
Selling & distribution 7,382 3.44% 9,160 3.04%
Other Expenses 9234 4.30% 11,482 3.81%
A company financial statement that displays all items as percentages of a common base figure.
This type of financial statement allows for easy analysis between companies or between time
periods of a company
The values on the common size statement are expressed as percentages of a statement
component such as revenue. While most firms don't report their statements in common size, it
is beneficial to compute if you want to analyze two or more companies of differing size against
each other.
Formatting financial statements in this way reduces the bias that can occur when
analyzing companies of differing sizes. It also allows for the analysis of a company over
various time periods, revealing, for example, what percentage of sales is cost of goods sold and
how that value has changed over time.
COMPARATIVE STATEMENT
MARUTI SUZUKI INDIA LIMITED 2009 -2010
Sources of Fund
1) Owner’s Fund
Equity Share Capital 1445 1445 -
Preference Share Capital - - -
Reserve & Surplus 92004 116906 ^ 24902 ^ 27.06%
Net Worth 93449 118351 ^ 24902 ^ 26.64%
2) Loan Fund
Secured Loan 1 265 ^ 264 ^ 0.001%
Unsecured Loan 6988 7949 ^ 961 ^ 13.75%
Borrowed Fund 6989 8214 ^ 1225 ^ 17.53%
Application Of Funds
4) Working Capital
(CA – CL )
Current Assets 55100 37724 v (17376) v 21.54%
(-) Current Liability (34165) (35678) ^ 1513 ^ 4.42%
WC 20935 2046 ^ 16880 ^ 87.32%
(-) Expenditure
Raw Material 1,50,598 2,14,881 ^ 64,238 ^ 42.65%
Employees Remuneration 4,711 5,456 ^ 745 ^ 15.81%
Manufacturing, Administrative 15,685 17,938 ^ 2,253 ^ 14.36%
Selling & distribution 7,382 9,160 ^ 1,778 ^ 24.08%
Other Expenses 9,234 11,482 ^ 2,248 ^ 24.34%
The comparative statement lines up a section of the income statement, balance sheet or
cash flow statement with its corresponding section from a previous period. It can also
be used to compare financial data from different companies over time, thus revealing
the trend in the financials.
Analysts like comparative statements because they show the effect business decisions
have on a company's bottom line. Analysts can identify trends and evaluate the
performance of managers, new lines of business on one statement instead of having to
flip through individual financial statements from different periods of time.
When comparing different companies, a comparative statement can show how
businesses react to market conditions affecting an entire industry.
MARUTI SUZUKI INDIA LIMITED 2009 -2010
TREND ANALYSIS
Trend analysis is a form of comparative analysis that is often employed to identify current and
future movements of an investment or group of investments. The process may involve
comparing past and current financial ratios as they related to various institutions in order to
project how long the current trend will continue. This type of information is extremely helpful
to investors who wish to make the most from their investments.
The term "trend analysis" refers to the concept of collecting information and attempting to
spot a pattern, or trend, in the information. In some fields of study, the term "trend analysis"
has more formally-defined meanings
Although trend analysis is often used to predict future events, it could be used to estimate
uncertain events in the past, such as how many ancient kings probably ruled between two
dates, based on data such as the average years which other known kings reigned.
For example, Maruti Udyog has plans of investing Rs. 6,500 crores; the Tata Motors is coming
up with more investment of Rs. 2,000 crores in its compact car project. Not only the Indian
companies but also foreign players like Hyundai are coming up with the investment of more
than Rs. 3,800 crores in India
At present the industry is enjoying a growth rate of 14-17% per annum, with domestic sales
growth at 12.8%. The growth rate is predicted to double by 2015.
As it is seen, the total sales of passenger vehicles - cars, utility vehicles and multi-utility
vehicles - in the year 2005 reached the mark of 1.06 million. The current growth rate indicates
that by 2012 India will overtake Germany and Japan in sales volumes.
Financing schemes have become an important factor in the growth of automobile sales. More
and more financial schemes are coming up with easy installment plans to lure the customers.
Sources of Fund
1) Owner’s Fund
Equity Share Capital 1445 1445 1445 100% 100% 100%
Preference Share Capital - - - - - -
Reserve & Surplus 89017 92004 116906 100% 103.35 131,13%
Net Worth 90462 93449 118351 100% % 130.82%
103.35
2) Loan Fund %
Secured Loan - 1 265
Unsecured Loan 4900 6988 7949 100% 162.24%
Borrowed Fund 4900 6989 8214 100% - 167.63%
142.61
Total Funds ( 1 + 2 ) 95362 100438 127935 100% % 134.15%
142.63
%
105.32
%
Application Of Funds
105.32
%
MARUTI SUZUKI INDIA LIMITED 2009 -2010
114.85
%
205.16
%
106.79
%
120.85
%
MARUTI SUZUKI INDIA LIMITED 2009 -2010
114.77
%
The performance of Maruti & Mahindra were comparatively good in the automobile
sector.
Maruti Suzuki Ltd had less borrowing, if it is compared to Tata & Mahindra
Maruti Suzuki Ltd. had good Reserve & surplus, Assets which we had come toknw
while comparing the trend
Maruti Suzuki Ltd. have shown the Upward Trend in the whole automobile sector
which is very good point from view of company as well as shareholders
WORKING CAPITAL
Working capital (abbreviated WC) is a financial metric which represents operating liquidity
available to a business, organization, or other entity, including governmental entity. Along
with fixed assets such as plant and equipment, working capital is considered a part of
operating capital. Net working capital is calculated as current assets minus current liabilities. \
It is a derivation of working capital, that is commonly used in valuation techniques
such as DCFs (Discounted cash flows).
If current assets are less than current liabilities, an entity has a working capital
deficiency, also called a working capital deficit.
A company can be endowed with assets and profitability but short of liquidity if its assets
cannot readily be converted into cash. Positive working capital is required to ensure that a firm
is able to continue its operations and that it has sufficient funds to satisfy both maturing short-
term debt and upcoming operational expenses. The management of working capital involves
managing inventories, accounts receivable and payable and cash.
MARUTI SUZUKI INDIA LIMITED 2009 -2010
Current Assets
1. Stock
Raw Material
Work in Progress 2,418 3,898
Raw Material (100 %)
Wages (50%) - -
Overheads (50%) - -
.Finished goods - -
3,416 5,834 3651 7,549
2. Debtors
3,124 2900
3. Preliminary Expenses
672 893
4. Cash / Bank
1,976 1,325
Gross Working Capital
. .
(-) Current Liability 11,606 12,667
CASH FLOW
Cash Flow Statement
Accounting Standard – 3
Section 211(3c) of The companies Act, 1956
Particulars Rs. Rs.
Indirect Method
VALUATION OF SHARES
The market price quotation in the stock market is considered to be the value of the share,
because there is considerable body of evidence to support the contention that the stock market
is relatively efficient. The shares of the company have to be valued in case the shares are not
MARUTI SUZUKI INDIA LIMITED 2009 -2010
listed on the stock exchange. The shares of Private limited company are also required to be
valued fore different purposes at different times.
Sometimes, market values of shares listed on the stock exchange also do not serve the purpose
because in market there is Malpractices, Price rigging, Speculation etc. therefore different
methods have been followed for the purpose of valuation etc.
= 79794000000
744000000
= Rs 107.25 / -
= 98.65 X 5
6
= Rs. 82.20 / -
= 107.25 + 82.20
2
= Rs. 94.725 / -
As the share price is higher when it is valued at Net Assets Method, so the dividend
declared will also be higher when the shares are valued at Net assets Value Method.
MARUTI SUZUKI INDIA LIMITED 2009 -2010
But generally company does not follow this method for valuation.
Mostly all the listed company’s follow the Yield Value Method, which is more
accurate & the dividend paid on them is also accurate.
Fair value method is mostly adopted by the firm which are not listed in the stock
exchange.
Valuation of Stock is very necessary as the dividend is declared on that price, & to give
True & Fair Result to shareholders, who are actually the owners of the firm.
Maruti Suzuki Ltd Values it shares as per yield Value Method.
The dividend declared by the Maruti Suzuki Ltd was the highest in the year 2009-2010
if it is compared to Automobile sector
with the whole Automobile Sector. The performance was Average in the Current Financial
year
The Company have given highest return on 28th September 2009, the main reason was the
company was going to announce an interim dividend on 30th September 2009
The Company’s Share Price have gone down & have given lowest return on 12th November
2009, the reason was the dependence on Sensex on European & American Markets.
The above Table & Graph gives us the Clear result of Investing in Maruti Suzuki Ltd.
FUTURE COMMENTS
Investment is leading to the employment growth in the sector. With the emergence of new
projects and introduction of technological advancements, the focus is more on the skilled and
experienced human resource. The companies are looking for skilled and hard working people
who can give their best to the organization.
The engineers in the automotive or electrical or mechanical field are in demand. Some of the
firms going for automation, i.e. planning for CAD (Computer Aided Designs) systems, are
also recruiting people with IT specializations.
As it is seen, the total sales of passenger vehicles - cars, utility vehicles and multi-utility
vehicles - in the year 2005 reached the mark of 1.06 million. The current growth rate indicates
that by 2012 India will overtake Germany and Japan in sales volumes.
Financing schemes have become an important factor in the growth of automobile sales. More
and more financial schemes are coming up with easy installment plans to lure the customers.
led by developments in the emerging economies which were, for the most part, not directly
affected by the financial crisis. By comparison, activity will increase at a somewhat more
modest pace in many of the advanced economies, which comprise the bulk of Ireland’s current
export markets. This reflects the continued existence of headwinds linked to the crisis, notably
weak labour markets, the need for further deleveraging in the private sector, and budgetary
adjustment to bring public deficits to more sustainable levels. Weighted by their share in Irish
exports, GDP in our main export markets is projected to increase by just under 2% next year.
CONCLUSION
The automobile sector registered a mixed performance in August 2008. The two-wheeler
segment continued to take advantage of a low base and posted better y-o-y numbers, while the
four-wheeler segment continued its lackluster performance and clocked low volumes.
Maruti Suzuki posted 9.2% y-o-y decline in total volumes
to 59,908 units in August 2008. Exports also clocked a
subdued 1% growth to 5,795 units (5,739).On the
domestic front, the company reported 10.2% y-o-y decline
in sales to 54,113 vehicles (60,229). The drag came in the
dominant A2 segment, which registered a y-o-y decline of
9.7% to 37,667 units (41,736).
Combined sales of Omni and Versa showed a decrease of
17.1% y-o-y to 6,540 units (7,889). The A1 segment
continued to be sluggish with sales of 3,717 vehicles, a
decline of 32.2%.However, the A3 segment clocked a
good sales growth of 12.2% y-o-y to 5,427 vehicles on
the back of the success of SX4 and Dezire. We feel the
biggest point of contention remains the increased
payment of royalty to Suzuki Motors. Maruti has
increased the royalty to 5.1% of Sales for the Q1 FY11
compared to an average of 3.4-3.7% in the previous
quarters. The total royalty Q1 FY11 included additional
non- recurring 0.8% arrears for FY 2010. This has impacted the company’s margin
significantly. Going forward, we expect the margin to remain under pressure due to higher
royalty and increasing competition though anticipated reduction in raw material costs will
partially offset this impact.
In an environment friendly initiative, in August 2010 Maruti
Suzuki introduced factory fitted CNG option on 5 models across
vehicle segments. These include Eeco, Alto, Estilo, Wagon R and
Sx4. The total royalty Q1 FY11 included additional non- recurring
0.8% arrears for FY 2010. This has impacted the company’s
margin significantly.
MARUTI SUZUKI INDIA LIMITED 2009 -2010
BIBLIOGRAPHY
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