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AR10 – Annual Report Sprint

Tata Motors & Maruti Suzuki

Made as a part of AR10- Annual Report Sprint

Anshul Thukral
FinShiksha
 Annual Report Analysis – Maruti Suzuki FinShiksha
www.finshiksha.com

Maruti Suzuki is leader in passenger car market having 50% market. Its more than
90% sales comes from India. It is a subsidiary of Japanese automobile manufacturer
Suzuki Motor Corporation with a 56.21% stake

Key points about company & business Key numbers about the company

• Market leader In passenger car with 50% share

INR Million FY 21
• Domestic sales 95% (40% sales from non-urban)
Net sales 6,65,621
• Company sells around 1.5 million cars per year EBITDA 53,453
• Material cost contributes 70% of sales EBIT 23,138
• Company has negative working capital, due to high PAT 43,297
bargaining power with suppliers EPS 140

• Manufacturing Plant- Manesar, Gurugram Vehicles Sold 1.4 Million

• Debt Free Company with strong cash balance

FinShiksha Source: Maruti Suzuki Annual Reports 2021

 Annual Report Analysis – Maruti Suzuki FinShiksha
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Major excerpts from MD&A Other important points

• Significant cost pressure due to increase • Threats faced due to covid- Supply side
in commodity prices that adversely disruption, semiconductor shortages &
impacted margins (raw material cost is logistics
70% of sales) • Reasons for underperformance is due to
• Decrease in negative working capital to increase in vehicle acquisition cost (due to
provide support to suppliers GST and BS-6 norms)
• Global shortage of semi-conductors which • Company took gradual price increase, and
may create Supply-side issues. cost cutting measures such as reduction in
promotional expenses
FinShiksha Source: Maruti Suzuki Annual Reports 2021
 Annual Report Analysis – Maruti Suzuki FinShiksha
www.finshiksha.com

Revenue Decreased

Revenue per car

Biggest Costs

• Due to raw material prices going up(steel). Its cost

have increased to 72% in FY-21 • Maruti sells 1.5 million cars per year
• Company's Margins got impacted adversely and has a 50% market share.
despite taking price increase measures. • Its revenue per car sold is less as the
• Revues have decreased over the years, as the company's major sales comes from
industry was not performing well, impacted due mini & compact
to GST and BS-6 norms • 4500 crore Capex plans
FinShiksha Source: Maruti Suzuki Reports 2021
 Annual Report Analysis – Maruti Suzuki FinShiksha
www.finshiksha.com

Key Strategies & Strengths

• Company enjoys Negative working capital as it has high bargaining power with
suppliers.
• Company has its focus on hybrid, CNG vehicles & will add SUVs to its existing
product portfolio.
• Company focus is on volumes rather than value & focusses on affordability
• Company's management does not have EV plans, due to lack of affordability in
India, as India's car penetration is already low, only 5% of car sold in India are above
15 lakhs
FinShiksha Source: Maruti Suzuki Annual Reports 2021
 Annual Report Analysis – Maruti Suzuki FinShiksha
www.finshiksha.com

Short Summary-

• Company’s major sales come from Mini and compact segment and only 15-20% is
from UV segment.
• Company is not able to take sufficient price increase & only took gradual price
increase which impacted their margins They took certain cost-cutting measures of
lowering marketing expenditure and employee cost reduction.
• Company does not have EV plans, as there is low car penetration in India due to low
per capita income and want to make affordable cars

Opinion –

I believe they are in dilemma with 50% market share and major sales form (compact
and mini) as they have always focused on volumes and they currently do not see EV
selling in volume, the reason being India's per capita income being $2000 also due to
lack of infrastructure, their target segment customer is focused on affordability. EV’s are
expensive, only 5% of cars sold in India are above 15 lakhs, but they should not
completely rely on hybrids and CNG.

FinShiksha Source: Maruti Suzuki Annual Reports 2021

 FinShiksha
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AR10 – Annual Report Sprint

Tata Motors

Made as a part of AR10- Annual Report Sprint

Anshul Thukral
FinShiksha
 Annual Report Analysis – Tata Motors FinShiksha
www.finshiksha.com

TATA motors has a diversified portfolio of commercial, Passenger & luxury vehicles. It has a
strong global network of subsidiaries & JVs including Jaguar Land Rover in UK

Key points about company & business Key numbers about the company

• JLR contributes 80% of revenue, followed by PV 13%

• Approach of profit over volumes which reflects in its INR Crore FY21
Revenue 249794
margins (high gross margins 35%)
EBITDA 30475
• Major Revenue from 5 countries (India, China, USA 20%)
Net Profit -13394
(UK, Europe 15%) Market Cap 163608
• Tata Motors has an 8.2% market share in India 2021( Total Sales 837783 units
Volume
growth of 69% from FY 19-20)
• 70% market share in EV by selling 4200 Nexon EV
• TATA can leverage growth from their group companies-
tata power, chemicals for EV business
FinShiksha
Source: Tata Motors Annual Reports 2021
 Annual Report Analysis – Tata Motors
Major excerpts from MD&A
• Supply situation adversely impacted due
to Covid & semiconductor shortages (took
production cut at JLR)
• Benefit from FAME scheme (supplied
more than 350 electric buses)
• Despite PV sales declining in India,
company witnessed double-digit growth
FinShiksha
Source: Tata Motors Annual Reports 2021
FinShiksha
www.finshiksha.com
Other important points
• 10 new EV by 2025 & will invest to
setup charging infrastructure
• Vehicle scrapping policy will benefit the
company’s commercial vehicle segment &
will provide low-cost raw material
• 55% of all new car sales in Europe may
be fully electrified by 2030.
 Annual Report Analysis – Tata Motors FinShiksha
www.finshiksha.com

High Gross profit margins

Biggest Cost

• High gross margins of 36% & 12% EBITDA • Company has faced losses in three
years due to muted demand from
as company has premium product portfolio
COVID, Brexit & China product quality
• Employee cost has reduced due to
issue.
employee layoff & grant provided by the UK
• Company took cost-cutting
government
measures to neutralise the impact of
raw material increase
FinShiksha
Source: Tata Motors Annual Reports 2021
 Annual Report Analysis – Tata Motors FinShiksha
www.finshiksha.com

Key Competitive Strengths Any Red Flags / Risk Factors

• Company enjoys negative working capital, has strong • Interest coverage ratio less than
bargaining power with suppliers 1 should be treated with caution,
• Huge growth potential in EV & FAME -2 policy support from reflects company’s ability to pay
government. interest using its operating
• Approach of profit over volumes, reflects in its margins (small income.
increase in volumes will make the company profitable • Company has increased debt in
• Leader in EV with 70% market share & have expansion plans recent years, its debt to equity
• Can leverage growth from group companies tata power, tata ratio is 2.02 (more than 60%
chemicals for EV support debt)

FinShiksha
Source: Tata Motors Annual Reports 2021
 Annual Report Analysis – Tata Motors FinShiksha
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Summary

• TATA motors has premium segment product portfolio. Company’s profits over volume
approach reflects in its high margins (small increase in volumes, will help the company
to be profitable)
• Cost-cutting measures such as reduction in employee expenses to neutralise the
impact of rising raw material cost, also semiconductor shortages impacted company’s
sales.
• Company has significant international debt, as its cash flows are also international
making it’s interest cost low.
• Company has made losses from past three years though prospects look good, with its
EV expansion plans, to launch new EV’s in the next 5 years
• Significant improvement in its Indian business with increased PV sales
• Tata can leverage their group companies, Tata power, TCS, Tata technologies, as EV
requires high end software’s.
• Received investment of 1billion$ from TPG rise climate for EV business.

FinShiksha Source: Tata Motors Annual Reports 2021