XIM University

School of Human Resource Management

Assignment on Financial Reporting & Analysis

Company : Maruti Suzuki
Topic : Analysis of the balance sheet of Maruti Suzuki 2021-22

Submitted by –
Kaveri Priyambada
UH22072
FRAN
Term II
Batch 2022-24

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INTRODUCTION

Maruti Suzuki India Limited was established in 1981. A joint venture agreement
was signed between the Government of India and Suzuki Motor Corporation
(SMC), Japan in 1982. The Company became a subsidiary of SMC in 2002. In terms
of production volume and sales, the Company is now SMC’s largest subsidiary. SMC
currently holds 56.37% of its equity stake. It is a public limited company, and its
shares are traded at the National Stock Exchange (NSE) and the Bombay Stock
Exchange (BSE).

The Company has two state-of-the-art manufacturing facilities, located in Gurugram

and Manesar in Haryana, capable of producing ~1.5 million units per annum. Highly
efficient lean manufacturing processes, together with a skilled and motivated
workforce, enable manufacturing of reliable and quality products.

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Suzuki Motor Gujarat Private Limited (SMG), a subsidiary of SMC, was set up in
Hansalpur, Gujarat to cater to the increasing market demand for the Company’s
products and has been operational since 2017. In April 2021, the 3rd manufacturing
plant with an annual production capacity of 0.25 million units, was made operational.
With this new capacity addition, an annual production capacity of 0.75 million units
has been made available at SMG, thereby taking the Company’s combined
production capability to ~2.25 million units. The Company is responsible for the
sales and distribution of units produced at the SMG facility.

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BALANCE SHEET

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Financial Ratios
Classification of Ratios

1. Return on Investment (ROI) ratios

2. Solvency ratios
3. Liquidity ratios
4. Efficiency or Turnover ratios
5. Profitability ratios

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 ▪ Return on Net Worth (RONW)

The ratio measures the net profit earned on equity shareholders’ funds. It is the
measure of overall profitability of a company.

Formula:
PAT- Pref. Dividend/Net Worth x 100
For the year 2022 = 37663/540860 x 100 = 6.9635 %
For the year 2021 = 42297/513668 x 100 = 8.2343 %
The ratio measures the net profit earned on equity shareholders’ funds. It is the
measure of the overall profitability of a company. The company’s Return on net
worth is not very good. It stood at 8.23% in 2021 and declined to 6.96% in 2022.

▪ Liquidity ratio:
Current ratio = Current asset/current liability
For the year 2022 = 167812/170137 = 0.9863
For the year 2021 = 180805/162001 = 1.1160

Decreased primarily on account of increase in current liabilities and provisions

mainly due to increase in raw material prices and effective working capital
management.

Collection period = (Trade receivable/credit sales) x 365

For the year 2022 = (20301/882956) x 365 = 8.3921
For the year 2021 = (12766/703325) x 365 = 6.6250
Quick ratio = (Current asset – inventory)/current liability
For the year 2022 = (167812 – 35331)/170137 = 0.7786
For the year 2021 = (180805 – 30500)/162001 = 0.9278

▪ Turnover ratio:
Fixed asset turnover ratio = sales/average fixed asset
For the year 2022 = 882956/134753 = 6.5524
For the year 2021 = 703325/141511 = 4.9701

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The fixed asset turnover ratio reveals how efficient a company is at generating
sales from its existing fixed assets. A higher ratio implies that management is using
its fixed assets more effectively. Fixed asset turnover ratio improved for the
company in the year 2022 in comparison with the year 2021.
Inventory turnover ratio = COGS/average inventory
For the year 2022 = 397387/32915.5 = 12.0729
For the year 2021 = 332969/30500 = 10.9170
The inventory turnover ratio is the number of times a company has sold and
replenished its inventory over a specific amount of time. It tells us about the
number of days it will take to sell the inventory on hand. The inventory turnover is
12.07 in the year 2022, meaning they had to replenish their full inventory 12 times
over the past year. The inventory turnover ratio improved in 2022 than the year
2021.
Debt to Tangible asset ratio = Total Liabilities/Shareholders Equity - Intangible
assets
For 2022 = 193083/540860 - (3499+2903) = 0.3612
For 2021 =187940/513668 - (2242+2975) = 0.3696
This indicates the number of times average debtors have been converted into cash
during a year. This is also referred to as the efficiency ratio, which measures the
company's ability to collect revenue. The company maintains an excellent debtor’s
turnover ratio. But it performed badly in the year 2022 than in the year 2021.
Fixed Asset Turnover = Net sales/Net fixed assets
For 2022 = 882956/127995 = 6.8983
For 2021 = 703325/141511 = 4.9701

▪ Profitability ratio:
Operating profit margin = (EBIT/sales) x 100
For the year 2022 = (45823/882956) x 100 = 5.1897 %
For the year 2021 = (51594/703325) x 100 = 7.3357 %

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The operating profit margin, also known as Return on sales (ROS), Measures
the net profit earned from each rupee of revenue. Profit margin declined in
the year 2022 from the year 2021.
Gross profit margin = (Gross profit/sales) x 100
For the year 2022 = (503504/882956) x 100 = 57.0248 %
For the year 2021 = (400820/703325) x100 = 56.9893 %
The gross profit margin tells what the business made after paying for the direct
cost of doing business. The company’s gross profit margin is excellent. In both the
years 2021 & 2022, it stands to be almost 57%. There is not much change.
Net profit margin = (Net profit/sales) x 100
For the year 2022 = (37663/882956) x 100 = 4.2355 %
For the year 2021 = (42297/703325) x 100 = 6.0138 %

Net Profit margin is lower as compared to previous year, mainly on account of

higher commodity prices partially offset by higher sales volume, increase in selling
price and cost reduction efforts.

The 5 year performance summary of Maruti Suzuki shows that the net sales has
increased in the year 2021-22 but Profit making has decreased, so is the Profit before
taxes. Even the company’s Current liabilities has increased while the total assets has
also increased but the current assets has decreased with the company. With the
company is left with very less operating cash flow with them after clearing all the
liabilities of them.

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ANALYSES

Revenue from operations for six years (in million)

Total Expenses for six years (in million)

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