A COMPARATIVE

PROFITABILITY ANALYSIS OF
AUTOMOBILE INDUSTRY
P R E S E N TAT I O N

Presented by Manish Kumar Choudhary

 01 Introduction

02 Objective

03 Methodology

Table of 04 Tools use for data analysis

Contents 05 Data analysis and ranking

06 Conclusion

07 Suggestion
 Profitability is the ability to earn profit from all the activities of an
enterprise. It indicates how well management of an enterprise generates
earnings by using the resources at its disposal. In the other words the

Introduction
ability to earn profit e.g. profitability, it is composed of two words profit
and ability. The word profit represents the absolute figure of profit but an
absolute figure alone does not give an exact idea of the adequacy or
Show the ways company plans to make otherwise of increase or change in performance as shown in the financial
money. statement of the enterprise. The word ‘ability’ reflects the power of an
enterprise to earn profits also known as earning performance. Earnings are
an essential requirement to continue the business. So, we can say that a
healthy enterprise is that which has good profitability. According to
Hermenson Edward and Salmonson “profitability is the relationship of
income to some balance sheet measure which indicates the relative ability
to earn income on assets employed” and according to Harward & Upton,”
profitability is the ability of a given investment to earn a return from its
use.”
 To make profitability analysis of the five
selected AUTOMOBILE INDUSTRY
Companies in India from the study period

Objective 2016-2017 to 2020-2021.

To Rank them on the basis of their financial

performance considering the effect of all
profitability indicators (that have been taken
in our study).

To offer findings, conclusion and suggestion

of this study.
PROFITABILITY RATIOS RELATING TO PROFITABILITY RATIOS RELATING TO
SALES: INVESTMENTS

Gross Profit Ratio Return on Equity

ROE= (Net Income / Shareholders’ Equity) X100
GPR= (Gross Profit / Net Sales) X100

Net Profit Ratio Return on Assets

ROA= (Net Income / Total Assets) * 100
NPR= (Net Profit / Net Sales) X100

Return on Capital Employed

Operating Profit Ratio ROCE= (Net Profit after tax / Capital Employed) *100

OPR= (Operating Profit / Net Sales) X100

Earnings Per Share
EPS= Net Profit Available to Equity Shareholders / No. of ordinary
share outstanding
Descriptive Statistics Against Each Of The Sample Companies
Particulars MSIL BIL TML M&ML TKIPL
MEAN OF GPR 11.08 5.4 -3.74 13.98 70.06
MEAN OF NPR 8.492 -6.014 -2.888 2.832 8.684
MEAN OF OPR 2.602 0.442 0.346 0.49 0.548
MEAN OF ROE 14.968 -3.208 -13.826 10.16 7.22
MEAN OF ROA 12.25 -1.964 -0.672 3.026 3.846
MEAN OF ROCE 16.2 9 5.2 11.4 15.2
MEAN OF EPS 219.176 -0.24 -24.496 29.708 96.568
Standard Deviation (SD) OF GPR 3.062189 3.174902 5.606068 7.281277 8.780831
Standard Deviation (SD) OF NPR 1.883075 21.40354 5.128632 3.613152 4.378011
Standard Deviation (SD) OF OPR 0.621023 0.784105 0.19718 0.472388 0.277615
Standard Deviation (SD)OF ROE 4.947097 17.41338 25.24959 7.921427 2.808318
Standard Deviation (SD) OF ROA 2.065393 9.943879 5.770734 1.92404 1.284613
Standard Deviation (SD) OF ROCE 8.757854 2.44949 4.086563 2.701851 6.379655
Standard Deviation (SD) OF EPS 50.49277 4.253346 54.24899 23.26386 43.97024

Co-efficient of Variance (%) OF GPR 361.8327 170.084 -66.7134 191.9993 797.8743

Co-efficient of Variance (%) OF NPR 450.9646 -28.0982 -56.3113 78.38031 198.3549

Co-efficient of Variance (%) OF OPR 418.9859 56.37003 175.4741 103.7284 197.3958

Co-efficient of Variance (%) OF ROE 302.5613 -18.4226 -54.7573 128.2597 257.0934

Co-efficient of Variance (%) OF ROA 16.86035 -506.307 -858.74 63.58361 33.40127

Co-efficient of Variance (%) OF ROCE 184.9768 367.4235 127.2463 421.9329 238.2574

Co-efficient of Variance (%) OF EPS 434.074 -5.64262 -45.1548 127.7002 219.6213

RANK OF THE SAMPLE COMPANIES ON THE BASIS OF PROFITABILITY RATIOS
 Particulars MSIL BIL TML M&ML TKIPL
Rank as per Mean of GPR 3 4 5 2 1
Rank as per Mean of NPR 2 5 4 3 1
Rank as per Mean of OPR 1 4 5 3 2
Rank as per Mean of ROE 1 4 5 2 3
Rank as per Mean of ROA 1 5 4 3 2
Rank as per Mean of ROCE 1 4 5 3 2
Rank as per Mean of EPS 1 4 5 3 2
Rank as per SD of GPR 5 4 3 2 1
Rank as per SD of NPR 1 5 4 2 3
Rank as per SD of OPR 4 5 1 3 2
Rank as per SD of ROE 2 4 5 3 1
Rank as per SD of ROA 3 5 4 2 1
Rank as per SD of ROCE 5 1 3 2 4
Rank as per SD of EPS 4 1 5 2 3
Rank as per C.V. of GPR 4 2 1 3 5
Rank as per C.V. of NPR 5 2 1 3 4
Rank as per C.V. of OPR 5 1 3 2 4
Rank as per C.V. of ROE 5 2 1 3 4
Rank as per C.V. of ROA 3 2 1 5 4
Rank as per C.V. of ROCE 2 4 1 5 3
Rank as per C.V. of EPS 5 2 1 3 4
 CONCLUSION

• It is observed that considering the aforesaid five indicators of profitability of Maruti Suzuki India Ltd. holds the 1st position

and TKMIL, M&ML, BIL & TML hold the position of 2nd, 3rd, 4th & 5th in terms of overall ranking due to their whole

performance in this study.

 
• After reviewing all such things, we are able to say that though Maruti Suzuki India Ltd. has lowest Mean Value in terms of
ROE, ROA & ROCE out of these five companies. Maruti Suzuki India Ltd. is most sound in terms of profitability position
during this study period because in terms of generating GPR, NPR & OPR its secure top position (Mean Value) in the ranking
table. It also generates largest EPS (Mean Value) during this period of study. Here we can say that it would be possible that
the value of its shareholders fund, and its value of assets may be higher therefore as the denominator rises it can offset the
power of numerator (return), and also there is a possibility that the company has some idle assets but after reviewing whole
picture including SD & CV Maruti Suzuki India Ltd. should be treated as the benchmark of this group of companies in terms
of profitability we can say that Maruti Suzuki India Ltd. is sound in terms of profitability.
 SUGGESTION
Approach 2
• Through the present position regarding GPR, NPR & OPR is good for the company Maruti Suzuki India Ltd. (MSIL), even every
company want to earn more. The other companies BIL, TML, HPCL & M&ML may earn more profit by increasing the sales price
without disturbing the sales volume. Beside this, both the direct and indirect avoidable cost are to be eliminated to increase the
profit.

• In terms of ROE, ROA & ROCE TATA Motors Ltd. (MSIL) failed to generate profit from investment, so TML need some improvement
for generating profit from investment.

• From the study it can be said that crucial decisions will be taken by the M&ML in terms of all the aspects which is discussed to
make consistency in it’s profitability through it’s performance.
Thanks for Listening
with great patience