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N.R. Institute Of BusinessAdministration

GLS Campus, Maida plaza Lane,Off. C.G.RoadEllisbridge, Ahmedabad 380 006.

Certificate

This is to certify that the reportbased on 3 years published Annual

Report of Maruti Suzuki ltd. Issubmitted by Varasani MahendraDevjibhai to the N. R. Institute OfBusiness Administration affiliatedto the Gujarat University in apartial fulfillment requirement for

the completion of practical studyat the second year B.B.A.programme for the year 2007.

1 FINANCIAL REPORT N.R.I.B.A.

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--------- ----------Directors sign Prof. In

charge

Date : 22/02/2008

ACKNOWLEDGEMENT

I am highly thankful to MARUTI SUZUKIfor helping me in my Practical Studies atsecond year B.B.A. programme. It hasprovided me many details and enlightensme in preparation of this financial report.

I take this opportunity to thanks ourdirector A. B. Dixit and Pro. Seema Panditfor giving me an opportunity to prepare myfinancial project report. She also helped mein finding out the Ratios and someimportant aspects.


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PREFACE

Finance management in India has substantially in scope andcomplexity in view of recent government policy. The modern approach

to corporate finance is much more than traditional approach to financial

management or with more procurement of funds. In present situational

financial management is real with procurement of funds and maximumutilization of it. Finance Is A Blood Of Any Business Body. Less capitalcreates problems in the business and more capital is also creating

problems.

In this report, I am trying to explain how we can find out financial

result with the help of ratio analysis and some more in portent graphswith the help of Ratio Analysis. We can easily understand the

profitability of the business, efficiency of business, useful in inter

comparison. It is also useful for budgeting control and decision-making.Ratio analysis helps interested parties like share holders, investors,

creditors, government also and analysis to make an evaluation of acertain aspect of a firms performances.


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INDEXSr.no.

Title Page No.

Certificate 01

Acknowledgement 02

Preface 031. Company profile

Name of the company

Registered office addressStatus in the market

Special achievementFinance highlights

Meaning of analysis and objectives of study

05

2. Results of operationsProfits of three years GP,NP,EBIT,EBT,EATImportance of cash profit (theory)

Cash flow statement

Conclusion

3. Ratio AnalysisMeaning and importance of ratio andclassification traditional classification &

functional classification

PROFITABILITY RATIO

Gross profit ratio


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Net profit ratio

Expense ratioOperating ratio

Return on investment

Return on share holders fund

Return on equity share capitalReturn on equity shareholders fundEarning per share

Dividend per share

Price earning ratioDividend yield ratio

Interest coverage ratio

ACTIVITY / TURNOVER RATIO:

Overall turnover ratio

Fixed asset turnover ratioDebtor turnover ratioCreditors ratio

Creditors turnover ratioStock turnover ratio

LIQUIDITY RATIO :Current ratio

Liquid ratioQuick / acid ratio

LEVERAGE RATIO:Proprietary ratio

Debt equity ratioCapital gearing ratio

OTHERS:Long term fixed fund to fixed asset

4. Accounting policies and notesNotes of accountsMain policies pertaining the unit

Implication5. Directors Report

6. Auditors ReportsName of the auditorsTo state weather reports is qualified or

unqualified

Implication


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7. Common sized statementP & L A/c common sizeBalance sheet common size

Comparison

8. ConclusionFindings

Conclusionsuggestion

Maruti Udyog LimitedREGISTEREDAND CORPORATEOFFICE:

11th Floor, Jeevan Prakash Building,25, Kasturba Ganghi Marg,

New Delhi 110001

Brief Introduction Of The Production Of TheBusiness:

Maruti Udyog does the make vehicle and also produces

spares and accessories of the vehicle.

States In The Market :

No.1 car producer Company in the Indian market andrunner up in foreign country.

Special Achievement :

MARUTI SUZUKI HAS WON OVER 50 AWARDS SINCE YEAR 2000


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NO. 1 INTHE AUTOMOBILESSECTORINTHE INDIAMOSTRESPECTED

COMPANIES SURVEY, 2006. RANKEDAMONGTHETOP 5 CARCOMPANIESINTHE 2006 WORLDSMOST

REPUTEDCSOMPSNIESLISTPUBLISHEDBY FORBESMAGAZINE.

NO. 1 IN CUSTOMER SATISFACTION, 7 TEARSINROW, 2000 06.

NO. 1 IN SALES SATISFACTION, 3 YEARSINARAW, 2004 06.

NO. 1 INITIAL QUALITY STUDY, 2006.

NO. 1 IN INDIA APEAL STUDY, 2006.

NO. 1 IN TOTAL CUSTOMER SATISFACTION, 5 YEARSINAROW, 2002 06.

NO. 1 IN GLOBAL CORPORATE SOCIAL RESPONSIBILITY STUDY, 2006.

RANKEDAMONGTOP 3 INTHE CORPORATE IMAGE MONITOR, 2005

MANUFACTUREROFTHE YEAR, 2005


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FINANCIAL HIGHLIGHT:

YEAR 2005 06 2006 - 07

Net Sales 120,034 145,922

Profit Before Tax. 17,500 22,798

Profit After Tax. 11,891 15,620

EPS 41.16 51.12

MEANING OF ANALYSIS AND OBJECTIVE OF STUDY :

Financial statement namely the statement of the profit & lossaccount and the balance sheet are indication of two signify-cant factorsprofitability and financial soundness analysis of statements means such

a treatment of the information contained to afford a diagnosis of theprofitability and financial statements analysis as the process of

methodical classification comparison with other co-rising question and

then seeking answer for them.

Finance is the very typical aspect in course of management. The

main objective behind the study is to get precisely. It also helps us tostudy the present finance scenario. The objective is such that companys

profitability, liquidity and capacity by such analysis we can interpret the

position of the company. So it is very important to study.


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[ 2.1] Profit of 3 years:

PARTICULARS 2004 05 2005 06 2006 - 07

Net profit 8,536 11,891 15,620

Gross Profit 19.93 % 20.51 % 24.59 %

EBIT 16.6% 17.1% 17.7%

EAT 8,536 11,891 15,620

EBT 17500 25888 20558

[ 2.2 ] IMPORTANCE OF CASH PROFIT THEORY :

MEANING

Cash flow means inflows that is, sources of cash which are at the

disposable at the firm and outflows of the fire that is the use of the firm.

The difference between inflows and outflows iseither net inflow

or net outflow. A cash outflow statement deals with the cash fund flow,which excludes working capital movements. The Accounting standard

(A53) classifies cash flows as under:

1) Cash from operating activities

2) Cash from investing activities3) Cash from financing activities

The operating activities include receipts from sale of goods orRendering of services receipts from royalty, fees, commission etc.

Outflow is the resulting from payment to creditors for goods andservices, payment for expenses such as lighting, power, rent, wages

salaries etc.

Only cash from operating activities is included in this report.


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IMPORTANCE OF CASH PROFIT :

The cash profit is an important measure of profitability as wellas liquidity. When the cash profit differs from the profit is shown in theprofit and loss account or profit and loss statement. Adjusting

depreciation arrives at the cash profit, amortize action of capitalexpenses etc. The cash profit is much less or negative compared to

the profit declared in the profit and loss account. It indicates liquidity

and signals for appropriate cash management. The net cash fromoperations can be calculated through adjustment of non-cash items

like depreciation, changes in inventory and receivable and payables ,and or other items for which cash offers the investing and financing

activities.

CASH FLOW STATEMENTFOR THE YEAR ENDED 31st MARCH 2007

(A) Cash flow from Operating Activities : Rs. In

million

Net Profit before Tax 22,798

Adjustments for :

Depreciation 2714

Interest Expense 376

Interest Income 1109

Dividend Income 1528

Net Loss on Sale / discarding of fixed assets 4Profit on sale of Investments 389

Debts / Advances Written back 22

Provisions no longer required written off 459

Opening Loss of MSAIL adjusted from opening surplus onamalgamation

84

Impact of transition provision of Accounting Standard 15 5

Employee benefit -

Operating profit before Working Capital changes 22340

Adjustments for changes in Working Capital

(increase) / decrease in sundry debtors 1035(increase) / decrease in other current Assets, Loan & advances 1523

(increase) / decrease in Inventories 1680

increase / (decrease) in current Liabilities and Provisions 5170

Cash generated from Operating Activities 26632

Taxes / received (Net of TDS) 6352

Net cash from Operating Activities 20,280


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(B) Cash flow from Investing Activities :

Purchase of fixed assets 13955

Sale of fixed Assets 123

Sale of investments 109253

Purchase of investments 122444

Interest received 1127Dividend received 1528

Net cash from Investing Activities 24368

(C) Cash flow from Financing Activities :

Proceeds from Short term borrowings 233

Proceeds from Long term borrowings 5675

Repayment of Short term borrowings 317

Interest paid 280

Dividend paid 1011

Net Cash from Financing Activities 4300

Net Increase / (Decrease) in Cash & Cash Equivalents 212

Cash and Cash Equivalents as at 1st April (Opening Balance) 14016

Cash and Cash Equivalents as at 31st March (Closing Balance) 14228

Cash and Cash Equivalents comprise 14228

Cash, Cheques & Drafts (in hand) 946

Balance with Scheduled Bank in Current Account 202Balance with Scheduled Bank in Deposit Account 13080

Interpretation

Above cash flow of Maruti Suzuki Ltd. Is shown that year 2006 07 net

profit is higher than 2005 06 and this is good condition for the

company. Also investing as well as financing activities cash flowdescribes strong condition from the previous years cash flow activities.


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3.1 MEANING & IMPORTANCE OF RATIO :

An idea the financial position can be had from the balance sheet.The directors report and chairmans speech would assist him in

foresting the future prospects of the company. However, accurate

conclusions cannot be drawn from the mass of figures included in thesefinancial statements. Hence, they are to be analyzed and interpreted

with the help of a number of devices. So let us at this stage, clarify themeaning of important terms useful in our study of analysis of accounts.

Ratio is a figure showing, logical relationship between any twoitems taken from financial statement as prepared and presented

annually are of little use for guidance of prospective investors, creditorsand even management. If relationships between various related items in

these financial statements are established, they can provide useful dues

to garage accurately the financial health and ability of business to makeprofit. The relation between in two related items of financial statements

is known ratio.

[ 3.2 ]UTILITY OF RATIO ANALYSIS :

It is very important to find the ratio of liquidity, profitability etc.Because the ratio analysis provides useful data to the management,

important uses of it are given as below:

PROFITABLITY :

Useful information about the trend of profitability is from

profitability ratio. The gross profit ratio, net profit ratio and ratio of

return on investment give a good idea of the profitability of thebusiness. On the basic of this ratio, investors get an idea about

overall efficiency of managers and bank as well as other creditorsdraw useful conclusion about repaying capacity of the borrowers.

LIQUIDITY :

In fact the use of ratio was made initially to ascertain the Liquidityof business. The current ratio, acid test ratio will tell whether the firmwill be able to meet its current liabilities and when they nature. Banks

and other leaders will be able to conclude from these ratios whether thefirm will be able to pay regularly the interest and loan installments.


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EFFCIENCY :

The turnover ratios are excellent guide to measure the efficiency of

managers. All such ratio related to sales present a good picture of the

success on the business.

INTER FIRM COMPARION :

The absolute ratios of a firm are not of much use, unless they arecompared with similar ratios of other firms belonging to the same

industry. This is a inter firm compared to other firms comparison,

which shows the strength and weakness of the firm as compared toother firms and will indicate corrective measures.

INDICATE TREND :

The ratio of the last 3 to 5 years will indicate the trend in therespective fields. A particular ratio of a company , for one year may

compare favorably with industry average, but its trend shows a

deteriorating position, it is not desirable only ratio analysis will provide

this information.

USEFUL FOR BUDGETARY CONTROL :

Regular budgetary reports are prepared in a business where thesystem of budgetary control is in use. If various ratios are presented

these reports, it will give a fairly good idea about various aspects offinancial position.

USEFUL FOR DECISION MAKING :

Ratio guide the management in making some of the important

decision, suppose, the liquidity ratios shows an unsatisfactoryposition, the management may decide to get additional liquid funds.

Even for capital expenditure decision, the ratio of investment. Theefficiency of each department a thus be deter minded. Thus, the ratio

are the most useful I financial statement.

[ 3.3 ] CLASSIFICATION OF RATIO :


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1) Profitability ratio :

These ratios indicate the profit generating capacity of Business.

This category includes:

Gross Profit Ratio

Net Profit Ratio

Operating ratio

Return on Company Employees Ratio

Return on Shareholders Funds

Debt Service Coverage Ratio

2) Liquidity Ratios :

These ratios indicate whether short term assets are enough to

meet short - term obligation from short assets. These categories include:

Current Ratio

Liquid Ratio

Acid Test Ratio

3) Leverage Ratios :

These ratios indicate compensation of companys capital and Its

distribution into debt and equity. These categories include:

Proprietary Ratio Debt Equity Ratio

Capital Gaining Ratio

Fixed Capital to Fixed Assets Ratio

4) Activity Ratio :

These ratios indicate the efficiency of investment in theorganization. These categories include :

Creditors Turnover Ratio

Debtors Turnover Ratio

Fixed Assets Turnover Ratio

Total Assets Turnover Ratio


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[ 3.2.1 ] Gross Profit Ratio :

Meaning :

It is a ratio expressing relationship between Gross Profit earned tosales. It is a useful indication of the profitability of business.

Implementation : Gross profit is result of the relation between price, sales volume

and costs. A change in the gross margin can be brought about by

changes in any of these factors.

The gross profit ratio can also be used in determining the extent

of loss caused by theft, spoilage, damage and so on in the case of

those firms which follow the policy of fixed gross profit margin inpricing their product.

The gross margin represents the limit beyond which fall in sales

price are outside the tolerance limit.

Formula :

= Gross profit X 100Sales

TABLE OF THREE YEARS RATIO :

PARTICULAR 200607 2005-06 2004-05Gross profit 24.59 20.51 19.93

Calculation of three years : [ Rs. In million]PARTICULAR 2006 07 2005 06 2004 - 05

Gross Profit 35880 24626 21744

Sales 145922 120034 109108

INTERPRETATION :

This ratio indicates relation between G/P and Sales. For the year 2004-

05 it was 19.93 and 2005-06 was 20.51 and increase to 24.59 in 2006-07.


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[ 3.2.2 ] Net Profit Ratio :

Meaning :

Net profit ratio is valuable for the purpose of ascertaining the over-allprofitability of business and shows the efficiency of operating the

business.

Implementation : The net profit ratio is indicative of managements ability to

operate the business with sufficient success not only to recover

from revenue of the period the cost of merchandise or services,

the expenses of operating the business and the cost of the

borrowed funds, but also to leave a margin of reasonable

compensation to the owners for providing their capital at risk.

The ratio of net profit ratio to sales essentially expresses the cost

price effectiveness of the operation.

A high net profit margin would ensure adequate return to the owners as

well as enable a firm to withstand adverse economic conditions when

selling price is declaiming, cost of production raising and a low net profit

margin has the opposite implication.

Formula :

= Net Profit X 100Sales

TABLE OF THREE YEARS RATIO :

PARTICULAR 200607 2005-06 2004-05

Net profit ratio 16.47 % 16.47 % 16.47 %

CALCULATON : [ Rs. In million]PARTICULAR 2006 - 07 2005 06 2004 05

Net Profit 15620 11891 8536

Sales 145922 120034 109108

Interpretation :


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This ratio shows a better profitability of the firm as compared to the last year i.e.2005 06. This suggests a satisfactory position. It is sound financial position to the

company. Higher the ratio better for the company.


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[ 3.2.3 ] Expenses Ratio :

Meaning :

Dividing expenses compute expenses ratio by sales. The termexpenses includes (1) COGS (2) administrative expenses (3) selling

expenses and (4) financial expenses but excludes taxes, dividends andextraordinary losses due to theft of goods, good destroyed by fire and

so on.

Implementation :

Some accountants calculate expenses ratio in respected of raw

material consumed, direct wages and factory expenses.

It is closely related to the profit margin, gross as well as net.

Formula :

= Expenses X 100Sales

TABLE OF THREE YEARS :

PARTICULAR 200607 2005-06 2004-05

Expenses ratio 92.03 89.23 22.79

CALCULATION : [ Rs. In million]PARTICULAR 200607 2005 06 2004-05

Expenses 100416 107110 129349

Sales 109108 120034 145922

Total 209524 227144 275271

INTERPRETATION :This ratio shows relationship between expanses to sales. Above tableshows that for the year 2004 05 it was 88.64 % the increase in 2005

06 up to 89.23% that indicates there is increase in operatingexpenses for the year 2006 07 it is 92.03% and it is higher than

previous tear which shows increase in operating expenses.


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[ 3.2.4 ] OPERATING RATIO :

Meaning :

Operating Ratio is computed by dividing expenses by sales. The termoperating ratio includes (1) COGS (2) administrative expenses (3)

selling expenses and (4) financial expenses but excludes taxes,dividends and extraordinary losses due to theft of goods, good

destroyed by fire and so on.

Implementation :

Some accountants calculate expenses ratio in respected of raw

material consumed, direct wages and factory expenses.

It is closely related to the profit margin, gross as well as net.

Formula:

= C O G S + Operating expenses X 100Net sales


PARTICULAR 200607 2005-06 2004-05

operating Ratio 87.33 86.90 83.89

Calculation : [ Rs. In million]PARTICULAR 2006-07 2005-06 2004-05

Operating Expenses 7928 8909 12370

C O G S 87364 95408 110042

Net sales 145922 120034 109108

TOTAL 182556 224351 232454

INTERPRETATION:This ratio shows relationship between COGS + operating expanses to

sales. Above table shows that for the year 2004 05 it was 87.33 %the increase in 2005 06 up to 86.90 % that indicates there is increase

in operating expenses for the year 2006 07 it is 83.89 % and it islower than previous year which shows increase in operating expenses.


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[ 3.2.5 ] Return on investment / Capital employed :

Meaning :The profitability ratio can be computed by relating the profits of a firmto its investment.

Implementation : Return on investment indicates the profitability of business and is

very much in use among financial analysis.

The ratio is an indicator of the measure of the success of a

business from the owners point of view. The ultimate interest of

any business is the rate of return on invested capital. It may bemeasured by the ratio of income to equality capital.

It determines whether a certain goal has been achieved or

whether an alternative use of capital is justified.

Formula := E B I T X 100

Capital employed

TABLE OF THREE YEARS :PARTICULAR 2006 07 2005 06 2004- 05

Return on investment /

capital employed ratio

34.88 % 37.42 % 40.78 %

CALCULATION : [ Rs. In million]E B I T 2006 - 07 2005- 06 2004 05

Earning before interest andtax

25888 20558 18140

CAPITAL EMPLOYED 2006 - 07 2005- 06 2004 05Capital 1445 1445 1445

Reserve and surplus + long

term loan

67094 53081 42343

INTERPRETATION:This ratio shows relationship between E B I T to CAPITAL EMPLOYED. Above table

shows that for the year 2004 05 it was 22.19 % the increase in 2005 06 up to


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26.54 % that indicates there is increase in E B I T for the year 2006 07 it is 24.60% and it is higher than previous year which shows decrease in capital employed.

Higher the ratio, it is better for the company.

[ 3.2.6 ] Return on shareholders fund:

Meaning :It is carries the relationship of return to the sources of funds yetanother step further.

Implication : It expresses the profitability of a firm in relation to the funds

supplied by the creditors and owners taken to gather, the return

on shareholders equity measures exclusively the return on the

owners funds.

Formula :

= Net profit X 100Share holders fund

TABLE OF THREE YEARS :PARTICULAR 2006- 07 2005-06 2004

05

Return on

shareholders fundratio

24.30 % 23.70 % 21.90 %

CALCULATION : [ Rs. In million]

Net Profit 2006 - 07 2005 06 2004 05

PAT 15620 11891 8536

Shareholders funds 2006 - 07 2005 06 2004 05

Capital 1445 1445 1445

Reserve and surplusLong term funds

67094 53081 42343

INTERPRETATION:The ratio indicates relationship between Net profits to share holders fund therefore

higher the returns to shareholders. For the year 2004 05 it is 21.90 % thatincrease in the year 2005 06 up to 23.70.This ratio shows downward trend

in the ratio in return on shareholders fund for this company.


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[ 3.2.7 ] Return on Equity share capital :

Meaning :It is obtained by dividing net profit after tax deduction of performance

dividing by his amount of ordinary share capital plus free reserve.

Implementation : This is probably the single most important ratio to judge whether

the firm has earned a satisfactory return for its equity holders

or not.

Its adequacy can be judge by : (1) comparing it with the past

record of the same form, (2) comparisons with the overall

industry average.

Formula := Net profit after tax -- Preference dividend X 100 Equity capital

TABLE OF THREE YEARS :PARTICULAR 2006 - 07 2005

06

2004 05

Ratio of Return on

Equity share capital

22.79 % 21.81 % 19.49 %

CALCULATION : [ Rs. In million]Net profit after tax 2006- 07 2005 06 2004 05

EBIT

(--)Interest

EBT

(--)PAT

25888

3090

22798

15620

20558

3058

17500

11891

18140

5091

13049

5091

Shareholders funds 2006-07 2005-06 2004-05

Capital 1445 1445 1445

INTERPRETATION:


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The ratio indicates relationship between Net profits to share holders fundtherefore higher the returns to shareholders. For the year 2004 05 it is 19.49 %that increase in the year 2005 06 up to 21.81 %. This ratio shows downwardtrend in the ratio in return on shareholders fund for this company.

[ 3.2.8 ] Return on Equity share holders fund :

Meaning :It is obtained by dividing net profit after tax deduction of performance

dividing by his amount of ordinary share capital plus free reserve.

Implementation : This is probably the single most important ratio to judge whether

the firm has earned a satisfactory return for its equity holders

or not.

Its adequacy can be judge by : (1) comparing it with the past

record of the same form, (2) comparisons with the overall

industry average.

Formula :

= Net profit after tax -- Preference dividend X 100Equity share holders funds

TABLE OF THREE YEARS :PARTICULAR 200607 2005-06 2004 05

Ratio of Return on

Equity share capital

22.79 % 21.81 % 19.49 %

CALCULATION : [ Rs. In million]Net profit after tax 2006 07 2005 06 2004 05

EBIT(--)Interest

EBT

(--)PAT

258883090

22798

15620

205583058

17500

11891

181405091

13049

5091

Shareholders funds 2006- 07 2005 06 2004 05


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Capital 1445 1445 1445

Reserve and surplus 67094 53081 42343

INTERPRETATION:For the year 2004 05 it is 19.49 % that increase in the year 2005 06 up to

21.81%. These ratios shows downward trend in the ratio in return on shareholdersfund for this company.

[ 3.2.9 ] Earning per share :

Meaning :

EPS measures the profit available to the equity shareholders on a per

share basis, that is, the amount that they can get on every share head.

Implementation :

Earning per share is a widely used ratio. EPS s a measure of

profitability

Formula :

= profit after tax preference dividend X 100No. of equity shareholders fund

TABLE OF THREE YEARS :PARTICULAR 2006 07 2005 06 2004 05

Ratio of Earning per

share

54.06 41.06 29.55

CALCULATION : [ Rs. In million]PARTICULAR 2006 - 07 2005 06 2004 05

P A T 15620 11891 8536

No. of shares 288910060 288910060 288910060

INTERPRETATION :

This ratio indicates the earning per share for shareholders of company.

In the year 2004 05 ratio is 29.55 % and 2005 06 it is 41.16 % and


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its increase on 54.06 %.therefore it is good for company as well asshareholders.

[ 3.2.10 ] Dividend per share :

Meaning :

DPS is the dividend paid to shareholders on a per share basis. In the

other words, DPS is the Net distributed profit belonging to theshareholders divided by the No. of ordinary shares outstanding.

Implementation :

The DPS would be a better indicator than EPS as the former

shows what exactly is received by the owners.

Like the EPS, the DPS is also should not be taken at its face value

as the increase DPS may not be a reliable measure of profitability

as the equality base may have increase due to increase relation

without any change in the number of outstanding shares.

Formula :

= total dividend declaredNo. of equity shares


Ratio of dividend per

share

4.50 3.50 2.00


Dividend declared 1300 1011 8536

No. of shares 288910060 288910060 288910060


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INTERPRETATION :

This ratio indicates the total dividend declared to no. of shares. For the

year 2004 05 it is 2.00 % and 2005 06 is3.50 % and increase on4.50 % in the year 2006 07.

[ 3.2.11 ] Price earning ratio :

Meaning :

It is closely related to the earning yield leanings price ratio. It is actuallythe reciprocal of the latter. Thus ratio is computed by dividing the

market price of the shares by the EPS.

Implementation : The price earning ratio reflects the price currently being paid by

the market for each Rupee of currently reported EPS. In other

words, the PIE ratio measures investors expectations and the

market appraisal of the earnings. Therefore, only normally

sustainable earning associated with the assets are taken into

account.

Formula :

= market value per shareEarning per share


PARTICULAR 2006-07 2005-06 200405

Ratio of priceearning ratio

17.58 21.95 29.55

CALCULATION : [ Rs. In million]PARTICULAR 2006-07 2005-06 2004-05

Market value 856 933 950

E P S 29.55 41.16 54.04


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INTERPRETATION :This ratio indicates the earning per share forshareholders of company.In the year 2004 05 ratio is 17.58% and 2005 06 it is 21.95% and

its increase on 29.55%. Therefore it is good for company as well asshareholders.

[ 3.2.12 ] Dividend yield ratio :

Meaning :Dividend yield ratio is closely related to the EPS and DPS. While the EPSand DPS are based on the book value per share, the yield is expressed

in terms of the market value per share. The earnings yield may bedefined as the ratio of earnings per share to the market value per

ordinary share.

Implementation : The dividend yield ratio is calculated by dividing the cash

dividends per share by the market value per share.

Formula :

= Dividend per share

Market value share


PARTICULAR 2006-07 2005-06 2004 05

Ratio of dividendyield

0.04 -- --

CALCULATION : [ Rs. In million]PARTICULAR 2006- 07 2005 06 2004 05

Dividend per share 4.50 -- --

Market value per

share

950 -- --

Note: There is no information about dividend of2004-05-06.


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INTERPRETATION :This ratio indicates the earning per share for shareholders of company.In the year 2004 05 ratio is 29.55 % and 2005 06 it is 41.16 % and

its increase on 54.06 %.therefore it is good for company as well asshareholders.

[ 3.2.13 ] interest coverage ratio :

Meaning :It is also known as time interest earned ratio. This ratio measuresthe debt servicing capacity of a firm insofar as fixed interest on long

term loan is concerned. It is determined by dividing the operating profitor earning before interest and taxes ( EBIT ) by the fixed interest

changes on loans.

Implementation : This ratio uses the concept of net profits before taxes because tax

is calculated after paying interest on long term loan.

This ratio as the name suggests, show how many times the

interest changes are covered by EBIT out of which they will be

paid.

Formula :

= EBITDInterest

TABLE OF THREE YEARS :PARTICULAR 2006 07 2005

062004 05

Interest coverage Ratio 68.85 100.70 50.39


EBDIT 25888 20558 18140

Fix interest 376 204 360


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INTERPRETATION :This ratio indicates the EBDIT to interest. In the year 2004 05 ratio is

50.39 and 2005 06 it is 100.70 and its decrease on 68.85.therefore itis good for company as well as shareholders.

[ 3.3.1 ] Overall turnover ratio :

Meaning :The amount invested in business is invested in all capital employed andsales are affected through them to earn profits so in order to find

relation between net sales to capital employed.

Implementation : The usefulness of the Du Pont analysis lies in the fact that it

presents the overall picture of the performance of a firm as also

enables the management to identify the factors which have a

bearing on profitability.

Formula := Net sales

Capital employed


PARTICULAR 2006-07 2005-06 2004-05

Overall Ratio 2.08 2.37 2.75

CALCULATION : [ Rs. In million]PARTICULAR 2006-07 2005-06 200405

Net sales 185922 120034 109108Capital employed 69872 50527 39545

INTERPRETATION :This ratio indicates net sales to capital employed. In the year 2004 05

ratio is 2.75 and 2005 06 it is 2.37 and its decrease on 2.08 in theyear 2006 07. Therefore it is bad for company.


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[ 3.3.2 ] fixed assets turn over ratio :

Meaning :It is based on the relationship between the sales and assets of the firm.A reference to this was made while working out the overall profitability

of a form as reflected in its earning power.

Implementation : To ascertain efficiency and profitability of the business. The higher

the turnover ratio, the more efficiency is the management and

utilization of the assets while low turnover ratios are indicative of

underutilization of available resources.

Formula := sales

Fixed assets


PARTICULAR 2006-07 2005-06 200405

Fixed assetsturnover Ratio

5.03 6.72 5.69


Net sales 145922 120034 109108

Fixed assets 28986 17872 19158

INTERPRETATION :

Fixed turn over ratio indicates the turnover of the company in one year.

In the year 2004 05 ratio is 5.69 and 2005 06 it is 6.72 and itsdecrease on 5.08 in the year 2006 - 07. Therefore, it is bad for

company.


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[ 3.3.3 ] Debtor turn over ratio :

Meaning :

It is allied and closely related to this is the average collection period. Itis the test of the liquidity of the debtors of a firm.

Implementation : This figure should be measured, as in the case of average

inventory, on the basis of the monthly average. It suggests that

number of times the amount of credit sale is collected during the

year.

Formula :

= credit salesAvg. Debtors


PARTICULAR 2006-07 2005-06 2004 05

Debtor turnoverRatio

20.94 19.19 16.90


Sales 145922 120034 109108

Avg. Debtors 6967.5 6271.5 6444.5

INTERPRETATION :Debtor turnover ratio indicates credit sales to avg. debtors. In the year2004 05 ratio is 16.90 and 2005 06 it is 19.19 and its increase on

20.94 in the year 2006 07. Therefore, it is good position for company.

How efficiently the amount is collected from the customers from thecredit sales. As compare to previous year the no. of days collection

period increase which indicate inefficiency of collection department.Lower the collection period and higher debtor turnover ratio is

advisable.


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[ 3.3.4 ] Creditor ratio :

Meaning :It is the no. of days within which we make payment to our creditors forcredit purchases it obtained from creditor ratio.

Implementation : The generally the longer credit period achieved means the

operation of the payment being financial interest feels by supper

funds.

Formula :

= creditor + B / P X 365Credit Purchases


PARTICULAR 2006-07 2005-06

200405

Creditors Ratio 30.64 20.77 18.82

CALCULATION : [ Rs. In million]PARTICULAR 2006 -07 2005 06 2004 05

Creditors 9096 5551 4637

Credit purchases 108362 97554 89632

INTERPRETATION :Creditor ratio indicates creditor to credit purchase. In the year 2004 05 ratio is 18.82 and 2005 06 it is 20.77 and its decrease on 18.88 in

the year 2006 07. Therefore, it is good position for company.


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[ 3.3.5 ] creditor turn over ratio :

Meaning :It is the no. of days within which we make payment to our creditors for

credit purchases it obtained from creditor ratio.

Implementation : The generally the longer credit period achieved means the

operation of the payment being financial interest feels by supper

funds.

Formula := No. of days in a year

Creditors ratio


PARTICULAR 2006-07 2005-06 2004-05

creditor turnoverRatio

11.91 17.57 19.33


Days 365 365 365

Creditors ratio 30.64 20.77 18.88

INTERPRETATION :Creditor ratio indicates creditor to credit purchase. In the year 2004

05 ratio is 19.33 and 2005 06 it is 17.57 and its increase on 11.91 inthe year 2006 07. Therefore, it is good position for company.


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[ 3.3.6 ] stock turnover ratio :

Meaning :It is the no. of times the average stock is turned over during the year is

known as stock turnover ratio. It measures the relationship betweenCOGS and inventory level.

Implementation : This approach has the advantage of being free from bias as it

smoothens out the fluctuations in the inventory level at different

period.

It is measures how quickly inventory is sold. it is a test of efficient

inventory management.

To judge whether the ratio of a firm is satisfactory or not.

Formula :

= cost of good soldAverage stock


Stock turnover Ratio 13.80 12.33 15.80


COGS 110042 45408 87364

Avg. stock 7972 7737 5532

INTERPRETATION :Stock turnover ratio indicates cost of goods sold to average stock. Inthe year 2004 05 ratio is 15.80 times and 2005 06 it is 12.33 times

and its increase on 13.80 times in the year 2006 07. Therefore, it isgood for company. How efficiently stock rate in the year Higher the

ratio, better position of the company as well as efficiency.


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[ 3.4.1 ] Current Ratio :

Meaning :The current ratio is the ratio of total current assets to total current

liability. It is calculated by dividing current assets by current liability.

Implementation : The current ratio of a firm measures its short term solvency. That

is a measure of margin of safety to the creditors. The fact that a

firm can rarely count on such an even flow requires that the size

of the C.A. should be sufficiently larger than C.L. so that the firm

would be assured of being able to pay its current maturing debts

as and when it becomes due.

Formula := current Assets

Current liability

TABLE OF THREE YEARS :PARTICULAR 200607 2005-06 2004 05

Current Ratio 1.54 : 1 1.52 : 1 1.84 : 1


Current assets 38459 37407 29720

Current liability 25015 198771 16080

INTERPRETATION :Current ratio indicates current assets to current liability. In the year

2004 05 ratio is 1.84 : 1 and 2005 06 it is 1.89 : 1 and its decreaseon 1.54 : 1 in the year 2006 07. Therefore, it is good for company.Mainly 2 : 1 is good. It indicates, repaying condition of the company to

the current liabilities. The standard current ratio must be 2:1.


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[ 3.4.2 ] liquidity Ratio :

Meaning :It is obtained by dividing the liquid assets by liquid liabilities. It liquidratio is designed to show the amount of cash available to meet

immediate payments.

Implementation : The importance of adequate liquidity in the sense of the ability of

a firm to meet short term obligations when they become due for

payment can hardly be overstressed.

In fact liquidity is a prerequisite for the very survival of a firm. Itmeasures ability of a firm to meet its short term obligations and

reflect the short term finance strength of a firm.

formula :

= liquid assetsLiquid liability


Liquid ratio 1.27 : 1 1.52 : 1 1.53 : 1


Liquid assets 31327 28597 23054

Liquid liability 24575 18825 15095

INTERPRETATION :Liquid ratio indicates liquid assets to liquid liability. In the year 2004

05 ratio is 1.53 : 1 and 2005 06 it is 1.52 : 1 and its decrease on1.27 : 1 in the year 2006 07. Therefore, it is good for company. How

effectively the liability paid off. The standard liquidation must be 1:1.


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[ 3.4.3 ] Quick / acid test ratio :

Meaning :The measure of absolute liquidity may be obtain by comparing only cash

and bank balance as well as readily marketable securities with liquidliabilities.

Implementation : This ratio is the most rigorous and conservative test of a firms

liquidity position. Further, it is suggested that it would be useful

for the management.

formula :

= Quick assetsLiquid liability


Quick / acid test ratio 0.79 1.17 1.13

CALCULATION : [ Rs. In million]PARTICULAR 200607 200506 2004-05

Quick assets 23853 22136 17059

Liquid liability 24575 18825 15095

INTERPRETATION :Quick / acid test ratio is indicates quick assets and liquid liability. In the

year 2004 05 ratio is 1.13 : 1 and 2005 06 it is 1.17 : 1 and itsdecrease on 0.97 : 1 in the year 2006 07. Therefore, it is good for

company.


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[ 3.5.1 ] Proprietary ratio :

Meaning :The ratio shows the proportion of proprietors funds to the total assets

employed in known in the proprietary ratio.

Implementation : Proprietary ratio helps to known how many proprietary funds to

total assets.

Formula := Proprietary fund

Net asset


PARTICULAR 2006-07 2005-06 200405

Proprietary fund ratio 63.22 % 66.12 % 60.65 %


Proprietary fund 64198 50127 38845

Total asset 101537 75793 64044

INTERPRETATION :This ratio indicates the proprietary funds to total assets. For the year2004 05 it is 60.65 %and 2005 06 is 66.12 % and decrease in 2006

07 it is 60.65 %. This is a bad for company.


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[ 3.5.2 ] Debt equity ratio :

Meaning :The relationship between borrowed funds and owners capital is apopular measure of the long term financial solvency of a firm. This

relationship is shown by the debt equity ratio.

Implementation : This ratio reflects the relative claims of creditors and shareholders

against the assets of the firm. Alternatively this ratio indicates the

relative proportions of debts and equity in financing the assets of

a firm.

The D/E ratio is an important tool of financial analysis to appraise

the financial structure of a firm. It has important implication from

view point of the creditors, owners and the firm itself.

Formula :

= long term liabilities

Shareholders fund


Debt equity ratio 8.84 0.79 22.19

CALCULATION : [ Rs. In million]PARTICULAR 2006-07 200506 200405

Debt 5674 400 700Equity 64198 50127 38845

INTERPRETATION :This ratio indicates the debt to equity ratio. For the year 2004 05 it is

1.80 %and 2005 06 is 0.79 % and decrease in 2006 07 it is 8.84%.

This is a bad for company as compare to 2005-06 year is more debt


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ratio which indicate the more realize on debt fund rather owned fund.The good impact is interest burden will be more indirectly.

[ 3.5.3 ] capital gearing ratio :

Meaning :This ratio expresses the proportion of preference capital and ordinary

capital the higher ratio, the greater propos ion of preference capital anddebenture to ordinary capital.

Implementation : Capital gearing ratio is helps to preference share and dividend to

equity share and helps to know about company s capital and

overall growth.

Formula := fixed investment barring capital

Ordinary capital


Capital gearing ratio 4.36 0.50 2.13


Deb. + preferencecapital

6308 717 3076

Ordinary capital 1445 1445 1445

INTERPRETATION :This ratio indicates the debenture and preference capital to ordinary

share. For the year 2004 05 in4.13% and 2005 06 is 0.50%andincreased in 2006 07 is 2.13. This is bad for the company.


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ACCOUTING POLICIES

1)BASIS OF PREPARATION OF ACCOUNTS

These accounts have been prepared in accordance with the historical.

Cost convention, the applicable accounting Standards issued by the

institute charted accounts of India and the relent provisions of thecompanies act, 1956.

2) FIXED ASSETSFixed Assets (except freehold lamed which is carried at cost) are carried

at cost of acquisition or construction or at manufacturing cost. [in caseof own manufactured assets ] in the year of capitalization less

accumulated depreciation.Assets required under finance lease are capitalized at the lower of their

fair value and present value of minimum lease payments.

3) DEPRECIATION

Fixed assets excepts for lease hold land are depreciated on the straightline method on a prorate basis from the month in which each asset is

put, to use, at the following rates :

1. Assets capitalized before 02/04/1987. Depreciation hasbeen provided at the rates computed in accordance with sation205 (2) (b) of the companies act, 1956, in terms of circular

no.1186 dated 21/05/86 of the government of India.

2. Assets capitalized on or after 02/04/1987. Depreciation has been

provided at the rates. Prescribed in schedule x/v to the companiesact 1956.except for certain fixed Assets. Where based on the

managements estimates of the useful life of the assets , higherdepreciation has been provide on the straight line method.


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a) Lease- hold land is amortized over the period of lease.

b) In case historical cost of an asset undergoes a change dueto an increase or decrease in related long term liability. Onaccount of foreign exchange fluctuations, change in duties etc,

the depreciation on the revised unamortized despicable amountis provided prospectively over the residues useful life of asset.

4) INVESTMENTS

Investments to be held for period exceeding one year, areclassified as long term investments.

Long term investments are valued at cost, provision for

domination in the value of such investment is made. Only if sucha decline is, other then temporary on individual investment basis.

5) INVENTORIES

a) Inventories are valued of lower of cost determined on theweighted average basis and net realizable value.

b) Tools are written off over a period of three years except for

tools valued at Rs.5000/- or less individually which are charged

off to revenue in the year of purchase.

c) Machinery spares (other than those supplied along withmain plant and machinery, which are capitalized anddepreciated accordingly) are charged to revenue on

consumption. Except those valued at Rs. 5000/- or lessindividually, which are charged off to revenue in the year of

purchases.

6) INVESTMENTS

Current investments are valued at the lower of cost and fair value. Long

term investments are valued at cost except. In the case of a permanentdiminution in their value, in which case the necessary provisions made.

7) RESEARCH AND DEVELOPMENT

Revenue expenditure on research and development is charged offagainst the profit of the year in which it is incurred. Capital expenditure


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on research and development is shown as an addition to fixed assetsdepreciated accordingly.

8) RETIREMENT BENIFITS COSTS

The company has Defined contribution plans for post employment

benefits namely Provident Fund and Superannuation Fund which are

recognized by the income tax authorities. These funds areadministered through trust and the companys contributions thereto are

charged to revenue every year.

The company also maintains insurance policy to fund post employment

medical assistance scheme, which is Defined contribution plan

administered by New India Insurance Company (NIIC). The

companys contribution to state plans namely Employee stateinsurance fund and Employee Pension Scheme 1995 are charged torevenue every year.

The company has Defined benefits plans namely leave Encashment /compensated absence. Gratuity and Retirement Allowance for

employees, the liability for which is determined on the basis of anactuarial valuation at the end of the year. The Gratuity Fund is

recognized by the income tax authorities and is administered throughtrusts. Termination benefits are recognized as an expense immediately.

Gains and losses arising out of actuarial evaluations are recognizedimmediately in the Profit and Loss account as income or expense.

9) DIFERRED TAXES

Tax expense of the period, comprising current tax, fringe benefits taxand deferred tax, is included in determining the net profit / (loss) for

the year. Current tax is recognized based on assessable profit Compute

in accordance with the income tax act and at the prevailing tax rate.Deferred tax is recognized for all timing differences. Deferred tax assets

are carried forward to the extent it is reasonably/ virtually certain thatfuture taxable profit will be available against which such deferred tax

assets can be realized. Deferred tax assets are reviewed at each

balance sheet date and written down /written up to reflect the amountthat is reasonably / virtually certain to be realized. Deferred tax assets


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and liabilities are measured at the tax rates that have been enacted orsubstantively enacted at the balance sheet date.

10) PROVISION AND CONTINGENCIES

The company creates a provision when there is a present obligation as aresult of past event that probably requires an outflow of resources and a

reliable estimate can be made of the amount of obligation. A disclosure

of contingent liability is made when there is a possible obligation or apresent obligation that will probably not require out flow of

resources or where a reliable estimate of the obligation can not bemade.


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NOTES OF ACCOUNTS

1) C0NTINGENT LIABILITIES :a) Claims against the Company disputed and not acknowledged as

debts :

1) Sales tax demands of Rs. 50 million( previous year Rs.50million ). Against this, the company has deposited a sum of

2) Rs. 2 million( previous year Rs. 2 million )under protest.

3) Excise duty demands / showcases cause notices of Rs.2,592

million ( previous year Rs. 1,790 million ). Against this, thecompany has deposited a sum of Rs. 27 million ( previous yearRs. 29 million ) under protest.

4) Customs duty demands of Rs. 118 million ( previous yearRs. 118 million against this the company has deposited a sum of

Rs. 22 million ( previous year Rs. 22 million ) under protest.

5) Income tax demands of Rs. 8,157 million (previous year Rs.7,620 million) against this the company has deposited a sum of

Rs. 4,869 million ( previous year Rs. 2,756 million ) underprotest.

6) Service tax demands of Rs. 8,157 million (previous year Rs.7,620 million).

a. Guarantee given to HDFC Limited for term loan ofRs.300million (previous year Rs. 300 million (previous year

Rs. 300 million)givenbyHDFC Limited to employees co-

Operative House Building SocietyLimited, Bonds, Againstthis, the contingent liability as at the year end is Rs. Nil

( previous year Rs. 34 million ).

b. As co-lessee in agreements entered into betweenvarious vendors of the company, as lessee, and banks aslessors for leasing of dies and moulds of certain models


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aggregating Rs. 2,000 million ( previous year Rs. 15 million)

c. A Guarantee given to HDFC Bank against non-fund

based facilities granted by the Bank to a group companySuzuki Powertain India Limited of Rs. 2,000 million(previousyear Rs.2,000 million).Against this the contingent liability as

at the year end is as Rs. 26 million.

Outstanding commitments under letters of credits

established by the company aggregate to Rs.1,050million.

Cotimated value of contracts on capital account ,

excluding Capital advances, remaining to be

executed and not provided for, amount to Rs. 8,076million.

Consumption of Raw material and components

includes a provision of Rs. 56 million and is net of

Rs. Nil for earlier years, on account of estimatedreversal of tax benefit on quantity differences on

inputs.

The company was granted sales tax benefit in

accordance with the provisions of rule 28C of

Haryana General Sales Tax Rules, 1975 for the

period from 1st August, 2001 to 31st July, 2015.The ceiling amount of concession to be availed of

during entitlement period is Rs. 5,644 million. Till31st March 2007, the company has availed of sales

tax benefits amounting to Rs. 1,469 million(previousyear Rs.1150 million ).

The company is primarily in the business of

manufacture, purchase and sale of Motor

Vehicles and spare parts ( automobile ). Theother activities of the company comprise facilitation

of Pre-owned Car sales, Fleet Management CarFinancing. The income from these activities, which


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are incidental to the Companys business is notmaterial, in financial terms but contribute

significantly ingenerating the demand for theproducts of the company. Accordingly segment

information has not been disclosed.

FINANCIAL RESULTS :

Marutis performance during the year as compared with that during the

previous year is summarized below :

DIVIDEND :The Board recommends a dividend of 90% (i.e. Rs.4.50 Per equity

share of Rs. 5 each ) for the year ended 31st March 2007 amountingto Rs. 1,300 million as against a dividend of 70% amounting to

Rs.1,011 million , paid for the year ended 31st March 2006.

NETWORK :


Figures in Rs. Million

2006 - 07 2005 06

Gross Total Income 178,043 151,823

Profit before Tax 22,798 17,500Provision for taxation

( Incl. Prev. Year ) 7,178 5,609

Profit after tax 15,620 11,891

Balance brought forward 43,939 34,421

MSAIL (Maruti Suzuki Automobiles

India Limited ) Loss : Adjusted

On Amalgamation & Transition

Adjustment for employee benefits 88 0

Profit available for appropriation 59,471 46,421

Appropriations :Debenture Redemption Reserve 17 31

General Reserve 1,562 1,189

Proposed Dividend 1,300 1,011

Corporate Dividend tax 219 142

Balance carried forward to balance 56,373 43,939

sheet

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The record sales performance was effected through Marutis vast

dealership network. The new car sales network grew from 375 outletsto 500 during the year. These outlets covered 312 cities across the

country. In addition to this, there are 223. Maruti true value outlets

spread across 148 cities , which are engaged in the sale , purchaseand exchange of pre owned cars. Maruti true value is the largest

organized pre-owned car sales network in India.

The service network had a total of 2445 service outlets, covering1172 cities.

DIRECTORS :

As per Articles of Association of the company and relevant

provisions of the companies act, 1956,Mr. R.C.Bhargava ,Mrs. PallaviShroff and Mr. Shuji Oishi are liable to retire by rotation at the ensuing

Annual General Meeting and, being eligible, offer themselves for

reappointment, During the year, Mr. Tsuneo Kobayashi was elevated asSenior Joint Managing Director with effect from 13 th November 2006.

Pursuant to the promotion and transfer to Suzuki Motor Corporation,japan, Mr. Shinichi Takeuchi has resigned with effect from close of

hours of 26th May 2007, from the post of Director and joint Managing

Director. The Board records its appreciation for the invaluablecontribution made by him during his tenure. Mr. Masayuki Osada was

appointed as Director and whole-time Director designated as Director(Research & Development) w.e.f26th July 2007 to fill the casual vacancy

caused by the resignation of Mr. Takeuchi.All the above appointments/ re-appointments are subject to theapproval of the members in the ensuing Annual General Meeting. The

brief resume/ details relating to the Directors who are to beappointed/re-appointed as stipulated under listing Agreement executed

with the stock exchanges are furnished in the explanatory statement ofthe notice of the ensuing Annual General Meeting.

DIRECTORS RESPONSIBILITY STATEMENT :

As required under section 217(2AA) of the companies Act,

1956, your Directors confirm having :


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a) Followed in the preparation of the Annual Accounts, theapplicable accounting standards with proper explanation relating to the

material departures.

b) Selected such accounting policies and applied them consistentlyand made judgment and estimates that are reasonable and prudent so

as to give a true and fair view of the state of affairs of your company atthe end of the financial year and of the profit of your company for that

period.

c) Taken proper and sufficient care for the maintenance with the

provisions of the Companies Act, 1956, for safeguarding the assets ofyour company and for preventing and detecting fraud and other

irregularities ; and

d) Prepared the Annual Accounts on a going concern basis.


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AUDITORS REPORT

TO THE MEMBERS OF MARUTI UDYOG LIMITED

1.. We have audited the attached balance sheet of maruti udyog

limited, as at 31st March 2007 and the related profit and loss accountand cash flow statement for the year ended on that date annexed

thereto, which we have signed under reference to this report. These

financial statements are the responsibility of the companysmanagement. Our responsibility is to express an option on these

financial statement statements based on our audit.

2.. We conducted our audit in accordance with the auditingstandards generally accepted in India. Those standards require that we

plan and perform the audit to obtain reasonable assurance about

whether the financial statements are free of material misstatement. Anaudit includes examining, on test basic, evidence supporting the

amounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significant

estimates made by management presentation. We believe that our

audit provides reasonable basic for our opinion.

3.. As required by the companies order, 2003, as amended by thecompanies order,200, issued by the central government of India in

terms of sub section of section 227 of the The companies Act, 1956

of India and on the basic of such checks of such checks of the booksand according to the information and explanations given to us, we

further report that:

1) a) The company is maintaining proper records showing full

particulars including quantitative details and situation of fixed assets.

b) The fixed assets are physically verified by the managementaccording to a phased programme designed to cover all theitems , except furniture and fixtures, office application and certain

other assets aggregating to Rupees 339 million , over a period ofthree years, which in our opinion, is reasonable having regard to the

size of its assets have been physically verified by the material

discrepancies between the book records and the physical inventoryhave been noticed.


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c) In our opinion and according to the information andexplanations given to us, a substantial part of fixed assts has not

been disposed off by the company during the year.

2) a) The inventory (excluding materials lying with vendors has been

physically verified by the management during the year. Confirmationshave been received for materials lying with vendors at the year end. In

our opinion, the frequency of verification is reasonable.

b) In our opinion, the procedures of physical verification ofinventory followed by the management are reasonable and adequate in

relating to the nature of its business.

c) On the basis of our examination of the inventory records, In

our opinion, the company is marinating proper records of inventory. Thediscrepancies noticed on physical verification of inventory as compared

to book records were not material.

3) The company has not taken or granted any loans, secured or

unsecured from/ to companies, firms or other parties covered in theregister maintained under Section 301 of the act.

4) In our opinion and according to the information and explanationsgiven to us, there are adequate internal control procedures

commensurate with the size of the company and nature of its businessfor the purchase of inventory, fixed assets and for the sale of goods

and service. Further, on the basis of our examination of the books andrecords of the company, and according to the information andexplanation given to us, we have neither come across nor have been

informed of any continuing failure to correct major weakness in theaforesaid internal control procedure.

5) In our opinion and according to the information and explanation

gives to us, there are no transactions made in pursuance of such

contracts or arrangements and exceeding the value of Rupees five lakesin respect of any party during the year, which have been made at

prices which are not reasonable having regard to the prevailing marketprices at the relevant time. In respect of purchase of goods and

materials including components from the holding company, the prices

paid for these items are not comparables these are of special nature.

6) The company has not accepted any deposits from the public with inthe meaning of section 58A and 58AA or any other relevant provisions

of the act and the rules framed there under.


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7) In our opinion, the company has an internal audit system

commensurate with its size and nature of its business.

8) We have broadly reviewed the books of account maintained by the

company in respect of products where , pursuant to the rules made bythe Central Government of India, the maintenance of cost records

has been prescribed under clause (d) of sub section (i) of section 209of the act and are of the opinion that prima facie, the prescribed

account and records have been made and maintained . We havenot, however, made a detailed examination of the records with a view

to determine whether they are accurate or complete.

9) According to the information and explanations given to us and the

records of the company examined by us, in our opinion, the company isregular in depositing undisputed statutory dues in respect of provident

fund, investor education and protection fund, employees state

insurance, income tax, sales tax, service tax, customs duty, excise duty,less and other material statutory dues as applicable with the

appropriate authorities.

10) The company has no accumulated losses as at March 31,2007 and

it has not incurred any cash losses in the financial year ended onthat date or in the immediately preceding financial year.

11) According to the records of the company examined by us and the

information and explanations gives to us, the company has notdefaulted in repayment of dues to any bank or debenture holders as at

the balance sheet date.12) The company has no granted any loans and advances on the basicof security by way of pledge of shares, departures and other securities.

13) The provisions of any special statute applicable to chit

fund/nidhi/mutual benefit fund /societies are not applicable to the

company.

14) In our opinion, the company is not a dealer or trader in shares,securities, debentures and other investments.

15) In our opinion and according to the information and explanationsgiven to us, the terms and conditions of the guarantee given by the

company, for loans taken by others from banks or financial institutionsduring the year, are no prejudicial to the interest of the company.


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16) In our opinion, and according to the information and

explanations given to us, on an overall basic, the term loans have beenapplied for the purpose for which they were obtained.

17) On the basic of an overall examination of the balance sheet of thecompany, in our opinion and according to the information and

explanations given to us , there are no funds raised on a short-termbasic which have been used for long term investment.

18) The company has not made any preferential allotment of shares to

parties and companies covered in the register maintained under

section 301 of the act during the year.

19) The company has created security and charge in respect ofdebentures issued and outstanding to the year-end.

20) The company has not raised any money by public issue during theyear.

21) During the course of our examination of the books and records

of the company , carried out in accordance with the generally

accepted auditing practices in India, and according to theinformation and explanations given to us, we have neither come across

any instance of fraud on or by the company, noticed or reported duringthe year, nor have we been informed of such case by the

management.

Audit committee:

Mr. Amal Ganguli chairmanMr. Shinzo Nakanishi member

Mrs. pallavi Shroff member

Mr. D. S. Brar member


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INTRODUCTION

A part from ratio analysis another useful way of analyzingfinancial statements to convert them into percentage when thismethod is pursued the income statement exhibits each expenses item or

group of expenses as a percentage of net sales, and net sales are takenat 100%. Similarly each individual assets and liability classification is

shown as percentage of total liabilities.Respectively statements prepared in this way are referred to as

common size statements prepared for one firm over the years would

highlight the relative changes in each group of expenses, assets andliabilities. This statements can be equally useful for absolute figures of

the same industry are not comparable.

COMMAN SIZE PROFIT & LOSE ACCOUNT

PARTICULARS 2006 - 07 2005 - 06

Amount % Amount % Per cent

( Rs. in

million )

( Rs. in

million )

( % )

INCOMENet Sales 145,922 100 120,034 100 100

Income from

Services

617 0.42 488 0.40 0.02

Other Income 5984 4.10 4292 3.57 0.53

Total 152,523 104.52 124,814 103.9 0.53

EXPENDITURE

Raw materials 101,374 69.47 88,766 73.96 (4.49)

Purchase of tradeGoods.

6,159 4.22 4,644 3.69 0.53

Stores 1,097 0.75 824 0.69 0.06

EmployeesRemunerationand Benefits

2,884 1.98 2,287 1.90 0.08

Manufacturing ;Administrative &

Other Expenses.

8,258 5.66 6,226 5.19 0.47

Selling and

Distribution

Expenses.

4,999 3.42 3560 2.97 0.45


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Total 124,771 85.50 106,320 88.58 (3.08)

Less: vehicles/dies

for own use

143 0.09 67 0.05 0.04 224

Add: increase /

Decrease in workProgress, finished,

Goods and spares 2,007

1.37

1,997

1.67 (0.30)

Total 2,150 86.74 2,064 86.86 (0.07)

EARNING BEFOREABOVE

17.74 17.12 0.62

Interest 367 0.26 204 0.16 0.1

Depreciation 2,714 2.11 2,854 2.37 (0.51)

Differed revenueExpenditure charged

off

- - - - -

Total 3,090 2.11 3,058 2.54 (0.43)

Profit Before Tax 22,798 15.63 17,500 14.58 1.05Less : Tax Expense 4.17 4.89 (0.72)

Current Tax 6,089 5,873

Deferred Tax 897 0.61 321 0.26 0.35

Fringe Benefits Tax 67 0.04 57 0.04 -

Previous years 125 0.08 - - 0.08

Total 7,178 6,251

Profit after Tax 15,620 1.17 11,891 9.91 0.79

Brought forwardFrom previous year

allount

43,851 30.11 34,421 28.68 1.43

Total 59,471 40.76 46,312 2.17

Less: AppropriationDebenture

Redemption Reserve

17 0.01 31 0.02 (0.01)

General Reserve 562 1.07 1,189 0.99 0.08

Proposed DividendTax

1,300 0.89 1,011 0.89 0.05

Corporate Dividend Tax 219 0.15 142 0.15 0.04

Total 3,098 38.63 2,373 36.60 2.03


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COMMAN SIZE BALANCE SHEET

PARTICULARS 2006 - 07 2005 06 2004 - 05

Amount

%

Amount

%

Amount

%( Rs. inmillion )

( Rs. inmillion )

( Rs. inmillion )

SOURCES OFFUND

Capital 1445 1.89 1445 2.58 1445 3.01

Reserve and Surplus 67094 87.68 53081 94.75 42343 88.28

LOAN FUNDS

Secured Loans 635 0.83 717 1.28 3076 6.42

Unsecured Loans 5673 7.41

DEFFERRED TAX

Deferred Tax Liability 1675 2.19 7791 1.39 1100 2.29

TOTAL 76,522 100 56,022 100 47,964 100

APPLICATION OF FUNDSFIXED ASSETS

Net Block 26,597 42.17 16,952 44.16 18,737 54.59

Capital Work in Progress 2389 3.79 920 2.40 421 1.23

INVESTMEENTS 34092 54.04 20,512 53.43 15.166 44.18

CURRENT ASSETS

LOANS ANDADVANCES

Inventories 7132 18.54 8812 23.50 6666 22.43

Sundry debtors 7474 19.43 6548 17.46 5995 20.17

Cash and bank 14228 37 14016 37.38 10294 34.64Other Current Assets 384 1.01 458 1.23 683 2.30

Loans and Advances 9241 24.02 7662 20.43 6082 20.46

CURRENT LIABILITIESAND PROVISIONS

Current liabilities 20110 80.39 15058 75.83 12188 75.80

Provisions 4905 19.62 4800 24.17 3892 24.20

Net Current Assets 13444 17.57 17638 31.48 13640 28.44

TOTAL 76,522 56,022 100 47964 100


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COMPARISION OF BALANCE SHEETCOMMAN SIZE BALANCE SHEET

PARTICULARS 2006 - 07 2005 06 2004 - 05Amount

( Rs. inmillion )

%

Amount

( Rs. inmillion )

%

Amount

( Rs. inmillion )

% difference

SOURCES OFFUND

Capital 1445 1.89 1445 2.58 1445 3.01 2.57

Reserve and Surplus 67094 87.68 53081 94.75 42343 88.28 13.07

LOAN FUNDS

Secured Loans 635 0.83 717 1.28 3076 6.42 0.44

Unsecured Loans 5673 7.41 7.41

DEFFERRED TAX

Deferred Tax Liability 1675 2.19 7791 1.39 1100 2.29 0.07

TOTAL 76,522 100 56,022 100 47,964 100 0.73

APPLICATION OF FUNDS

FIXED ASSETSNet Block 26,597 42.17 16,952 44.16 18,737 54.59 8.12

Capital Work in Progress 2389 3.79 920 2.40 421 1.23 12.61

INVESTMEENTS 34092 54.04 20,512 53.43 15.166 44.18 7.94

CURRENT ASSETSLOANS AND ADVANCES

Inventories 7132 18.54 8812 23.50 6666 22.43 6.41

Sundry debtors 7474 19.43 6548 17.46 5995 20.17 1.77

Cash and bank 14228 37 14016 37.38 10294 34.64 6.41

Other Current Assets 384 1.01 458 1.23 683 2.30 0.32

Loans and Advances 9241 24.02 7662 20.43 6082 20.46 6.41

CURRENT LIABILITIES AND

PROVISIONSCurrent liabilities 20110 80.39 15058 75.83 12188 75.80 0.60

Provisions 4905 19.62 4800 24.17 3892 24.20 2.01

Net Current Assets 13444 17.57 17638 31.48 13640 28.44 31.91

TOTAL 76,522 56,022 100 47964 100


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CONCLUSION

When summarizing the financial results of MARUTI UDYOG LIMITED. Ihave observed that their working is quite reasonable financial. It is very

good company. There are no any debts of long term liabilities of the

company. To conclude, from of the overall analysis of financialmanagement of the company, I can say that it is financial sound

and well managed three consecutive years shows and applaudingposition. I was also able to well understand my financial concepts. It

was a tough task to make this project but at last I able to complete the

project report of analysis of annual report of the company MARUTIUDYOG LIMITED.


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FINDINGS:

Annual Report of MARUTI UDOG LIMITED of 3Years

1) 2004 052) 2005 06

3) 2006 07

Financial Management by khan & jain information about ratiosand accounting policy.

B. S. SHAH

On the web site.

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22105138 Maruti Suzuki