C !!!

MAruti Suzuki India Limited 2009 -2010

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


Contents

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 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-

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


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.

WHY MARUTI SUZUKI ??

Maruti Suzuki India Limited (MSIL, formerly known as Maruti Udyog Limited) is a subsidiary of Suzuki Motor Corporation, Japan. MSIL has been the leader of the Indian car market for over two and a half decades. The company has two manufacturing facilities located at Gurgaon and Manesar, south of New Delhi, India. Both the facilities have a combined capability to produce over a 1.2 million (1,200,000) passenger car units annually. The company plans to expand its manufacturing capacity to 1.75 million by 2013. For this the company will be

investing around Rs. 60 Billion (Rs 6,000 Crores) over the period till 2013.

The company offers a wide range of cars across different segments. It offers 14 brands and over 150 variants - Maruti 800, people movers, Omni and Eeco, international brands Alto, Alto-K10, A-star, WagonR, Swift, Ritz and Estilo, off-roader Gypsy, SUV Grand

Vitara, sedans SX4 and Swift DZire 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.

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 wasteCreate solutionsComplete projects on timeImprove efficiencyDocument the right requirementsHelps 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.

TOOLS FOR COMPANY ANALYSIS

COMMENTS ON BALANCE SHEET 2009 -2010

(Rs. In Million)

Trend Analysis

Ratio Analysis

Cash Flow Statement

Studying The Profit & Loss

Studying The Balance Sheet


I Sources of fundsThe company acquires fund in two ways shareholders (owner of the company) and other in form of Borrowed fund (from banks, debentures)

Share Capital (Schedule 1)The company has not raised any funds through issuing shares. The company equity capital remains same in current year 2010 compare to previous year 2009.The Company has 28,89,10,060 Equity Share of Rs 5 Each. These shares were issued in cash & also given to Suzuki Motor Corporation the Holding Company

Reserves and Surplus (Schedule 2)Reserve and surplus includes any transfer of profit to reserve, general reserve, share premium, capital reserve, Hedge Reserve Account. The reserve and surplus in the previous year 2009 was 92,004 and in the current year it is 116,906 it was increased by 24,902.

Reserves & Surplus Schedule Rs

Share Premium AccountHedge Reserve AccountGeneral Reserve AccountBalance as per Profit & Loss

Schedule 2 Rs.4,241Rs.238Rs.11,928Rs.100,499

Net worth (Share Capital + Reserve & Surplus)It basically includes share capital, reserves and surplus if any fictitious assets are owned by the firm have to be subtracted. Net worth is also known a shareholders funds, owned funds, proprietors fund. In the previous year 2009 it was 101,989 and in current year it was 127,935 and it was increased by 25,946

Verical Blance sheet

Sources of fund


Borrowed fundsThe 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.

Secured Loans (schedule 3)The Loans were taken From banks which was secured against book debt, current Assets& the company have also taken Loan From Sundram Finance , which is payable within 1 Year, & Secured against the vehicles of the FirmThe Company have take Secured Loan of Rs 265 Million in the Current Year

Unsecured Funds (Schedule 4) The Company have taken short term Loans from Indian Banks & Long term Loans From Foreign Banks.The Company have Taken Unsecured Loan of Rs 7,949 Million in the current Year, while in Previos year the Loan taken was only Rs 6,988 Million

Total fund (Net Worth + Borrowed Fund)It includes net worth and borrowed. It basically tells what are the sources from which the company have acquired the fund.

II) Application Of Funds

Fixed Assets (schedule 5)Fixed assets are the biggest source for the company from land, building, plant and machinery, furniture, office equipment, computers. And there was also provision for depreciation on certain assets. The fixed assets have been increased from Rs.40,708 in Mar’09 to Rs. 46,498 in Mar’10 by Rs. 5,788. It shows that company invested continuously to create a sizeable fixed asset base.Fixed Assets as on 1.4.2009(+) Purchases of Fixed Assets(-) Sale of Fixed Assets(-)Depreciation for the Current YearNet Fixed Assets as on 31.3.2010

Fixed Assets Schedule RsBuildingPlant & MachineryFurniture & FixtureVehiclesIntangible Assets

Schedule 5 Rs. 5,901Rs. 35,697Rs. 455Rs. 511159

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 – CLWorking capital has Increased from Rs.34,165 in Mar’09 to Rs.35,678 in Mar’10.

Current AssetsCurrent 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 Assets Schedule Rs

Inventories Sundry Debtors Cash & Bank Balances Other Current Assets Loan & Advances

Schedule 8Schedule 9Schedule 10Schedule 11Schedule 12

Rs.12,008Rs.8,099Rs.982Rs.848Rs.15,707

Current LiabilitiesCurrent 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.

Current Liability Schedule Rs

1.Creditors2.Bank Overdraft3.Unclaimed Dividend 4.Interest Accrued but not Due

Schedule 13 Rs.69Rs.675Rs.1,124Rs.43

Capital EmployedIt 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.

Pie Charts


Fixed Assets40%

Investment33%

Working Capital

28%

Application of Funds

The Above Pie Chart Shows the Sources of Fund, & How is the application made of that. Sources of Funds64% are from the source of Reserve & Surplus30% From Unsecured Loan5% From shareholders& 1% From Secured Loans

Application of Funds40% of Total Fund is Employed in Fixed assets32% 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

COMMENTS ON PROFIT & LOSS2009 -2010

(Rs. In Million)

Share Capital5%

Reserve & Surplus

64%

Secured Laon1%

Unsecured Loan30%

Sorces of Fund


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 shareholder. The income of the bank includes interest, discount on advances .commission, and income of investment.

Sales (Schedule 15)Company has sale of Rs.23085 in Mar’09, & Sale of Rs.318,073 in March 2010.The Company Pays Excise Duty of around 16% on Sales. The Company have paid Rs.28,488 Of Excise Duty in The current year 2010.

Income From Services (Schedule 16)Company have Earned a Income of Rs.954 in the Previous Year & Rs.1,404 In the current year. The Income of Company have increased in the current year. This is a positive sign that with the Net sales, company’s Other Income have also increased.

TOTAL INCOME OF COMPANY

The Company Earns Maximum from Sales & rest from Other IncomeThe 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

Employees Remuneration & Benefits (Schedule 17)All the details of Employee’s Remuneration & Benefits is explained under the schedule 17. The Expenditure inquired on Employees Remuneration & Benefits were Rs. 4,711 in March 2009 & March 2010 is Rs.5,456

Manufacturing & Administrative Expenses (Schedule 18)

2009 20100

50000

100000

150000

200000

250000

300000

350000

Income

SalesOther Income


All the details of Manufacturing & Administrative Expenses is explained under the schedule 18. The Expenditure inquired on Manufacturing & Administrative Expenses were Rs. 15,685 in March 2009 & March 2010 is Rs.17,938

Selling & Distribution (Schedule 19)All the details of Selling & Distribution is explained under the schedule 19. The Expenditure inquired on Selling & Distribution Expenses were Rs.7,382 in March 2009 & March 2010 is Rs.9160

TOTAL EXPENDITURE

2009 20100

5000

10000

15000

20000

25000

30000

Remenuration & BenefitsManufacturing & Administra-tiveSelling & Distribution

The Above Graph Clearly explains the expenses which are inquired in the financial year 2008-2009 & 2009-2010The Expenses of the Company have increased in the current yearThe major expenses are on manufacturing & Administrative

RATIO ANALYSIS

Sr. No

Ratio 2009 2010 Comments


1

2

3

4

5

6

Liquidity Ratios

Current Ratio = Current Assets Current Liability

Quick Ratio = Quick Assets Quick Liability

Inventory Turnover Ratio = Cost of Goods SoldAverage Inventory

Debtors Turnover ratio =Net Credit SalesAverage Accounts Receivable

Fixed Assets Turnover Ratio =Net SalesNet fixed Assets

Total Assets Turnover Ratio =Net SalesTotal assets

1.53 : 1

1.26 : 1

30.46

29.07

2.38

3.86

1.02 :1

0.67 : 1

30.47

14.07

2.82

3.06

The standard Current Ratio is 2:1, it tells about the short term in solvency of the Company.

The standard Quick Ratio is 1:1, it tells about the Immediate obligation of the company

The Inventory Turnover Ratio tells the relationship between Cost of goods Sold & Average Inventory

Debtors turnover Ratio indicates that how much frequently Company have to collect money From Debtors.

Fixed Assets Turnover Ratio, helps to find out the how efficiently FA are used.

Total Assets turnover Ratio, help us to find, how efficiently is Total Assets used, Compare to Sales

7

8

9

Leverage Ratios

Debt Equity Ratio = Total Debt Equity

Debt Assets Ratio = Total Debt Total Assets

Interest Coverage Ratio = Earning Before Interest & Tax

0..06

0.07

2.56

0.03

0.06

1.86

The Standard Debt Equity Ratio is 2:1It Shows that how much does a Firm depend on borrowing Funds.

The Debt Assets Ratio, help us to find out what the total Debt Compared to total Assets of the Firm.

Interest Coverage Ratio help us to find out that how


Interest much Interest is Company paying out of its Net Profit.

10

11

12

13

14

15

16

Profitability Ratios

Gross Profit Ratio = Gross Profit X 100Net Sales

Net Profit Ratio =Net Profit X 100Net Sales

Return on Total Assets =Profit Before Interest & TaxFixed Assets + Current Assets

Return on Capital Employed = Net Profit After TaxTotal Capital Employed

Return on Shareholder’s Equity =Net Profit After TaxNet worth

EPS = Net Profit Available To shareholdersNumber of Share

Profit Earning Ratio =Net Market PriceEPS

5.77 %

5.72%

10.45

14.63

13.04

42.18

65.88

9.93%

8.43%

11.33

19.78

21.10

86.45

128.00

Gross Profit Ratio Indicate Profit earned before encoring any Indirect Expenses.

Net Profit Ratio Indicate the profit earned after encoring all direct & Indirect Expenses.

Return on total Assets, tell us that what is the return we will get on Assets employed by the firm Compared to Net profit before Interest & Tax

Return on Capital Employed, shows that what return are the shareholders going to get on Capital Employed by them

Return on Shareholders Equity tell that What return will Shareholders get on Funds Invested by them.

Earning Per share Indicates that what is Company actually earning on Per share as pr the profit earned by the firm.

Profit Earning Ratio tells us that how much profit the company is earning


17 Dividend Payout Ratio =Dividend Per Share X 100EPS

8.60 9.39

compared to Market Price of Share.

Dividend Payout Ration Tells that how much dividend is Company Going to Payout in the financial year to the Shareholders

Current R

atio

Gross

Profit R

atio

Net Pro

fit Rati

o

Reurn

on share

holders Fu

ndEP

S0

20406080

Ratio Analysis

20092010

Ratio

COMMON SIZE

Common Size Statement - Balance SheetParticulars 2009 (Rs) 2009 (%) 2010 (Rs) 2010 (%)

Sources of Fund

1) Owner’s FundEquity Share CapitalPreference Share CapitalReserve & Surplus

Net Worth

2) Loan FundSecured Loan

1445-

9200493449

1

1.41%-

90.20%92.19%

0.001%

1445-

116906118351

265

1.78%-

91.37%93.83%

0.20%


Unsecured LoanBorrowed Fund

Total Funds ( 1 + 2 )

69886989

101989

6.85%6.86%

100%

79498214

127935

6.21%6.42%

100%

Application Of Funds

1) Fixed Assets(-) Depreciation on fixed AssetsNet Fixed Assets

2) Capital Work in Progress

3) Investment

4) Working Capital (CA – CL )Current Assets(-) Current LiabilityWC

Capital Employed( 1 + 2 + 3 + 4 )

87206(46498) 40708

8613

31733

55100(34165) 20935

101989

85.50%45.91%39.91%

0.46%

31.11%

54.02%33.49%20.52%

100%

104067(53820) 50247

3876

71766

37724(35678) 2046

127935

81.34%42.06%39.27%

3.02%

56.09%

29.48%27.88%1.59%

100%

Common Size Statement – P&LParticulars 2009 (Rs) 2009 (%) 2010 (Rs) 2010 (%)


Gross Sales(-)Excise DutyNet SalesOther Income

Total Income

(-) ExpenditureRaw MaterialEmployees RemunerationManufacturing, AdministrativeSelling & distributionOther Expenses

Earning Before Tax, Depreciation & Interest

(-)Interest(-)Depreciation

Profit before Tax

(-) Tax

Profit After Tax

(+) Op Bal(-) Appropriation

Retained Earnings

2,30,852 27,2982,03,583

10,955 .

2,14,538

1,50,5984,711

15,6857,3829234

. 24,333

5107,065

. 16,758

4,592 . 12,187

70,2572,402

. 80,042

107.60%12.72%94.89%5.10%

-100%

70.192.19

7.31%3.44%4.30%

. 11.34%

0.23%32,91% . 7.81%

2.14% . 5.68%

32.74%1.11%

. 37.30%

3,18,073 28,4882,89,585 11,613 .

3,01,198

2,14,8815,456

17,9389,160

11,482

. 44,510

3358,250

. 35,925

11230 . 24,976

80,04216,001

.1,00,499

105.60%9.45%

96.14%3.85%

-100%

71.34%1.81%5.95%3.04%3.81%

. 14.77%

0.11%2.73%

. 11.92%

3.72% . 8,29%

26.5%5.31%

. 33.36%

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 companyThe 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


Comparative Statement – Balance SheetParticulars 2009 2010 Increase /

Decrease (Rs)Increase / Decrease (%)

Sources of Fund


Net Worth

2) Loan FundSecured LoanUnsecured Loan

Borrowed Fund


1445-

9200493449

169886989

101989

1445-

116906118351

26579498214

127935

--

^ 24902^ 24902

^ 264^ 961

^ 1225

^ 25946

^ 27.06%^ 26.64%

^ 0.001%^ 13.75%^ 17.53%

^ 25.43%


1) Fixed Assets(-) Depreciation on fixed AssetsNet Fixed Assets

2) Capital Work in Progress

3) Investment



87206(46498) 40708

8613

31733

55100(34165) 20935

101989

104067(53820) 50247

3876

71766

37724(35678) 2046

127935

^ 16861^ 7322^ 9449

v (4737)

^ 40033

v (17376)^ 1513

^ 16880

^ 25946

^ 19.33%^ 15.74%^ 23.16%

v 54.99%

^ 126.15%

v 21.54%^ 4.42%

^ 87.32%

^ 25.43%

Comparative Statement – P&LParticulars 2009 2010 Increase /

Decrease (Rs)Increase / Decrease (%)



Total Income




Profit before Tax

(-) Tax

Profit After Tax


Retained Earnings

2,30,852 27,2982,03,583

10,955 .

2,14,538

1,50,5984,711

15,6857,3829,234

. 24,333

5107,065

. 16,758

4,592 . 12,187

70,2572,402

. 80,042

3,18,073 28,4882,89,585 11,613 . 3,01,198

2,14,8815,456

17,9389,160

11,482

. 44,510

3358,250

. 35,925

11230 . 24,976

80,04216,001

.1,00,499

^ 87,221^ 1,190

^ 86,002^ 658

. ^ 95,660

^ 64,238^ 745

^ 2,253^ 1,778^ 2,248

. ^ 20,177

v 175^ 1,185 .

^ 19,167

^ 6,638 .

^ 12,789

^ 9,785^ 13,599 -

^ 20,457

37.78%4.35%

42.24%6.01%

44.56%

^ 42.65%^ 15.81%^ 14.36%^ 24.08%^ 24.34%

^ 82.92%

v 34.31%^ 16.77%

^ 114.37%

^ 144.55%

^ 104.93%

^ 13.92%^ 566.15%

^ 25.55%

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.

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.

TREND OF AUTOMOBILE SECTOR IN INDIA

Nearly every automobile company is investing at a higher rate than ever before to achieve a high growth trajectory. The overall investment in the sector has been increasing quite rapidly. It is expected that by the end of 2010 Indian automobile sector will be investing a huge amount as Rs. 30,000 crores. 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.

Trend Analysis – Balance SheetParticulars 2008

(Rs)2009 (Rs)

2010 (Rs)

2008 (%)

2009(%)

2010 (%)


Sources of Fund


Net Worth

2) Loan FundSecured LoanUnsecured Loan

Borrowed Fund


1445-

8901790462

-49004900

95362

1445-

9200493449

169886989

100438

1445-

116906118351

26579498214

127935

100%-

100%100%

100%100%

100%

100%-

103.35%103.35%

-142.61%142.63%

105.32%

100%-

131,13%130.82%

162.24%167.63%

134.15%


1) Net Fixed Assets

2) Capital WIP

3) Investment



30767

8099

31733

53973(29210) 24763

95362

40708

8613

31733

55100(34165) 20935

100438

50247

3876

71766

37724(35678) 2046

127935

100%

100%

100%

100%100%100%

100%

132.31%

106.34%

100%

102.08%116.96%84.54%

105.32%

163.31%

47.85%

226.15%

69.69%122.14%8.26%

134.15%

Trend Analysis – Profit & Loss StatementParticulars 2008

(Rs)2009 (Rs)

2010 (Rs)

2008 (%)

2009(%)

2010 (%)



Total Income




Profit before Tax

(-) TaxProfit After Tax


Retained Earnings

1,95,855 26,1761,69,679

09,595 . 1,79,274

1,40,5244,0045,8855,0826,209

. 17,570

567 7,065 9,938

(3,998) 5,940

65,7881987

. 69,741

2,30,852 27,2982,03,583

10,955 .

2,14,538

1,50,5984,711

15,6857,3829234

. 24,333

510 7,065 16,758

(4,592) 12,187

70,2572,402

. 80,042

3,18,073 28,4882,89,585 11,613 . 3,01,198

2,14,8815,456

17,9389,160

11,482

. 44,510

335 8,250 35,925

(11230) 24,976

80,04216,001

.1,00,499

100100100100

100

100100100100100

100

100100100

100100

100100

100

117.86%104.28%119.98%114.17%

119.67%

107.16%117.65%266.52%145.25%148.71%

138.49%

89.94%100%

168.62%

114.85%205.16%

106.79%120.85%

114.77%

162.40%108.83%170.66%121.03%

168.09%

152.91%136.26%304.80%180.24%184.92%

253.32%

59.08%116.77%361.49%

280.89%420.47%

121.66%805.28%

144.10%

TREND OF MARUTI SUZUKI LTD.


TREND OF AUTOMOBILE SECTOR

Borrowings Reserve & Surplus

Total Assets Total Lability0

5

10

15

20

25

Tata motorsMarutiMahindra

The performance of Maruti & Mahindra were comparatively good in the automobile sector.Maruti Suzuki Ltd had less borrowing, if it is compared to Tata & MahindraMaruti Suzuki Ltd. had good Reserve & surplus, Assets which we had come toknw while comparing the trendMaruti 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

Borrowings Reserve & Surplus

Total Assets Total Lability0

2

4

6

8

10

12

14

200820092010

http://en.wikipedia.org/wiki/Accounting_liquidity


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.

Working Capital = Current AssetsNet Working Capital = Current Assets − Current LiabilitiesEquity Working Capital = CA −CL − Long-term Debt

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.

WORKING CAPITAL STATEMENT

Particulars 2009 2010

http://en.wikipedia.org/wiki/Liquidity

http://en.wikipedia.org/wiki/Profit_(accounting)

http://en.wikipedia.org/wiki/Assets

http://en.wikipedia.org/wiki/Current_liabilities

http://en.wikipedia.org/wiki/Current_assets


Current Assets

1. StockRaw MaterialWork in Progress

Raw Material (100 %)Wages (50%)Overheads (50%)

.Finished goods

2. Debtors

3. Preliminary Expenses

4. Cash / Bank

Gross Working Capital

(-) Current Liability

1. Creditors For Raw Material

2. Time Lag in Payment of Wages Overheads

(+) Provision for Contingency

Net Working Capital

Rs. Rs. Rs. Rs.

2,418

---

3,416

--

5,834

3,124

672

1,976

. 11,606

(3,981)

673 . 8,298

3,898

---

3651

--

7,549

2900

893

1,325

. 12,667

(3,819)

- . 8,848

CASH FLOW

Cash Flow StatementAccounting Standard – 3


Section 211(3c) of The companies Act, 1956Particulars Rs. Rs.

Cash Flow From OperationsIndirect MethodTax Paid

Cash Flow from Investing ActivityPurchase of AssetsSale of AssetsPurchase of InvestmentSale of InvestmentInterest Received

Cash Flow From Financing ActivityProceeds from short term borrowingsRepayment of Short term borrowingsRepayment of Long term borrowingsInterest PaidDividend Paid

Net Increase/ Decrease In Cash

Cash @ the Beginning of the YearCashBankBank o/d

Cash @ the End of the yearCashBankBank o/d

Net Decrease in Cash Flow

39,153(10,279)

(13,597)488

(206,591)1,67,804

4113

4,014(661)

(1,472)(319)

(1,011)

28,874

(47,833)

551

(18,408)

19,390

982

(18,408)

Indirect Method

Particulars Rs. Rs.


Net Profit

(+) Non Cash ItemsDepreciation

(+) Non Operating ItemsProfit on sale of investmentLoss on Sale of fixed AssetsInterest ExpenseInterest IncomeDividend Income

Net Profit before Working Capital Changes

Add: Increase in Liability & Decrease in Assets Increase in Current Liability Decrease in Debtors Decrease in Current assets

Less: Decrease in Liability & Increase in Assets Increase in Inventories

Cash Flow From Operation (Indirect Method )

8,250

(1,627)97

335(2,150)

(1,560)

9151,279

754

3065

35,925

8,250

(4,905)

39,270

2,948

(3,065)

39,153

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 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.

Methods for valuation of Equity Shares.

1. Intrinsic Value Method2. Yield Value Method3. Fair Value Method

Intrinsic Value = Balance Available to Equity share holdersNo. of Equity shares

= Assets @ Market value – Outside Labiality – Preference Share CapitalNo. of Equity shares

= 79794000000744000000

= Rs 107.25 / -

Yield Value = Expected Rate of Return X paid up value of shareNormal Rate of Return

= 98.65 X 56

= Rs. 82.20 / -

Fair Value = Intrinsic Value + Yield Value2

= 107.25 + 82.202

= Rs. 94.725 / -


Intrinsic Value Yield

Value Fair Value

0

1

2

3

4

5

6

7

Dividend as on 31st March 2009Interim Dividend 2009Dividend as on 31st March 2010

Types of Valuation

Divi

dend

Dec

lare

d

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.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

2007 2008 2009 20100

0.51

1.52

2.53

3.54

4.55

Dividend

INVESTMENT IN MARUTI SUZUKI


Date Amount Invested

Time Return

15th March 2010 – 22nd March

2010

1st March 2010 – 31st March

2010

1st Oct 2009 – 31st March 2010

1st April 2009 – 31st March 2010

Highest Return28th September

2009

Lowest Return12th November

2009

Rs. 1,00,000

Rs. 1,00,000

Rs. 1,00,000

Rs. 1,00,000

Rs. 1,00,000

Rs. 1,00,000

1 week

1 Month

6 Months

1 Year

1 Day

1 Day

^ 1,08,302

^ 1,06,337

v 94,783

^ 1,23,089

^ 105,119

v 89,091

Maruti Suzuki Ltd have Give good returns to the shareholders who have invested in their company.If we compare the share price of the company with the Sensex & with the whole Automobile Sector. The performance was Average in the Current Financial yearThe 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 2009The 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.

Nearly every automobile company is investing at a higher rate than ever before to achieve a high growth trajectory. The overall investment in the sector has been increasing quite rapidly. It is expected that by the end of 2010 Indian automobile sector will be investing a huge amount as Rs. 30,000 crores. 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 IndiaAt 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.

EFFECT OF BUDGET ON SHARE PRICE

While the external outlook remains somewhat uncertain, the expectation is that global economic activity will continue to recover at a reasonably solid pace in the coming years. However, growth throughout this period is expected to remain uneven, with the recovery being 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 best performing Company in the sector of Automobile & Guarantee same for Future


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.

BIBLIOGRAPHY

http://www.livemint.com/2008/09/04112316/Performance-Review-Maruti-Suz.html#%23


www.moneyrediff.com

Money Control

Financial Management – FY.BAF (Semester – II)

Management Accounting – SY.BAF (Semester - IV)

NCFM – Financial Module

Investment Analysis & Portfolio Management – P.C.Chandra

http://www.moneyrediff.com/

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