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4/15/2010
BLACK
EDITION
- TUM0R
BALANCE SHEET ANALYSIS OF
MARUTI SUZUKI
Submitted to:
Dr. Himani Joshi
Prepared By: Dipa Shah
Krishna Rajput
Nikita Saghvi
Mitesh Shah
Bharat Maheshvari
Keyur Savalia
2
ACKNOWLEDGEMENT
An acknowledgement is the expression of one’s thanks giving to the people who have extended their help in
every possible way. Help is a voluntary fulfillment of duty, which, all the people mentioned below have
performed it to their maximum possible, in a way giving us & our research the utmost important.
At the onset, we wish to express our gratitude to Dr. Himani Joshi, Academic Coordinator, and CA Ms. Neha
Saxena, faculty at Stevens Business School for their keen interest, constant support & help in completing this
report successfully.
We would also like to thanks to the authors, journals and websites for providing us the related information to
our project’s subject.
3
TABLE OF CONTENTS
Sr. No. Particular Page No.
1 Acknowledgement 02
2 Executive Summary 05
3 Company profile 06
3.1 Introduction 06
3.2 Key Data 07
3.3 Vision 07
3.4 Mission 07
3.5 Market Scenario 08
3.6 Sales Analysis 09
3.7 Market Share 10
4
Financial Highlight 11
5
Meaning of Analysis and Objective of Study 15
5.1 Importance of Cash Profit Theory 15
5.2 Meaning and Importance Of Ratio 16
5.3 Utility Of Ratio Analysis 16
6 Classification Of Ratio 18
6.1 Profitability Ratio 18
6.1.1 Gross Profit Ratio 18
6.1.2 Net Profit Ratio 20
6.1.3 Expenses Ratio 22
6.1.4 Operating Ratio 23
6.1.5 Return on Investment 24
6.1.6 Return on Share Holders’ Fund 25
6.1.7 Return on Equity Share Capital 26
6.1.8 Return on Equity Share holders’ Fund 27
6.1.9 Earning per Share 28
4
6.1.10 Dividend Per Share 29
6.1.11 Price Earning Ratio 30
6.1.12 Dividend Yield Ratio 31
6.1.13 Interest coverage Ratio 32
7
Activity/Turnover Ratio 33
7.1 Overall turnover Ratio 33
7.2 Fixed Assets Turnover Ratio 34
7.3 Debtor Turnover Ratio 35
7.4 Creditor Ratio 36
7.5 Creditor Turnover Ratio 37
7.6 Stock Turnover Ratio 38
8
Liquidity Ratio 39
8.1 Current Ratio 39
8.2 Liquid Ratio 40
8.3 Quick / Acid Test Ratio 41
9
Leverage Ratio 42
9.1 Proprietary Ratio 42
9.2 Debt Equity Ratio 43
10 Accounting Policy 2009 44
11 Notes To Account 48
12 Auditor’s Report 50
13 Conclusion 55
14 Appendix 1 56
Appendix 2 57
Appendix 3 58
Appendix 4 60
5
Executive summary
In this report, we have tried to explain how one can find out financial result with the help of ratio analysis and
some more in portent graphs with 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 a certain aspect of a firm’s performances.
Financial analysis is essential for any business entity. It is the tool to communicate with creditors, debtors,
suppliers and all those who are directly or indirectly associated with an organization.
Here in this project report we have discussed about various components of balance sheet and their significance.
We have done in depth analysis of ratios. Detailed analysis of creditors, debtors, equity share holders, debenture
holders of Maruti Suzuki are also described. The growth trend of Maruti Suzuki is also mentioned here. We
have also mentioned profit trends, dividend trends, revenue analysis, profit analysis, and analysis of company’s
liquidity are discussed here.
In a nut shell this report gives the complete financial analysis of Maruti Suzuki for five years.
6
INTRODUCTION
Maruti Udyog Limited (MUL) was established in Feb 1981 through an Act of Parliament, to meet the
growing demand of a personal mode of transport caused by the lack of an efficient public transport system. It
was established with the objectives of - modernizing the Indian automobile industry, producing fuel efficient
vehicles to conserve scarce resources and producing indigenous utility cars for the growing needs of the Indian
population. A license and a Joint Venture agreement were signed with the Suzuki Motor Company of Japan in
Oct 1983, by which Suzuki acquired 26% of the equity and agreed to provide the latest technology as well as
Japanese management practices. Suzuki was preferred for the joint venture because of its track record in
manufacturing and selling small cars all over the world. There was an option in the agreement to raise Suzuki’s
equity to 40%, which it exercised in 1987.
Five years later, in 1992, Suzuki further increased its equity to 50% turning Maruti into a non-
government organization managed on the lines of Japanese management practices.
Maruti created history by going into production in a record 13 months. Maruti is the highest volume car
manufacturer in Asia, outside Japan and Korea, having produced over 5 million vehicles by May 2005. Maruti
is one of the most successful automobile joint ventures, and has made profits every year since inception till
2000- 01. In 2000-01, although Maruti generated operating profits on an income of Rs 92.5 billion, high
depreciation on new model launches resulted in a book loss.
REGISTERED AND CORPORATE OFFICE:
11th
Floor, Jeevan Prakash Building,
25, Kasturba Ganghi Marg,
New Delhi – 110001
First Indian automobile company to join the million clubs
Invests Rs 1,700 Crore in new facility to expand capacity by 2.5 lakh units
COMPANY PROFILE
7
KEY DATA
1. Country: INDIA
2. BSE: 532500
3. NSE: MARUTI
4. Exchanges: BOM
5. Major Industry: Automotive
6. Sub Industry: Diversified Automotive Mfrs.
7. 2009 Sales: 206,638,000,000
(Year Ending Jan 2010)
8. Employees: 7,159
9. Currency: Indian Rupees
10. Market Cap: 399,028,129,369
11. Fiscal Yr Ends: March
12. Shares Outstanding: 288,910,060
13. Share Type: Ordinary
14. Closely Held Shares: 156,618,440
VISION
The leader in the India Automobile Industry, Creating Customer Delight and Shareholder’s Wealth; A pride of
India”
MISSION
To provide maximum value for money to their customers through continuous improvement of products and
services
8
MARKET SCENERIO (2008 -09)
Maruti has a network of 681 sales outlets across 454 cities all over India. The service network covers 1,314
towns and cities, bolstered by 2,767 authorized service outlets. The company's change in strategy and emphasis
on developing effective marketing communications was their highlights.
9
SALES ANALYSIS
The company vouches for customer satisfaction. For its sincere efforts it has been rated (by customers)
first in customer satisfaction among all car makers in India for ten years in a row in annual survey. Maruti
Suzuki India Limited, a subsidiary of Suzuki Motor Corporation of Japan, has been the leader of the Indian car
market for over two decades.
During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024 were exported. In all, over six
million Maruti cars are on Indian roads since the first car was rolled out on 14 December 1983.
And finally in 2009-10, the nation's number one car manufacturer joined a select club of global automobile
makers, when it became the first automobile company in India to produce one million (10 lakh) cars in a year.
10
MARKET SHARE
11
MARUTI SUZUKI FINANCIALS FOR 2008-09
Total Income up 14.28 per cent; Premium compacts and sedan segment drive top line growth
Fiscal 2008-09
The company's Total Income (Net of Excise) (Income from Operations plus Other Income) for the financial
year 2008-09 climbed to Rs 21,453.8 Crore. This is the highest Total Income (Net of Excise) ever in the
company's history, and marks a growth of 14.28 per cent over 2007-08. The growth in Total Income (Net of
Excise) included higher realizations, largely contributed by the company's popular hatch-back Swift and
premium sedan Swift Dzire (Diesel and Petrol variants).
Net Profit during the year stood at Rs 1,218.7 Crore, down 29.6 per cent over 2007-08. The company's EBDITA
for the year stood at Rs 2,433.4 Crore, a fall of about 22 per cent over the previous year.
During the year, commodity prices went up sharply and remained high for most part of the year. Forex
fluctuations were also adverse and impacted the bottom-line significantly.
In recent months, commodity prices have eased.
With regard to foreign currency exposure, the company's exports in 2009-10 are expected to be higher and
cover its imports.
Dividend
The Board of Directors recommended a dividend of 70 per cent for 2008-09. (Fiscal 2007-08: 100 per cent).
Quarter 4
The company registered Total Income (Net of Excise) (Income from Operations plus Other Income) of Rs
6,538.3 Crore during January-March 2009, a growth of 30.26 per cent compared to January-March 2008.
Net profit during January-March 2009 was Rs 243.1 Crore vis-à-vis Rs 297.7 Crore during January-March
2008.
While there was a 17 per cent growth in unit sales during the quarter, the adverse foreign exchange movements
during the year, impacted the bottom-line in Q4 as well.
12
Highlights of 2008-09
FINANCIAL HIGHLIGHT:
FINANCIAL HIGHLIGHTS
Particulars 2009 2008 2007 2006 2005 2004 2003
Net Sales (In
x10M Rs) 20530.1 17891.6 14696.3 12015.9 10923.8 9104.4 7180.1
Profit Before Tax
(In x10M Rs) 1675.8 2503 2279.8 1750 1304.9 769.8 282.1
Reported Net
Profit (In x10M
Rs)
1218.7 1730.8 1562 1189.1 853.6 542.1 146.4
Earnings Per
Share-Unit Curr
( In Rs)
41.57 59.03 53.29 40.65 29.25 18.56 4.88
In the fiscal 2008-09 Maruti Suzuki sold a total of 792,167 vehicles. The annual sales in 2008-09 is the highest
ever by the company in its 25 year history. The previous highest annual sales were 764,842 units in 2007-08.
During the fiscal, Maruti Suzuki Swift crossed the 3 lakh-sales mark cumulative domestic sales since launch
and became the quickest vehicle model to do so. During the fiscal, Maruti Suzuki's Alto continued to be the
preferred vehicle for the great Indian middle class crossing the 1 million-mark in cumulative sales in domestic
market.
The company's sales included exports of 70,023 units in 2008-09, up by 32.1 per cent over sales of 53,024
recorded in 2007-08. The 2008-09 export numbers, the highest ever by the company, was led by A-star, the fuel
efficient compact car launched in Europe during the year as Suzuki Alto. The export tally includes around
19,000 units of A-star exported to Europe including United Kingdom, France, Germany, Italy, Netherlands,
Denmark and Switzerland.
Fiscal 2008-09 marked Maruti Suzuki's Silver Jubilee year in India. Over these 25 years the company has sold
over 7 million (70 lakh) cars in the domestic market. Additionally, over half a million cars made by Maruti
Suzuki have been exported world-over.
During the year, the company continued its focus on long term initiatives, despite the challenging market
situation. These include:
• Focus on R&D: Manpower strength to 730 engineers from 460 in end March 2008. Company plans
1,000 engineers in R&D by 2010.
• New technology engine: Brand new facility for K-series engine launched on schedule.
• Launching new models: A-star launched. Introduced Maruti 800 Duo - an alternate fuel option that runs
on LPG and petrol.
13
• Annual capacity to manufacture expanded from 800,000 to one million units (Gurgaon plus Manesar
plants).
• Reached out to new segments of customers - government employees and rural customers - through
innovative programs.
• Export of A star (as Suzuki Alto) to Europe commenced as per schedule.
• Dedicated export port facilities for cars at Mundra completed, used for A-star shipment.
• Network expansion:
o Sales : From 600 sales outlets (in 393 cities) last year to 681 outlets (in 454 cities)
o Service : From 2,628 service outlets (1220 cities) last year to 2,767 (in 1314 cities);
o True Value : From 265 outlets (in 166 cities) last year to 315 outlets (181 cities)
• Increased Pre-owned car sales from 1.01 lakh units in 2007-08 to 1.23 lakh units in 2008-09
• National Road Safety Mission launched - a nation-wide Corporate Social Responsibility (CSR) initiative
to train 500,000 people in safe driving in three years. The network of Maruti Driving Schools further
expanded and crossed 50 schools.
Accolades
During the year, the company, its products and services received many awards and accolades instituted by
independent expert groups, media houses and research agencies.
These include:
• A star as the "Car of the year"
• A star as the "Best small car of the year"
• K10B Engine as the "Automotive technology of the year"
• Maruti Suzuki as the "Manufacturer of the year"
The company was rated No. 1 for a record 9th consecutive year in the JD Power Customer Satisfaction Index
Study.
Maruti Suzuki India Ltd has informed BSE that a meeting of the Board of Directors of the Company will be
held on April 26, 2010, inter alia, to consider and approve the audited financial results for the year ended on
March 31, 2010 and to recommend dividend if any, on equity shares of the Company for the financial year
2009-10.
14
MEANING OF ANALYSIS AND OBJECTIVE OF STUDY :
Financial statement namely the statement of the profit & loss account and the balance sheet are indication of
two signify-cant factors profitability and financial soundness analysis of statements means such a treatment of
the information contained to afford a diagnosis of the profitability 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 to study the present finance scenario. The objective is such that company’s
profitability, liquidity and capacity by such analysis we can interpret the position of the company. So it is very
important to study.
Profit Trend for 7 years:
PROFIT COMPARISION (IN x10M Rs)
Particulars 2009 2008 2007 2006 2005 2004 2003
Operating Profit
(EBDIT) 2433.3 3130.8 2588.8 2055.8 1797.7 1308.1 656.9
Gross Profit
(EBDT) 2382.3 3071.2 2551.2 2035.4 1761.7 1264.7 604.2
Profit Before Tax
(EBT) 1675.8 2503 2279.8 1750 1304.9 769.8 282.1
Adjusted Net
Profit (EAT) 1072.63 1669.71 1535.29 1197.07 860.1 621.82 129.72
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 is either 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 activities
3) Cash from financing activities
The operating activities include receipts from sale of goods or Rendering of services receipts from royalty,
fees, commission etc. Outflow is the resulting from payment to creditors for goods and services, payment for
expenses such as lighting, power, rent, wages salaries etc.
Only cash from operating activities is included in this report.
15
IMPORTANCE OF CASH PROFIT:
The cash profit is an important measure of profitability as well as liquidity. When the cash profit differs from
the profit is shown in the profit and loss account or profit and loss statement. Adjusting depreciation arrives at
the cash profit; amortize action of capital expenses 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 from operations 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.
MEANING & IMPORTANCE OF RATIO:
The Balance Sheet and the Statement of Income are essential, but they are only the starting point for successful
financial management. Apply Ratio Analysis to Financial Statements to analyze the success, failure, and
progress of your business.
Ratio Analysis enables the business owner/manager to spot trends in a business and to compare its performance
and condition with the average performance of similar businesses in the same industry. To do this compare your
ratios with the average of businesses similar to yours and compare your own ratios for several successive years,
watching especially for any unfavorable trends that may be starting. Ratio analysis may provide the all-
important early warning indications that allow you to solve your business problems before your business is
destroyed by them.
Ratio is a figure showing, logical relationship between any two items taken from financial statement as prepared
and presented annually are of little use for guidance of prospective investors, creditors and 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 make profit. The relation between in two
related items of financial statements is known ratio.
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 the business. On the basic of this
ratio, investors get an idea about overall efficiency of managers and bank as well as other creditors draw useful
conclusion about repaying capacity of the borrowers.
16
LIQUIDITY :
In fact the use of ratio was made initially to ascertain the Liquidity of business. The current ratio, acid test ratio
will tell whether the firm will be able to meet its current liabilities and when they nature. Banks and other
leaders will be able to conclude from these ratios whether the firm will be able to pay regularly the interest and
loan installments.
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 are compared 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 to other firms and will indicate corrective measures.
INDICATE TREND :
The ratio of the last 3 to 5 years will indicate the trend in the respective 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 the system of budgetary control is in use. If various
ratios are presented these reports, it will give a fairly good idea about various aspects of financial position.
USEFUL FOR DECISION MAKING :
Ratio guide the management in making some of the important decision, suppose, the liquidity ratios shows an
unsatisfactory position, the management may decide to get additional liquid funds. Even for capital
expenditure decision, the ratio of investment. The efficiency of each department a thus be deter minded. Thus,
the ratio are the most useful I financial statement.
17
6. Classification of ratio
6.1Profitability ratio
[6.1.1] Gross Profit Ratio:
Meaning:
It is expresses relationship between Gross Profit earned to net sales. It is a significant indicator of the
profitability of business.
It expresses in percent. For example, a ratio shows that for a sale of every Rs. 1000 a margin of 250
rupees is available from which operating expenses of business are recovered.
The ratio shows whether the mark up obtained on cost of production is sufficient or not. There is no
calibration against reasonability of gross profit ratio. However it must be enough to cover its operating
expenses. In many industries, there are more or less recognized gross profit ratios and the business
should strive to maintain this standard.
If this ratio is low, it indicates that the cost of sales is high or that the purchasing is inefficient.
Alternatively, it may also mean that due to depression, the selling price is reduced but there are may be
no corresponding reduction, the selling price is reduced but there may be no corresponding reduction in
cost of sales. In such a case, the management must investigate the causes and try to bring up this ratio.
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 in
pricing their product.
The gross margin represents the limit beyond which fall in sales price are outside the tolerance limit.
Formula:
Gross profit X 100
Sales
18
FOR GROSS PROFIT RATIO
Particulars 2009 2008 2007 2006 2005 2004 2003
Gross Profit
(EBDT) (In x10M
Rs)
2382.3 3071.2 2551.2 1761.7
1264.7 604.2
Net Sales (In x10M
Rs) 20530.1 17891.6 14696.3 12015.9 10923.8 9104.4 7180.1
Gross Profit Ratio 11.603937 17.165597 17.359471 16.939222 16.1271
719
13.891
0856
8.4149
2458
INTERPRETATION:
As mentioned above the gross profit ratio indicates the relationship between gross profit and net sales. Here
from the table we can judge the financial position of Maruti Suzuki year wise.
Here 6 consecutive years from 2004 to 2009 are taken into consideration. The changes in the gross profit ratio
in percent are as follows.
Here, negative sign indicates that the percent is decreased compare to immediate previous year, while positive
sign indicates that the percent is decreased in the gross profit compare to immediate previous year.
For consecutive four years the gross profit ratio is positive. It indicates better financial position of the company.
19
[6.1.2] Net Profit Ratio:
Meaning:
Net profit ratio is valuable for the purpose of ascertaining the over-all profitability of business and shows the
efficiency of operating the business.
Implementation:
The net profit ratio is indicative of management’s 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.
It indicates the portion of sales revenue is left to the proprietors after all operating expenses are paid.
The higher the ratio, the better will be the profitability. In order to have a better idea of profitability, the
gross profit ratio and net profit ratio may be simultaneously considered. If the gross profitability
increases over the five years but net profit is declining, it indicates that administrative expenses are
slowly rising.
Formula:
FOR NET PROFIT RATIO
Particulars 2009 2008 2007 2006 2005 2004 2003
Net Profit (In x10M
Rs) 1072.63 1669.71 1535.29 1197.07 860.1 621.82 129.72
Net Sales (In x10M
Rs) 20530.1 17891.6 14696.3 12015.9 10923.8 9104.4 7180.1
Net Profit Ratio 5.2246701 9.3323682 10.446779 9.9623831 7.87363
372
6.8298
8445
1.8066
6007
Net Profit X 100
Sales
20
Interpretation:
Here 6 consecutive years from 2004 to 2009 are taken into consideration. The changes in the net profit
ratio in percent are as follows.
Higher the net profit ratio shows better financial position of the company.
Due to various reasons this ratio goes down. If the administration department is not sufficient then net
profit ratio goes down or the control mechanism is not efficient at all check points then also it affects net
profit of the company.
Net profit is the profit that is available to the proprietors of the firm after clearing all outstanding and
expenses. Thus, higher the ratio yields higher profit.
21
[6.1.3] Expenses Ratio:
Meaning:
This ratio shows relationship between expanses to sales.
Above table shows 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 operating expenses for the year 2006 – 07 it is 92.03% and it is higher
than previous year which shows increase in operating expenses.
For the year 2008-09 there is 2.43 increases in the net profit ratio which gives signal of better financial
position of the company.
This operating expense may be due to growth in the organization or it may reflect inefficacy of
administrative control on expenses.
Here negative sign shows decrease in operating expenses.
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:
FOR EXPENSES RATIO
Particulars 2009 2008 2007 2006 2005 2004 2003
Total Expenditure
(In x10M Rs) 18738.7 15934.2 12462.8 10625.3 9671 8177.1 6704.8
Net Sales (In x10M
Rs) 20530.1 17891.6 14696.3 12015.9 10923.8 9104.4 7180.1
Net Profit Ratio
91.274275 89.059670 84.802297 88.427000 88.5314
634
89.814
8148
93.380
315
INTERPRETATION:
This ratio shows relationship between expanses to sales.
Above table shows 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 operating expenses for the year 2006 – 07 it is 92.03% and it is higher
than previous year which shows increase in operating expenses.
This operating expense may be due to growth in the organization or it may reflect inefficacy of
administrative control on expenses.
Here negative sign shows decrease in operating expenses.
Expenses X 100
Sales
22
[6.1.4] OPERATING RATIO:
Meaning:
Operating Ratio is computed by dividing expenses by sales.
The term ‘operating 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:
OPERATION RATIO
Particulars 2009 2008 2007 2006 2005 2004 2003
Operating Expense 2114.8 1510.4 1244.21 900.15 801.54 786.54 840.88
COGS 3498.6 3744.5 3197.01 2506.35 2160.04 1673.64 1168.58
Net Sales 20530.1 17891.6 14696.3 12015.9 10923.8 9104.4 7180.1
Operating Ratio 27.3423 29.3708 30.22 28.3499 27.1113 27.0219 27.9865
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 is lower
than previous year which shows increase in operating expenses.
In the year 2008-09 there is 28% increase in the operating expenses. This is may be due to inefficient
operation management and also there may be some other expenses for sales or promotion may incur
during this year.
C O G S + Operating expenses X 100
Net sales
23
[6.1.5] Return on investment / Capital employed:
Meaning:
The profitability ratio can be computed by relating the profits of a firm to 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 be measured 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.
It is an index of profitability of business and is obtained by comparing net profit with capital employed.
Capital includes share capital, reserves and long term loans such as debentures.
Formula:
FOR RETURN ON INVESTMENT / CAPITAL EMPLOYED
Particulars 2009 2008 2007 2006 2005 2004 2003
Gross Profit (EBIT) (In
x10M Rs) 2382.3 3071.2 2551.2 2035.4 1761.7 1264.7 604.2
Capital Employed (
Share capital + Reserves
and surplus) (In x10M
Rs)
9344.9 8415.4 6853.9 5452.6 4378.8 3591.2 3098
Return on Investment 25.4930497 36.49499
73
37.222
6032
37.3289
807
40.232
4838
35.216
6407
19.502
9051
INTERPRETATION:
This ratio shows relationship between E B I T to CAPITAL EMPLOYED.
Higher the ratio, it is better for the company.
In the year 2008- 09 there is decrease of 43.15 percent in the gross profit of the company. This show
slow- down in company’s sale. It is due to recession during that period where an overall sale was
affected.
E B I T X 100
Capital employed
24
[6.1.6] Return on shareholder’s fund:
Meaning:
It is carries the relationship of return to the sources of funds yet another step further.
In order to judge the efficiency with which the proprietors’ funds are employed in business, this ratio is
ascertained. Proprietor’s equity or Proprietors’ funds include share capital and reserves.
It is of great practical importance to the perspective of investors, as it enables the profitability of a
company to be compared with that of other.
It also indicates whether the return on proprietor’s fund is enough in relation to the risk that they
undertake.
This ratio shows what amount of dividend is likely to be received on shares.
Implementation:
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:
FOR RETURN ON SHAREHOLDER'S FUND
Particulars 2009 2008 2007 2006 2005 2004 2003
Net Profit (In x10M Rs) 1072.63 1669.71 1535.29 1197.07 860.1 621.82 129.72
Capital Employed ( Share
capital + Reserves and
surplus) (In x10M Rs)
9344.9 8415.4 6853.9 5452.6 4378.8 3591.2 3098
Return on Investment 11.4782
395
19.84112
46
22.4002
393
21.9541
136
19.642
3678
17.315
1036
4.18721
756
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 % that increase 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.
During the year 2008-09 there is 72.97% decrease in the ROI. This ratio shows upward trend for that
financial year for the company.
Net profit X 100
Share holders fund
25
[6.1.7] 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:
FOR RETURN ON EQUITY SHARE CAPITAL
Particulars 2009 2008 2007 2006 2005 2004 2003
Net Profit (In x10M Rs) 1072.63 1669.71 1535.29 1197.07 860.1 621.82 129.72
Preference Dividend (In
Rs) 0 0 0 0 0 0 0
Share Capital (In x10M
Rs) 144.5 144.5 144.5 144.5 144.5 144.5 144.5
Return on Equity Share
Capital (In Rs) 55.73 8.13 22.03 28.14 27.73 79.12 11.46
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 19.49 % that increase in the year 2005 – 06 up to 21.81 %.
This ratio shows downward trend in the ratio in return on shareholders fund for this company.
For the financial year 2008-09 there is 85% increase in the ratio in return on shareholders fund.
Here, year 2008-09 shows marked improvement that is why it is taken into consideration.
Net profit after tax Preference dividend X 100 Equity capital
26
[6.1.8] 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:
FOR RETURN ON EQUITY SHARE HOLDERS FUND
Particulars 2009 2008 2007 2006 2005 2004 2003
Net Profit (In x10M Rs) 1072.63 1669.71 1535.29 1197.07 860.1 621.82 129.72
Capital Employed ( Share
capital + Reserves and
surplus) (In x10M Rs)
9344.9 8415.4 6853.9 5452.6 4378.8 3591.2 3098
Preference Dividend (In
Rs) 0 0 0 0 0 0 0
Return on Investment (In
Rs)
11.4782
395
19.8411
246
22.4002
393
21.9541
136
19.6423
678
17.315
1036
4.18721
756
INTERPRETATION:
For the year 2004 – 05 it is 19.64 % that increase in the year 2005 – 06 up to 21.95%.
These ratios shows downward trend in the ratio in return on shareholders fund for this company.
Here in the year 2008-09 there is decrease of 69% compared to previous year in the ROI which shows
upward trend in the company.
Net profit after tax Preference dividend X 100
Equity share holders’ funds
27
[6.1.9] 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.
This ratio shows the profitability of the firm from the owner’s point of view. By comparing EPS of the
current year with past years the path of the trend of profitability can be ascertained.
It is essential that EPS of the company should be compared with the other companies and also average
of the company before giving final opinion.
The limitation of EPS is that it does not show how much dividend is actually paid to shareholders and
how much profit is retained in business.
Implementation:
Earning per share is a widely used ratio. EPS s a measure of profitability
Formula:
FOR RETURN ON EARNING PER SHARE
Particulars 2009 2008 2007 2006 2005 2004 2003
Net Profit (In x10M Rs) 1072.63 1669.71 1535.29 1197.07 860.1 621.82 129.72
No. of Equity Shares 2889100
60
2889100
60
2889100
60
2889100
60
2889100
60
288910
060
2889100
60
Preference Dividend (In
Rs) 0 0 0 0 0 0 0
Return on Investment ( In
Rs)
37.1267
792
57.7934
185
53.1407
594
41.4340
02
29.7705
106
21.522
9612
44.8997
865
INTERPRETATION:
This ratio indicates the earning per share for shareholders of company.
In the year 2004 – 05 ratio is 29.77 % and 2005 – 06 it is 41.43 % and its increase on 2006-07 is 53.14
%.therefore it is good for company as well as shareholders.
Profit after tax – preference dividend X 100
No. of equity shareholders fund
28
[6.1.10] 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 the shareholders 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:
FOR DIVIDEND PER SHARE
Particulars 2009 2008 2007 2006 2005 2004 2003
No. of Equity Shares 2889100
60
2889100
60
2889100
60
2889100
60
2889100
60
288910
060
2889100
60
Total Dividend (In x10M
Rs) 101.1 144.5 130 101.1 57.8 43.3 42.7
Dividend per Share ( In
Rs)
3.49935
894
5.00155
654
4.49967
024
3.49935
894
2.00062
262
1.4987
3632
1.47796
861
INTERPRETATION:
This ratio indicates the total dividend declared to no. of shares. For the year 2004 – 05 it is 2 % and 2005
– 06 is3.50 % and increase on 4.50 % in the year 2006 – 07.
For the year 2007-08 is 96% increased compared to previous year while for the year 2008-09 it is
decreased to 26.84%. Thus for the current year it is decreased. It indicates slow-down in the financial
position of the company.
Total dividend declared
No. of equity shares
29
[6.1.11] Price earning ratio:
Meaning:
It is closely related to the earning yield leanings price ratio. It is actually the 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:
FOR PRICE EARNING RATIO
Particulars 2009 2008 2007 2006 2005 2004 2003
Market Value of Share (In
Rs) 1559.65 520.1 990.05 927.35 636.5 461.25 376.3
Earning Per Share (In Rs) 41.57 59.03 53.29 40.65 29.25 18.56 4.88
Price Earning Ration 37.5186
433
8.81077
418
18.5785
326
22.8130
381
21.7606
838
24.851
8319
77.1106
557
INTERPRETATION:
This ratio indicates the earning per share for shareholders 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 as shareholders.
Market value per share
Earning per share
30
[6.1.12] Dividend yield ratio:
Meaning:
Dividend yield ratio is closely related to the EPS and DPS.
While the EPS and 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 be defined 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:
FOR DIVIDEND YIELD RATIO
Particulars 2009 2008 2007 2006 2005 2004 2003
Market Value of Share (In
Rs) 1559.65 520.1 990.05 927.35 636.5 461.25 376.3
Dividend Per Share (In Rs) 3.4993589
4
5.001555
65
4.49967
024
3.499358
94
2.00062
262
1.4987
3632
1.4779
6861
Dividend Yield Ratio 0.0022436
8
0.009616
53
0.00454
489
0.003773
5
0.00314
316
0.0032
4929
0.0039
2763
INTERPRETATION:
This ratio indicates the earning per share for shareholders of company.
In the year 2004 – 05 ratio is 17.58% and 2005 – 06 it is 21.95%.
For the year 2007-08 the ratio is decreased by 109.9% and for 2008-09 it is increased by 76.51%. So for
current situation is good for company as well as shareholders.
Dividend per share
Market value share
31
[6.1.13] Interest coverage ratio:
Meaning:
It is also known as ‘time interest – earned ratio’.
This ratio measures the debt servicing capacity of a firm insofar as fixed interest on long term loan is
concerned. It is determined by dividing the operating profit or 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:
FOR INTEREST COVERING RATIO
Particulars 2009 2008 2007 2006 2005 2004 2003
Operating Profit (EBDIT)
(In x10M Rs)
2433.
3 3130.8 2588.8 2055.8 1797.7 1308.1 656.9
Interest (In x10M Rs) 51 59.6 37.6 20.4 36 43.4 52.7
Interest Covering Ratio
47.71
1764
7
52.53020
13
68.85106
38
100.774
51
49.9361
111
30.1405
53
12.464
8956
INTERPRETATION:
This ratio indicates the EBDIT to interest. In the year 2004 – 05 ratio is 49.93 and 2005 – 06 it is 100.8
and its decrease on 68.85.therefore it is good for company as well as shareholders.
For the year 2008-09 the interest covering ratio is 47.71 while for the year 2007-08 it is 52.53.It is
decreasing for the last 2 financial years due to the fluctuation in for-ex.
EBITD
Interest
32
7. Activity / Turn over Ratio:
[7.1] Overall turnover ratio:
Meaning:
The amount invested in business is invested in all capital employed and sales 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:
FOR OVERALL TURNOVER RATIO
Particulars 2009 2008 2007 2006 2005 2004 2003
Net Sales (In x10M
Rs) 20530.1 17891.6 14696.3 12015.9 10923.8 9104.4 7180.1
Capital Employed (
Share capital +
Reserves and surplus)
(In x10M Rs)
9344.9 8415.4 6853.9 5452.6 4378.8 3591.2 3098
OVERALL
TURNOVER RATIO
2.19693
0946
2.126054
614
2.1442244
56
2.203700
987
2.49470
174
2.5351
97149
2.31765
6553
INTERPRETATION:
This ratio indicates net sales to capital employed. In the year 2004 – 05 ratio is 2.49 and 2005 – 06 it is
2.20 and its decrease on 2.14 in the year 2006 – 07. Therefore it is bad for company.
In the year 2008-09 the ratio is 2.19 while in the year 2007-08 the ratio is decreased to 2.12 which
shows slow down in the company.
Net sales
Capital employed
33
[7.2] 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:
FOR FIXED ASSETS TURNOVER RATIO
Particulars 2009 2008 2007 2006 2005 2004 2003
Net Sales (In x10M
Rs) 20530.1 17891.6 14696.3 12015.9 10923.8 9104.4 7180.1
Total Fixed Asset (In
x10M Rs)
7079.34
4828
5716.166
134
4740.7419
35
4073.186
441
3943.61
011
3746.6
6667
3554.50
495
Fixed Asset Turnover
Ratio 2.9 3.13 3.1 2.95 2.77
2.4299
99998 2.02
INTERPRETATION:
Fixed turn over ratio indicates the turnover of the company in one year.
In the year 2004 – 05 ratio is 2.77 and 2005 – 06 it is 2.95 and it increase on 3.1 in the year 2006 - 07.
Therefore, it is good for company.
In the year 2008-09 there is decrease of 7% in the fixed turnover ratio compare to last year while during
year 2007-08 there is very minor change in the ratio. Year 2007-08 and 2006-07 shows almost similar
financial position of the company while year 2008-09 shows slight slow down in the financial position
of the company
Sales
Fixed assets
34
[7.3] Debtor turn over ratio:
Meaning:
It is allied and closely related to this is the average collection period. It is 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:
FOR DEBTOR TURN OVER RATIO
Particulars 2009 2008 2007 2006 2005 2004 2003
Net Sales (In x10M
Rs) 20530.1 17891.6 14696.3 12015.9 10923.8 9104.4 7180.1
Sundry Debtors (In
x10M Rs)
697.117
1477
596.9836
503
595.23288
78
507.2140
144
527.974
867
560.61
57635
603.877
2077
Debtor Turnover
Ratio 29.45 29.97 24.69 23.69 20.69 16.24 11.89
INTERPRETATION:
Debtor turnover ratio indicates credit sales to avg. debtors.
In the year 2004 – 05 ratio is 20.69 and 2005 – 06 it is 23.69 and its increase on 24.69 in the year 2006 –
07. Therefore, it is good position for company.
In the year 2008-09 there is 1% decrease in the Debtor’s turnover ratio compare to previous year and
2007-08 there is 17.91% increase in the debtor’s turn over ratio.
How efficiently the amount is collected from the customers from the credit sales.
As compare to previous year the no. of day’s collection period increase which indicate inefficiency of
collection department.
Lower the collection period and higher debtor turnover ratio is advisable.
Credit sales
Avg. Debtors
35
[7.4] Creditor 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:
FOR CREDITOR RATIO
Particulars 2008 2007 2006 2005
Creditor (In x10M Rs) 854.9 909.6 555.1 463.7
Bills Payable (In x10M Rs) 0 0 0 0
Credit Purchase (In x10M
Rs) 13938.8 10836.4 9392.8 8621.3
Creditor Ratio 22.3863245 30.63785021 21.57093731 19.6316681
INTERPRETATION:
Creditor ratio indicates creditor to credit purchase.
In the year 2004 – 05 ratio is 19.63 and 2005 – 06 it is 21.57 and its increase on 30.63 in the year 2006 – 07.
In the year 2007-08 there is decrease on 22.38 times i.e. decrease of 36.36% in the creditor ratio compare to
previous year.
Thus it indicates slight slow down in the financial condition of the company.
Creditor + B / P X 365
Credit Purchases
36
[7.5] creditor turns 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:
FOR CREDITOR TURN OVER RATIO
Particulars 2008 2007 2006 2005
NO. Of Days
in Year 365 365 365 365
Creditor's
Ratio 22.3863245 30.63785021 21.57093731 19.6316681
Creditors
Turnover
Ratio
16.30459703 11.91336851 16.92091515 18.5924089
INTERPRETATION:
Creditor ratio indicates creditor to credit purchase. In the year 2004 – 05 ratio is 18.59 and 2005 – 06 it
is 16.92 and its increase on 11.91 in the year 2006 – 07. Therefore, it is good position for company.
During the year 2007-08 ratio is 16.30. It increases in compare to previous financial year thus it
indicates good position of the company.
No. of days in a year
Creditor’s ratio
37
[7.6] 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 between COGS and inventory level.
Higher the turnover ratio, the more profitable business would be. Such firms will be able to trade on a
smaller margin of a gross profit.
Lower stock turn over ratio indicates accumulation of slow moving, obsolete and low quality goods,
which is a danger signal for management.
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:
FOR STOCK TURN OVER RATIO
Particulars 2009 2008 2007 2006 2005 2004 2003
Sales Turnover (In
x10M Rs) 23182.2 21025.2 17205.9 14753.1 13335.7 11047.4 8981.5
Gross Profit (EBDT)
(In x10M Rs) 2382.3 3071.2 2551.2 2035.4 1761.7 1264.7 604.2
Cost Of Good Sold
(COGS) (In x10M Rs) 20799.9 17954 14654.7 12717.7 11574 9782.7 8377.3
Inventories (In x10M
Rs) 902.3 1038 701.4 881.2 666.6 439.8 487
Stock Turn over Ratio 23.052089
11
17.29672
447
20.893498
72
14.4322514
8
17.362736
3
22.243519
78
17.201848
05
INTERPRETATION:
Stock turnover ratio indicates cost of goods sold to average stock.
In the year 2004 – 05 ratio is 17.36 times and 2005 – 06 it is 14.43 times and it’s increase on 20.80 times
in the year 2006 – 07.
For the year 2008-09 and 2007-08 the ratio are 23.05 times and 17.3 times respectively. It is more in
2008-09 compare to 2007-08. It indicates better position of the company.
Therefore, it is good for company. How efficiently stock rate in the year Higher the ratio, better position
of the company as well as efficiency.
Cost of good sold
Average stock
38
8. Liquidity Ratio:
[8.1] 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.
It is also known as a working capital ratio, as it is measure of working capital available at a particular
time. It is a measure of short term financial strength of the business and shows whether the business will
be able to meet its current liabilities, as and when they mature.
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:
FOR CURRENT RATIO
Particulars 2009 2008 2007 2006 2005 2004 2003
Total Current
Assets (In x10M
Rs)
5491.1 3097.9 4405 3740.9 2972 2018.9 2782.8
Total Current
Liabilities (In
x10M Rs)
3397.6 2825.7 3072.4 1977.1 1608 1531.8 1478.6
Current Ratio 1.6162 1.096330 1.433732 1.892114 1.848258 1.31799 1.882050
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 decrease on 1.43: 1 in the year 2006 – 07.
Therefore, it is good for company.
For the year 2008-09 the ratio is 1.61:1 and for the year 2007-08 it is 1.61:1. So for the year 2008-09 it
is good as ideal is 2:1 and 1.61:1 closer to ideal one.
Mainly 2: 1 is good. It indicates, repaying condition of the company to the current liabilities. The
standard current ratio must be 2:1.
Current Assets
Current liability
39
[8.2] Liquid Ratio:
Meaning:
It is obtained by dividing the liquid assets by liquid liabilities.
It liquid ratio is designed to show the amount of cash available to meet immediate payments.
If the liquid assets are equal to or more than liquid liabilities, the condition may be considered as
satisfactory.
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. It measures ability of a firm to meet its
short term obligations and reflect the short term finance strength of a firm.
Formula:
FOR LIQUIDITY RATIO
Particulars 2009 2008 2007 2006 2005 2004 2003
Total Current
Assets (In
x10M Rs)
5491.1 3097.9 4405 3740.9 2972 2018.9 2782.8
Inventories
(In x10M Rs) 902.3 1038 701.4 881.2 666.6 439.8 487
Prepaid
Expenses (In
x10M Rs)
0 0 0 0 0 0 0
Quick Asset
(In x10M Rs) 4588.8 2059.9 3703.6 2859.7 2305.4 1579.1 2295.8
Total Current
Liabilities (In
x10M Rs)
3397.6 2825.7 3072.4 1977.1 1608 1531.8 1478.6
Bank Over
Draff (In
x10M Rs)
0 0 0 0 0 0 0
Liquidity
Ratio 1.35060042 0.72898751 1.205442 1.44641141 1.43370647 1.0308787 1.55268497
Liquid assets
Liquid liability
40
INTERPRETATION:
Liquid ratio indicates liquid assets to liquid liability. In the year 2004 – 05 ratio is 1.43: 1 and 2005 – 06 it is
1.44: 1 and its decrease on 1.21: 1 in the year 2006 – 07. Therefore, it is good for company. How effectively the
liability paid off.
For the year 2008-09 the ratio is 1.35:1 which shows slight better condition compare to FY 2004-05.
The standard liquidation must be 1:1.
41
[8.3] 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 liquid liabilities.
This is exacting standard of liquidity and it is satisfactory if the ratio is 0.5:1.
Quick assets here do not include both stock and debtors, because payment from debtors would not
generally be received immediately when liquid liabilities are to be paid.
Implementation:
This ratio is the most rigorous and conservative test of a firm’s liquidity position. Further, it is suggested
that it would be useful for the management.
Formula:
FOR QUICK ACID TEST RATIO
Particulars 2009 2008 2007 2006 2005 2004 2003
Quick Assets
(In x10M Rs) 5491.1 3097.9 4405 3740.9 2972 2018.9 2782.8
Current
Liability (In
x10M Rs)
3397.6 2825.7 3072.4 1977.1 1608 1531.8 1478.6
Quick Acid
Test Ratio 1.61617024 1.09633011 1.43373259 1.89211471 1.84825871 1.3179919 1.88205059
INTERPRETATION:
Quick acid test ratio is indicates quick assets and liquid liability. In the year 2004 – 05 ratio is 1.84: 1
and 2005 – 06 it is 1.89: 1 and its decrease on 1.4: 1 in the year 2006 – 07. Therefore, it is good for
company.
Quick assets
Liquid liability
42
9. Leverage Ratio:
[9.1] 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.
The higher the ratio, the stronger the financial position of the enterprise, as it signifies that the
proprietors have provided larger funds to purchase assets. This ratio can not exceed 100%; it means that
the business does not use any outside funds. There are no outside liabilities. Purchases are made for cash
only and firm carries business entirely from own funs only. A very high ratio therefore is not desired as
it shows insufficient use of out side fund is made.
Generally it is said that proprietor’s fund should be enough to cover fixed assets. And also reasonable
proportion must be maintained between owned funds and borrowed funds, so the benefit of trading on
equity is obtained. Which inture increase the rate of equity dividend.
Formula:
FOR PROPEIETARY RATIO
Particulars 2009 2008 2007 2006 2005 2004 2003
Total Proprietary
Funds (In x10M Rs) 9344.9 8415.4 6853.9 5452.6 4378.8 3591.2 3098
Total Assets (In
x10M Rs) 10043.8 9315.6 7484.7 5524.3 4686.4 3903.1 3554
Proprietary Ratio 93.041478
32
90.3366
3962
91.57214
05 98.702098
93.43632
639
92.0089
1599
87.169
38661
INTERPRETATION:
This ratio indicates the proprietary funds to total assets. For the year 2006 – 07 it is 91.57 % and 2007– 08 is
90.33 % and increase in 2008 – 09 it is 93.04 %. This is a good for company.
Proprietary fund
Net asset
43
[9.2] Debt equity ratio:
Meaning:
The relationship between borrowed funds and owner’s capital is a popular 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.
A higher ratio means that outside creditors have a larger claim than the owners of business. The
pressure from creditors would increase and their interference will also increase. The company with high
debt position will have to accept strict conditions from the lenders, while borrowing money.
A lower ratio is not profitable from the view point of equity share holders, as benefit of trading on
equity is not availed of and the rate of equity dividend will be comparatively lower.
FOR DEBT EQUITY RATIO
Particulars 2009 2008 2007 2006 2005 2004 2003
Long term
Liabilities (In x10M
Rs)
841.041 841.54 411.234 218.104 350.304 395.032 588.62
Total Shareholders
Funds (In x10M Rs)
9344.9 8415.4 6853.9 5452.6 4378.8 3591.2 3098
Debt-Equity Ratio 9% 10% 6% 4% 8% 11% 19%
INTERPRETATION:
This ratio indicates the debt to equity ratio. For the year 2004 – 05 it is 8 %and 2005– 06 is 4 % and
increase in 2006 – 07 it is 6%.
This is a bad for company as compare to 2005-06 year is more debt ratio which indicate the more realize
on debt fund rather owned fund. The good impact is interest burden will be more indirectly.
For the year 2008-09 and 2007-08 the debt equity ratio is 9% and 10% respectively. As the higher debt
equity ratio it shows the weaker financial condition of the company. But, still it again varies for
company to company.
44
Accounting Policy 2009
1) BASIS FOR PREPARATION OF ACCOUNTS
These financial statements have been prepared to comply in all material respects with all the applicable
accounting principles in India, the applicable accounting standards notified under section 211(3C) of the
Companies Act, 1956 and the relevant provisions of the Companies Act, 1956.
2) REVENUE RECOGNITION
Domestic and export sales are recognized on transfer of significant risks and rewards to the customer which
takes place on dispatch of goods from the factory / stockyard / storage area and port respectively.
3) FIXED ASSETS
Fixed assets (except freehold land which is carried at cost) are carried at cost of acquisition or construction or at
manufacturing cost (in case of own manufactured assets) in the year of capitalization less accumulated
depreciation.
Assets acquired under finance lease are capitalized at the lower of their fair value and the present value of
minimum lease payments.
4) BORROWING COSTS
Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets
are capitalized till the month in which each asset is put to use as part of the cost of that asset.
5) DEPRECIATION
a) Fixed assets except leasehold assets viz land and vehicles are depreciated on the straight line method on a
pro-rata basis from the month in which each asset is put to use.
Depreciation has been provided at the rates prescribed in Schedule XIV to the Companies Act, 1956 except for
certain fixed assets where, based on the managements estimate of the useful life of the assets, higher
depreciation has been provided on the straight line method over the following useful lives:
Plant and Machinery 8 - 11 Years Dies and Jigs 4 Years Electronic Data Processing Equipments 3 Years
In respect of assets whose useful life has been revised, the unamortized depreciable amount is charged over the
revised remaining useful life of the assets.
b) Leasehold assets viz land & vehicles are amortized over the period of lease.
45
c) All assets, the individual written down value of which at the beginning of the year is Rs. 5,000 or less, are
depreciated at the rate of 100%. Assets purchased during the year costing Rs 5,000 or less are depreciated at the
rate of 100%.
6) INVENTORIES
a) Inventories are valued at the lower of cost, determined on the weighted average basis, and net realizable
value.
b) Tools are written off over a period of three years except for tools valued at Rs. 5,000 or less individually
which are charged off to revenue in the year of purchase.
c) Machinery spares (other than those supplied along with main plant and machinery, which are capitalized and
depreciated accordingly) are charged to revenue on consumption except those valued at Rs. 5,000 or less
individually, which are charged off to revenue in the year of purchase.
7) 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 permanent diminution in their value, in which case the necessary provision is made.
8) RESEARCH AND DEVELOPMENT
Revenue expenditure on research and development is charged off against the profit of the year in which it is
incurred. Capital expenditure on research and development is shown as an addition to fixed assets and
depreciated accordingly.
9) EMPLOYEE BENEFIT 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 are administered
through Trusts and the Companies contributions thereto are charged to revenue every year. The Company also
maintains an insurance policy to fund a post-employment medical assistance scheme, which is a Defined
Contribution plan administered by The New India Insurance Company Limited.
The Companies contribution to State Plans namely Employees State Insurance Fund and Employees Pension
Scheme are charged to revenue every year.
The Company has Defined Benefit Plans namely leave encashment/ compensated absence, Gratuity, Interest on
Provident Fund and Retirement Allowance for employees, the liability for which is determined on the basis of
an actuarial valuation at the end of the year. The
Gratuity Fund is recognized by the income tax authorities and is administered through a Trust.
46
Termination benefits are recognized as an expense immediately.
Gains and losses arising out of actuarial valuations are recognized immediately in the Profit and Loss Account
as income or expense.
10) CUSTOMS DUTY
Custom duty available as drawback is initially recognized as purchase cost and is credited to consumption on
export of vehicles.
11) GOVERNMENT GRANTS
Government grants are recognized in the profit and loss account in accordance with the related scheme and in
the period in which these are accrued.
12) TAXES
Tax expense for the period, comprising current tax, fringe benefit tax and deferred tax, is included in
determining the net profit/ (loss) for the year.
Current tax is recognized based on assessable profit computed 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 that future 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 Amount that is reasonably/ virtually certain (as the case may be) to be realized.
Deferred tax assets and liabilities are measured at the tax rates that have been enacted or substantively enacted
at the balance sheet date.
13) DIVIDEND INCOME
Dividend from investments is recognized when the right to receive the payment is established and when no
significant uncertainty as to measurability or collectability exits.
14) INTEREST INCOME
Interest income is recognized on the time basis determined by the amount outstanding and the rate applicable
and where no significant uncertainty as to measurability or collectability exists.
15) IMPAIRMENT OF ASSETS
47
At each balance sheet date, the Company assesses whether there is any indication that an asset may be impaired.
If any such indication exists, the Company estimates the recoverable amount. If the carrying amount of the asset
exceeds its recoverable amount, an impairment loss is recognized in the profit and loss account to the extent the
carrying amount exceeds the recoverable amount.
16) PROVISIONS AND CONTINGENCIES
The Company creates a provision when there is a present obligation as a result of a past event that probably
requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A
disclosure of contingent liability is made when there is a possible obligation or a present obligation that will
probably not require
Outflow of resources or where a reliable estimate of the obligation cannot be made.
48
Notes to Accounts Year End: Mar '09
1) Contingent Liabilities:
a) Claims against the Company disputed and not acknowledged as debts:
i. Sales-tax demands of Rs.50 million (Previous year Rs.50 million). Against this, the Company has deposited a
sum of Rs. 2 million (Previous year Rs. 2 million) under protest.
ii. Excise duty demands/show-cause notices of Rs. 4,799 million (Previous year Rs. 3,130 million). Against
this, the Company has deposited a sum of Rs. 23 million (Previous year Rs. 27 million) under protest.
iii. Customs duty demands of Rs. 118 million (Previous year Rs. 118 million). Against this, the Company has
deposited a sum of Rs. 22 million (Previous year Rs. 22 million) under protest.
iv. Income-tax demands of Rs. 4,466 million (Previous year Rs. 9,905 million). Against this, the Company has
deposited a sum of Rs. 3,802 million under protest (Previous year Rs. 4,745 million).
v. Service-tax demands of Rs. 1234 million (Previous year Rs. 253 million).
vi. Claims against the Company for recovery of Rs 606 million (Previous year Rs. 639 million) lodged by
various parties.
b) As co-lessee in agreements entered into between various vendors of the Company, as lessee, and banks as
lessors for leasing of dies and moulds of certain models aggregating Rs.2 million (Previous year Rs. 2 million).
c) A guarantee given to HDFC Bank Limited against Non-Fund based facilities granted by the bank to a group
company Suzuki Powertrain India Limited of Rs. Nil (Previous year Rs. 2,000 million). Against this, the
balance outstanding as at the year-end is Rs. Nil (Previous year Rs. 194 million).
d) A guarantee given to HSBC Limited against Non-Fund based facilitiesgranted by the bank to a group
company Suzuki Powertrain India Limited of Rs. Nil (Previous year Rs. 3,000 million). Against this, the
balance outstanding as at the year-end is Rs. Nil (Previous year Rs. 1,543
Million).
e) The amounts shown in the item (a) represent the best possible estimates arrived at on the basis of available
information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal
processes which have been invoked by the Company or the claimants as the case may be and therefore cannot
be predicted accurately. The Company engages reputed professional advisors to protect its interests and has
been advised that it has strong legal positions against such disputes.
49
The amount shown in items (b) to (d) represent guarantees given in the normal course of the Companies
operations and are not expected to result in any loss to the Company on the basis of the beneficiaries fulfilling
their ordinary commercial obligations.
2) Outstanding commitments under Letters of Credit established by the Company aggregate to Rs 2,255 million
(Previous year Rs. 2,764 million).
3) Estimated value of contracts on capital account, excluding capital advances, remaining to be executed and
not provided for, amount to Rs.11,593 million (Previous year Rs. 12,692 million).
4) a) Consumption of raw materials and components has been computed by adding purchases to the opening
stock and deducting closing stock verified physically by the management. b) Consumption of raw material and
components includes a provision of Rs. 9 million (Previous year Rs. 26 million) on account of estimated
reversal of tax benefit on quantity differences on inputs.
2) 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. Till 31st March 2009, the Company
has availed of sales tax benefit amounting to Rs. 1,675 million (Previous year Rs. 1,605 million).
3) With effect from April 1, 2008, the company has adopted Accounting Standard 30 - Financial Instruments -
Recognition and Measurement issued by The Institute of Chartered Accountants of India to the extent it does
not contradict with any other Accounting Standard notified u/s
211(3C) of the Companies Act. Accordingly, during the current year, in respect of derivative instruments which
qualify for hedge accounting, the net unrealized loss aggregating Rs. 1,709 million has been accounted for as a
Hedging Reserve to be ultimately recognized in the profit and loss account when the underlying transaction
arises, as against the earlier practice of recognizing the same in the profit and loss account, on valuation at the
end of each period. Other derivative instruments that do not qualify for hedge accounting have been recorded at
fair value at the reporting date and the resultant loss/ gain has been accounted in the profit and loss account.
4) Previous Years figures have been recast regrouped where considered necessary to make them comparable
with the current year’s figures.
50
Auditor's Report Year End: Mar '09
1. We have audited the attached Balance Sheet of Maruti Suzuki India Limited, as at 31st March, 2009, and the
related Profit and Loss Account and 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 Companies management. Our responsibility is to express an
opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards 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. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall financial
statement
Presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors
Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of
Section 227 of The Companies Act, 1956 of India (the Act) and on
The basis of such checks of the books and records of the Company as we considered appropriate and according
to the information and explanations given to us, we further report that:
i) (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 management according to a phased programmed designed to
cover all the items, except furniture and fixtures, office appliances and certain other assets having an aggregate
net book value of Rs. 367 million, over a period of
Three years, which in our opinion, is reasonable having regard to the size of the Company and the nature of its
assets? Pursuant to the programmed, a portion of the fixed assets have been physically verified by the
management during the year and no material discrepancies between the book records and the physical inventory
have been noticed.
(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed
assets has not been disposed off by the Company during the year.
ii) (A) the inventory (excluding materials lying with vendors) has been physically verified by the management
during the year. In respect of inventory lying with the vendors, these have substantially been confirmed by
them. In our opinion, the frequency of verification is reasonable.
(b) In our opinion, the procedures of physical verification of inventory followed by the management are
reasonable and adequate in relation to the size of the Company and the nature of its business.
51
(c) On the basis of our examination of the inventory records, in our opinion, the Company is maintaining proper
records of inventory. The discrepancies noticed on physical verification of inventory as compared to book
records were not material.
iii) The Company has not taken or granted any loans, secured or unsecured, from / to companies, firms or other
parties covered in the register maintained under Section 301 of the Act.
iv) In our opinion and according to the information and explanations given to us, having regard to the
explanation that certain items purchased are of special nature for which suitable alternative sources do not exist
for obtaining comparative quotations, there is an adequate internal control system commensurate with the size
of the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of
goods and services. Further, on the basis of our examination of the books and records of the Company, and
according to the information and explanations given to us, we have neither come across nor have been informed
of any continuing failure to correct major weaknesses in the aforesaid internal control system.
v) (a) In our opinion and according to the information and explanations given to us, the particulars of contracts
or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained
under that section.
(b) In our opinion and according to the information and explanations given to us, there are no transactions made
in pursuance of such contracts or arrangements and exceeding the value of Rupees Five Lakhs in respect of any
party during the year, which have been made at prices
Which are not reasonable having regard to the prevailing market prices 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 comparable as these are of special nature.
vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA
or any other relevant provisions of the Act and the rules framed there under.
vii) In our opinion, the Company has an internal audit system commensurate with its size and nature of its
business.
viii) We have broadly reviewed the books of account maintained by the Company in respect of products where,
pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been
prescribed under clause (d) of sub-section (1) of Section 209 of the Act and are of the opinion that prima facie,
the prescribed accounts and records have been made and maintained. We have not, however, made a detailed
examination of the records with a view to determine whether they are accurate or complete.
ix) (a) According to the information and explanations given to us and the records of the Company examined by
us, in our opinion, the Company is regular in depositing undisputed statutory dues in respect of provident fund,
investor education and protection fund, employees
State insurance, income tax, sales-tax, wealth tax, service tax, customs duty, excise duty, cess and other material
statutory dues as applicable with the appropriate authorities.
52
(b) According to the information and explanations given to us and the records of the Company examined by us,
the particulars of dues of income-tax, sales-tax, wealth tax, service tax, customs duty, excise duty and cuss as at
March 31, 2009 which have not been deposited on Account of any dispute are as follows:
(Rs. in Million)
Name of the
statute (Nature
of Dues)
Amount Amount deposited
under protest amount
Period to which the
amount is pending
Forum where the
dispute is pending
Income Tax Act,
1961 (Tax &
Interest)
5,271 3,799 1992 to 2006 Income Tax
Tribunal/ High Court
Appellate
Commissioner Income
Tax (Appeals) 1 1 1998 to 1999 High Court
Wealth Tax Act,
1957 (Tax)
Haryana General
Sales Tax Act
(Tax & Interest)
3 1984 to 1989 Assessing Authority
Dlhi Sales Tax
Act (Tax)
47 2 1988 to 1992 Additional
Commissioner
The Central
Excise Act, 1944
(Duty, Interest &
Penalty)
1774 51 April 1986 to January
2008
Customs Excise &
Service
Tax Appellate
Tribunal/ High Court/
Supreme Court/
Commissioner Appeals
The Finance Act,
1994 (Service
Tax, Interest &
Service Penalty)
370 July 1997 to
September 2004
Tax Appellate Tribunal
Customs Excise &
Service
53
Customs Act,
1962 (Duty &
Interest)
27 22 February 2003 to
August 2003
Customs Excise &
Service
Tax Appellate Tribunal
Or detailed listing refer Note 30 on Schedule 23
x) The Company has no accumulated losses as at March 31, 2009 and it has not incurred any cash losses in the
financial year ended on that date or in the immediately preceding financial year.
xi) According to the records of the Company examined by us and the information and explanations given to us,
the Company has not defaulted in repayment of dues to any bank or debenture holders as at the balance sheet
date.
xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares,
debentures and other securities.
xiii) The provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund/societies are not
applicable to the Company.
xiv) In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other
investments.
xv) In our opinion and according to the information and explanations given to us, the terms and conditions of
the guarantees given by the Company, for loans taken by others from banks or financial institutions during the
year, are not prejudicial to the interest of the Company.
xvi) In our opinion, and according to the information and explanations given to us, on an overall basis, the term
loans have been applied for the purposes for which they were obtained.
xvii) On the basis of an overall examination of the balance sheet of the Company, in our opinion and according
to the information and explanations given to us, there are no funds raised on a short-term basis which have been
used for long-term investment.
xviii) 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.
xix) The Company has no outstanding debentures as at the year end.
xx) The Company has not raised any money by public issue during the year.
54
xxi) 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 the information and explanations given
to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the
year, nor have we been informed of such case by the management.
4. Further to our comments in paragraph 3 above, we report that:
(a) We have obtained all the information and explanations, which to the best of our knowledge and belief were
necessary for the purposes of our audit;
(b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears
from our examination of those books;
(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in
agreement with the books of account;
(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this
report have been prepared in compliance with the applicable accounting standards referred to in sub-section(3C)
of Section 211 of the Act and Accounting Standard 30, Financial Instruments: Recognition and Measurement
issued by the Institute of Chartered Accountants of India to the extent it does not contradict any other
accounting standard referred to in sub-section (3C) of Section 211 of the Act;
(e) On the basis of written representations received from the directors as on March 31st 2009 and taken on
record by the Board of Directors, none of the directors is disqualified as on 31st March 2009 from being
appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act;
(f) In our opinion and to the best of our information and according to the explanations given to us, the said
financial statements together with the notes thereon and attached thereto give in the prescribed manner the
information required by the Act and give a true and fair view in conformity with the accounting principles
generally accepted in
India:
(i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2009;
(ii) In the case of the Profit and Loss Account, of the profit for the year ended on that date; and
(iii) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
Anupam Dhawan,
Membership Number- F084451,
Partner,
For and on behalf of
Place: New Delhi Price Waterhouse
Date: April 24, 2009 Chartered Accountants.
55
Conclusion
Maruti was listed in 2003, and has been a consistent and strong performer on the stock exchange, giving
handsome returns to investors.
They are practically debt free and have a healthy cash balance. They have financed all growth from internal
resources.
Their continuous efforts at cost cutting and improving productivity, even in good times, have helped them in
making reasonable profits despite the impact of higher commodity prices and weaker rupee.
Maruti Suzuki India LTD. company has a trend of growth from 2003 to 2007.During the financial year 2008-09
the there is downfall in the growth of the company. The main reason behind this downfall is because of the
global recession and the price of commodities of Maruti was quite high in the commodity market. The downfall
of net profit during the financial year 2008-09 is 29.6% over the financial year 2007-2008.The total sales
numbers in 2009-10 mark a growth of 29% over last financial year. The export sales of 147,575 units in the
year2009-10 are the highest ever annual export by the company.
Maruti has crossed sale of 1million cars and by achieving this now it has become landmark for Maruti where
other companies will take time to reach and of course they have raise their bar for themselves also.
From above facts and figures we reach to the conclusion that the future is exciting and full of promise.
56
Appendix 1
Balance Sheet of Maruti Suzuki
Balance Sheet(2009-2000) of Maruti Suzuki
*All numbers are in INR and in x10M
200903 200803 200703 200603 200503 200403 200303 200203 200103 200003
SOURCES OF FUNDS :
Share Capital 144.5 144.5 144.5 144.5 144.5 144.5 144.5 132.3 132.3 132.3
Reserves Total 9200.4 8270.9 6709.4 5308.1 4234.3 3446.7 2953.5 2575 2510.2 2779.8
Equity Share Warrants 0 0 0 0 0 0 0 0 0 0
Equity Application Money 0 0 0 0 0 0 0 0 0 0
Total Shareholders Funds 9344.9 8415.4 6853.9 5452.6 4378.8 3591.2 3098 2707.3 2642.5 2912.1
Secured Loans 0.1 0.1 63.5 71.7 307.6 311.9 300 395.1 561.5 86.4
Unsecured Loans 698.8 900.1 567.3 0 0 0 156 260.9 550.6 459.7
Total Debt 698.9 900.2 630.8 71.7 307.6 311.9 456 656 1112.1 546.1
Total Liabilities 10043.8 9315.6 7484.7 5524.3 4686.4 3903.1 3554 3363.3 3754.6 3458.2
APPLICATION OF FUNDS :
Gross Block 8720.6 7285.3 6146.8 4954.6 5053.1 4566.7 4513.8 4384.7 3866.7 3499.9
Less : Accumulated Depreciation 4649.8 3988.8 3487.1 3259.4 3179.4 2735.9 2258.1 1954.6 1619.6 1324.2
Less:Impairment of Assets 0 0 0 0 0 0 0 0 0 0
Net Block 4070.8 3296.5 2659.7 1695.2 1873.7 1830.8 2255.7 2430.1 2247.1 2175.7
Lease Adjustment 0 0 0 0 0 0 0 0 0 0
Capital Work in Progress 861.3 736.3 250.7 92 42.1 74.9 9.3 72.4 368.4 234.2
Investments 3173.3 5180.7 3409.2 2051.2 1516.6 1677.3 103.2 96.8 95.5 397.4
Current Assets, Loans & Advances
Inventories 902.3 1038 701.4 881.2 666.6 439.8 487 681.1 865.5 990.2
Sundry Debtors 918.9 655.5 747.4 646.1 599.5 689.4 671.1 839.3 675.5 466.3
Cash and Bank 1939 330.5 1422.8 1401.6 1029.4 240.2 989.4 71.9 87.6 31.7
Loans and Advances 1730.9 1073.9 1533.4 812 676.5 649.5 635.3 517.7 622.4 526.4
Total Current Assets 5491.1 3097.9 4405 3740.9 2972 2018.9 2782.8 2110 2251 2014.6
Less : Current Liabilities and Provisions
Current Liabilities 3016.9 2456.2 2011 1505.8 1218.8 1211.4 1135.9 1201.7 1026.7 1090.2
Provisions 380.7 369.5 1061.4 471.3 389.2 320.4 342.7 263.5 239.4 325.8
Total Current Liabilities 3397.6 2825.7 3072.4 1977.1 1608 1531.8 1478.6 1465.2 1266.1 1416
Net Current Assets 2093.5 272.2 1332.6 1763.8 1364 487.1 1304.2 644.8 984.9 598.6
Miscellaneous Expenses not written off 0 0 0 0 0 16.3 88.7 119.2 58.7 52.3
Deferred Tax Assets 78.9 99.6 110.1 121.1 125.4 125.5 231.7 0 0 0
Deferred Tax Liability 234 269.7 277.6 199 235.4 308.8 438.8 0 0 0
Net Deferred Tax -155.1 -170.1 -167.5 -77.9 -110 -183.3 -207.1 0 0 0
Total Assets 10043.8 9315.6 7484.7 5524.3 4686.4 3903.1 3554 3363.3 3754.6 3458.2
Contingent Liabilities 1353 2186.1 1684.4 881.4 1051.4 1297.3 1754.1 2018.2 1314.2 793.2
57
Appendix 2
Income Statement
Income Statement (2009-2003) of Maruti Suzuki
*All numbers are in INR and in x10M
200903 (12) 200803 (12) 200703 (12) 200603 (12) 200503 (12) 200403 (12) 200303 (12) 200203 (12) 200103 (12) 200003 (12)
INCOME :
Sales Turnover 23182.2 21025.2 17205.9 14753.1 13335.7 11047.4 8981.5 9087.8 8928.7 9315.1
Excise Duty 2652.1 3133.6 2509.6 2737.2 2411.9 1943 1801.4 2013.2 2211.8 2325.6
Net Sales 20530.1 17891.6 14696.3 12015.9 10923.8 9104.4 7180.1 7074.6 6716.9 6989.5
Other Income 998.5 837.1 598.4 429.2 403.2 377.6 276.5 318 324.6 357.5
Stock Adjustments -356.6 336.3 -243.1 236 141.7 3.2 -94.9 141.9 -20.3 51.3
Total Income 21172 19065 15051.6 12681.1 11468.7 9485.2 7361.7 7534.5 7021.2 7398.3
EXPENDITURE :
Raw Materials 15763.1 13791.5 10739 9335.6 8563.2 6973.3 5563.4 5839.6 5889.8 5616.1
Power & Fuel Cost 193.6 147.3 97.4 57.2 58.1 95.8 78.1 49.4 51.4 37.5
Employee Cost 463.5 346.8 266.29 211.45 191.46 293.76 217.82 227.25 199.22 185.71
Other Manufacturing Expenses 254.7 197.8 153.5 141.3 92.7 71.1 57.3 60.2 82.1 94.9
Selling and Administration Expenses 1486.96 1110.4 941.67 668.56 580.01 536.44 621.29 635.02 551.8 588.15
Miscellaneous Expenses 576.84 340.4 264.94 211.19 185.53 206.7 166.89 184.83 117.88 167.54
Less: Pre-operative Expenses Capitalised 0 0 0 0 0 0 0 0 0 0
Total Expenditure 18738.7 15934.2 12462.8 10625.3 9671 8177.1 6704.8 6996.3 6892.2 6689.9
Operating Profit 2433.3 3130.8 2588.8 2055.8 1797.7 1308.1 656.9 538.2 129 708.4
Interest 51 59.6 37.6 20.4 36 43.4 52.7 77 75.9 60.2
Gross Profit 2382.3 3071.2 2551.2 2035.4 1761.7 1264.7 604.2 461.2 53.1 648.2
Depreciation 706.5 568.2 271.4 285.4 456.8 494.9 322.1 342.9 322.3 263.1
Profit Before Tax 1675.8 2503 2279.8 1750 1304.9 769.8 282.1 118.3 -269.2 385.1
Tax 459.2 759.8 621.4 587.3 524.6 251.5 35.1 13.8 0.2 55
Fringe Benefit tax 9.7 9.8 6.7 5.7 0 0 0 0 0 0
Deferred Tax -11.8 2.6 89.7 -32.1 -73.3 -23.8 100.6 0 0 0
Reported Net Profit 1218.7 1730.8 1562 1189.1 853.6 542.1 146.4 104.5 -269.4 330.1
Extraordinary Items 146.07 61.09 26.71 -7.97 -6.5 -79.72 16.68 -0.71 18.29 5.83
Adjusted Net Profit 1072.63 1669.71 1535.29 1197.07 860.1 621.82 129.72 105.21 -287.69 324.27
Adjst. below Net Profit 0 0 -8.8 0 0 0 0 0 0 0
P & L Balance brought forward 7025.7 5637.3 4393.9 3442.1 2757.4 2335.9 2269.9 2233.2 2502.8 2245
Statutory Appropriations 0 0 0 0 0 0 0 0 0 0
Appropriations 240.2 342.4 309.8 237.3 168.9 120.6 80.4 67.8 0.2 72.3
P & L Balance carried down 8004.2 7025.7 5637.3 4393.9 3442.1 2757.4 2335.9 2269.9 2233.2 2502.8
Dividend 101.1 144.5 130 101.1 57.8 43.3 42.7 39.7 0 33.1
Preference Dividend 0 0 0 0 0 0 0 0 0 0
Equity Dividend % 70 100 90 70 40 30 30 30 0 25
Earnings Per Share(Adj)-Unit Curr 41.57 59.03 53.29 40.65 29.25 18.56
Earnings Per Share-Unit Curr 41.57 59.03 53.29 40.65 29.25 18.56 4.88 78.99 0 243.99
Earnings Per Share(Adj)-Unit Curr 41.57 59.03 53.29 40.65 29.25 18.56
Book Value-Unit Curr 323.35 291.19 237.16 188.67 151.52 124.26 107.2 2046.33 1997.35 2201.13
58
Appendix 3
Cash Flow Statement
Cash Flow Statement (2009-2001) - Maruti Suzuki
*All numbers are in INR and in x10M
200903 200803 200703 200603 200503 200403 200303 200203 200103
Cash Flow Summary
Cash and Cash Equivalents at Beginning of the year 330.5 1422.8 1401.6 1029.4 240.2 989.4 71.9 87.6 31.7
Net Cash from Operating Activities 1193.3 1822.8 2028 1222.6 1074.7 1035.9 770.5 653.9 -244.8
Cash Flow From Operating Activities
Net Profit before Tax & Extraordinary Items 1675.8 2503 2279.8 1750 1304.9 769.8 282.1 118.3 -269.2
Adjustment For
Depreciation 706.5 568.2 271.4 285.4 456.8 494.9 322.1 342.9 322.3
Interest (Net) -192.6 -81.2 -73.3 -86.5 -29.4 -30.4 -48.9 -18.6 4.6
Dividend Received -144 -166.8 -152.8 -72 -79.2 -72.3 -3 -3.9 -3.7
P/L on Sales of Assets 12.5 2.4 0.4 22 11.9 2.2 5.4 0.8 0.7
P/L on Sales of Invest -213.7 -89.8 -38.9 -10 -1.1 -3.4 -35 0 -19
Prov. & W/O (Net) -37.9 -85.5 -43.7 -4.4 -36.7 -8.1 43.6 -42.3 19.2
P/L in Forex -61 44.3 0 0 0 0 0 -0.2 0
Fin. Lease & Rental Chrgs 0 0 0 0 0 0 0 0 0
Others 0 0 -8.9 0 0 0 0 0.3 -26.1
Total Adjustments (PBT & Extraordinary Items) 69.8 191.6 -45.8 134.5 322.3 382.9 284.2 279 298
Op. Profit before Working Capital Changes 1745.6 2694.6 2234 1884.5 1627.2 1152.7 566.3 397.3 28.8
Adjustment For
Trade & 0th receivables -265 92 -103.5 -55.3 89.9 -20.4 167.3 -184.1 -333.8
Inventories 135.7 -336.6 168 -214.6 -226.7 47.3 194.1 175 124.7
Trade Payables 645.5 356.6 517 318.5 105.2 113 -20.3 172.7 -74
Loans & Advances -616.1 -119.1 -152.3 -130.1 -21.5 -23.2 -124.6 105.6 0
Investments 0 0 0 0 0 0 0 0 0
Net Stock on Hire 0 0 0 0 0 0 0 0 0
Leased Assets Net of Sale 0 0 0 0 0 0 0 0 0
Trade Bill(s) Purchased 0 0 0 0 0 0 0 0 0
Change in Borrowing 0 0 0 0 0 0 0 0 0
Change in Deposits 0 0 0 0 0 0 0 0 0
Others 0 0 0 0 0 0 0 0 0
Total (OP before Working Capital Changes) -99.9 -7.1 429.2 -81.5 -53.1 116.7 216.5 269.2 -283.1
Cash Generated from/(used in) Operations 1645.7 2687.5 2663.2 1803 1574.1 1269.4 782.8 666.5 -254.3
Interest Paid(Net) 0 0 0 0 0 0 0 0 0
Direct Taxes Paid -452.4 -864.7 -635.2 -580.4 -499.4 -233.5 -12.3 -12.3 9.5
Advance Tax Paid 0 0 0 0 0 0 0 0 0
Others 0 0 0 0 0 0 0 -0.3 0
Total-others -452.4 -864.7 -635.2 -580.4 -499.4 -233.5 -12.3 -12.6 9.5
Cash Flow before Extraordinary Items 1193.3 1822.8 2028 1222.6 1074.7 1035.9 770.5 653.9 -244.8
Extraordinary Items
Excess Depreciation W/b 0 0 0 0 0 0 0 0 0
59
Premium on Lease of land 0 0 0 0 0 0 0 0 0
Payment Towards VRS 0 0 0 0 0 0 0 0 0
Prior Year 's Taxation 0 0 0 0 0 0 0 0 0
Gain on Forex Exch. Tran 0 0 0 0 0 0 0 0 0
Others 0 0 0 0 0 0 0 0 0
Net Cash Used in Investing Activities 951.4 -3047.4 -2436.8 -530.7 -193.7 -1551.1 37 -128.1 -193.5
Cash Flow from Investing Activities
Investment in Assets :
Purchased of Fixed Assets -1620.7 -1685.8 -1395.5 -210.3 -482.5 -140.1 -101.7 -222.9 -603.6
Sale of Fixed Assets 7.1 6.9 12.3 31.5 3.7 2.3 8.6 9.4 16.8
capital WIP 0 0 0 0 0 0 0 0 0
Capital Subsidy Recd 0 0 0 0 0 0 0 0 0
Financial/Capital Investment :
Purchase of Investments -17019.1 -18696.6 -12244.4 -9346.9 -5224.3 -5416.3 -2290.5 -1.3 -11
Sale of Investments 19237.2 17012.3 10925.3 8822.2 5375.7 3845.5 2319.1 0 331.9
Investment Income 0 0 0 0 0 0 0 0 0
Interest Received 202.9 149 112.7 100.8 54.5 85.2 98.5 82.8 68.7
Dividend Received 144 166.8 152.8 72 79.2 72.3 3 3.9 3.7
Invest.In Subsidiaires 0 0 0 0 0 0 0 0 0
Loans to Subsidiaires 0 0 0 0 0 0 0 0 0
Investment in Group Cos 0 0 0 0 0 0 0 0 0
Issue of Sh. on Acqu. of Cos 0 0 0 0 0 0 0 0 0
Canc. of Invest. in Cos Acq. 0 0 0 0 0 0 0 0 0
Acquisition of Companies 0 0 0 0 0 0 0 0 0
Inter Corporate Deposits 0 0 0 0 0 0 0 0 0
Others 0 0 0 0 0 0 0 0 0
Net Cash Used in Financing Activities -536.2 132.3 430 -319.7 -91.8 -234 110 -541.5 494.2
Cash Flow From Financing Activities
Proceeds:
Proceeds from Issue of shares (incl share premium) 0 0 0 0 0 0 399 0 0
Proceed from Issue of Debentures 0 0 0 0 0 0 0 0 0
Proceed from 0ther Long Term Borrowings 0 0 567.5 0 0 0 0 0 435.6
Proceed from Bank Borrowings 0 0 0 0 0 0 0 0 0
Proceed from Short Tem Borrowings 454.8 399.9 23.3 1.7 7.6 11.9 13.3 41.5 126.1
Proceed from Deposits 0 0 0 0 0 0 0 0 0
Share Application Money 0 0 0 0 0 0 0 0 0
Cash/Capital Investment Subsidy 0 0 0 0 0 0 0 0 0
Loans from a Corporate Body 0 0 0 0 0 0 0 0 0
Payments:
Share Application Money Refund 0 0 0 0 0 0 0 0 0
On Redemption of Debenture 0 0 0 0 0 0 0 0 0
Of the Long Tem Borrowings 0 0 0 0 0 -142.7 0 0 0
Of the short term Borrowings -788.7 -63.4 -31.7 -237.6 -11.9 -13.3 -209.6 -504.1 0
Of financial Liabilities 0 0 0 0 0 0 0 0 0
Dividend Paid -144.4 -129.9 -101.1 -57.8 -43.2 -42.7 -39.7 0 0
Shelter Assistance Reserve 0 0 0 0 0 0 0 0 0
Interest Paid -57.9 -74.3 -28 -26 -44.3 -47.2 -53 -78.9 -67.5
Others 0 0 0 0 0 0 0 0 0
Net Cash Used in Financing Activities -536.2 132.3 430 -319.7 -91.8 -234 110 -541.5 494.2
Net Inc/(Dec) in Cash and Cash Equivalent 1608.5 -1092.3 21.2 372.2 789.2 -749.2 917.5 -15.7 55.9
Cash and Cash Equivalents at End of the year 1939 330.5 1422.8 1401.6 1029.4 240.2 989.4 71.9 87.6
60
Appendix 4
Ratio
Key Ratios for Maruti Suzuki
200903 200803 200703 200603 200503 200403 200303 200203 200103 200003
Key Ratios
Debt-Equity Ratio 9% 10% 6% 4% 8% 11% 19% 33% 30% 12%
Long Term Debt-Equity Ratio 6% 7% 6% 4% 8% 11% 18% 24% 15% 2%
Current Ratio 1.22 1.13 1.52 1.73 1.42 1.37 1.47 1.35 1.22 1.25
Turnover Ratios
Fixed Assets 2.9 3.13 3.1 2.95 2.77 2.43 2.02 2.2 2.42 3.18
Inventory 23.9 24.18 21.74 19.06 24.11 23.84 15.38 11.75 9.62 11.88
Debtors 29.45 29.97 24.69 23.69 20.69 16.24 11.89 12 15.64 25.08
Interest Cover Ratio 29.91 43 61.63 86.78 37.25 21.47 5.79 2.54 -2.55 7.4
Profitability Ratio
PBIDTM (%) 9.63 14.89 15.05 13.93 13.48 12.91 6.98 5.92 1.44 7.6
PBITM (%) 6.58 12.19 13.47 12 10.05 8.43 3.4 2.15 -2.16 4.78
PBDTM (%) 9.41 14.61 14.83 13.8 13.21 12.52 6.4 5.07 0.59 6.96
CPM (%) 7.67 10.93 10.66 9.99 9.83 10.11 5.03 4.92 0.59 6.37
APATM (%) 4.63 8.23 9.08 8.06 6.4 5.63 1.44 1.15 -3.02 3.54
Return on Capital Ratio
ROCE (%) 15.76 30.51 35.63 34.68 31.28 25.34 9.1 5.63 -5.44 14.6
RONW (%) 12.08 22.67 25.38 24.19 21.42 18.59 4.47 3.91 -9.7 11.93
