annual report analysis - maruti suzuki ltd 2 (1)

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ICFAI BUSINESS SCHOOL, GURGAON Annual Report Analysis Maruti Suzuki Ltd Meetali Singh Naman Popli Nishant Ritika Suri Sakshi Kalra 9/7/2009

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Page 1: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

ICFAI BUsiness School, gurgaon

Annual Report Analysis

Maruti Suzuki Ltd

Meetali Singh Naman Popli

Nishant Ritika Suri

Sakshi Kalra9/7/2009

Page 2: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Table of ContentsIntroduction......................................................................................................................................3

Brief History.....................................................................................................................................4

Products and Services...................................................................................................................5

Management Team.........................................................................................................................5

Shareholding Pattern......................................................................................................................6

Achievements..................................................................................................................................7

Performance Overview (2008 – 2009).........................................................................................8

Industry Overview.......................................................................................................................8

Company Overview..................................................................................................................11

Company’s Financial Performance.........................................................................................12

Analysis – Key Points.......................................................................................................................13

Auditor’s Report............................................................................................................................15

Director’s report for the year ended 2008-09..................................................................................16

Ratio Analysis................................................................................................................................19

Comparative Balance Sheet and Profit and loss account.......................................................34

Common size Balance sheet and Profit and loss.....................................................................46

INTERPRETATION......................................................................................................................51

Annexure…………………………………………………………………………………..57

Individual contribution…………………………………………………………………..62

Page 3: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Introduction

Maruti Suzuki Limited

“We expect that A-star will enable our company to reach a different level in our exports. Last

year, Maruti Suzuki exported 53,000 cars to over 40 countries. This was the highest ever

annual export in our history. However, with the A-star, we are targeting to make a quantum

jump, and scale up our exports to around 200,000 cars in 2010-11.”

– Shinzo Nakanishi,

Managing Director and CEO, Maruti

On 19th Nov 2008, India’s largest car maker, Maruti Suzuki launched its strategic model ‘A-

star’ a Euro V compliant model in A-segment to explore new markets in domestic as well as

overseas and primarily to boost its exports in the coming years. A-star is the fifth world

strategic model of its parent company Suzuki, as a part of its global market strategy for small

cars segment and to leverage the low cost manufacturing capabilities of the company. This

car has been designed to keeping in mind aspirations of the urban environment conscious

customers. Company has used latest technologies to make it as most fuel efficient petrol

car. In addition it represents a green car, capable of being 85% of it being recycled. This

would help to make the car more acceptable.

With this launch company has the opportunity to re-launch itself in the European markets,

which it had left two years back because lack of suitable model. Now it is targeting a yearly

volume of 100,000 in Europe and other parts of the world. Company had already entered

into an export contract for this new model, with Nissan a European auto giant. Company

sources believe that this would take its exports to around 200,000 cars by FY 11. In

domestic front also, company expect this model to be well accepted of its sporty and

compact look, matching with the earlier success full launched models Swift, Dzire, and SX4.

The company had already built a new technology world class manufacturing facilities at

Manesar to manufacture one million units per year. In partnership with Adani Group

Company build new export cargo infrastructure facilities to support its ambitious export

plans. Maruti Suzuki wants to celebrate their silver jubilee by exploring new growth

opportunities with this launch and plans to maintain its leadership position which it has for

the last 25 years in the domestic market of Indian Automobile Industry.

Page 4: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Brief History

Maruti Suzuki India limited (MSIL) is the largest passenger car manufacturer in India with a

market share of over 50%. MSIL formerly Maruti Udyog Limited (MUL) was established in

Feb 1981 through an act of parliament, as a government company with Suzuki Motor

Corporation of Japan holding 26 per cent stake. Its actual production commenced in 1983

with the Maruti 800 car based on the Suzuki Alto keicer, which was the only modern car

available in India at that time; its only competitors were Hindustan Ambassador and Premier

Padmini. Till 2004, it remained India’s largest selling compact car ever since its launch while

MSIL remained the Indian car market leader for over two decades. In 2002, Government of

India (GOI) ceded majority control to Suzuki through rights issue. The GOI subsequently

sold 25.6% of its stake to investors in an IPO. Now, Suzuki owns 54.21% of Maruti.

Suzuki chose Maruti to be its small car-manufacturing hub for the European market and also

as an R&D center. Currently, Maruti offers a gamut of cars – from entry level Maruti 800 &

Alto to stylish hatchback A-Star, Swift, Wagon R, Estilo and sedans DZire, SX4 and Sports

Utility Vehicle Grand Vitara. MSIL has two state-of-the-art manufacturing facilities in India.

The Gurgaon Facility (300 acres)

Gurgaon facility houses three fully integrated plants. The three plants have a total installed

capacity of 350,000 cars per year. Several productivity improvements or shop floor kaizens

over the year have enabled the company to manufacture nearly 700,000 cars per year at the

Gurgaon facility.

The Manesar Facility (600 acres)

Manesar facility is designed to suit Suzuki Motor Corporation (SMC) and Maruti Suzuki India

Limited’s (MSIL) global ambitions. The plant was inaugurated in February 2007. The World

Car derived from concept A-Star would be manufactured here. At present the plant rolls out

World Strategic Models – Swift, SX4, and DZire. The plant has several in-built systems and

mechanisms. The plant at Manesar is the company’s fourth car assembly plant. It started

with an initial capacity of 100,000 cars per year and presently increased to 170,000 cars per

year.

Diesel Engine Facility at Manesar

The factory is situated about 20 kilometers away from the Gurgaon car plant. The diesel

engine factory currently manufactures one-lakh engines, which is slated to scale to 3 lakh by

2010 with an investment of Rs.2500 crore.

Page 5: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Products and ServicesMaruti offers a gamut of products, ranging from Maruti 800, Maruti Omni, Gypsy, Wagon-R,

Maruti Versa, Maruti Zen Estilo, Maruti Suzuki Swift, Maruti Suzuki SX4, Suzuki Grand

Vitara, and Maruti DZiRE. Currently, Maruti Alto is the largest selling car in India. Maruti A-

star was launched in December 2008. The upcoming model of MSIL is Maruti Splash, which

will be ready to run on the roads next year. Maruti has an unparalleled service network in

India. To ensure the vehicles they sold are serviced properly, Maruti has 2628 listed

Authorized Service Stations and 30 Express Service Stations on 30 highways across India.

Maruti provides vehicle insurance (launched in 2002) to its customers in association with the

National Insurance Company, Bajaj Allianz, New India Assurance, and Royal Sundaram. As

part of its corporate social responsibility, Maruti Udyog launched the Maruti Driving School in

Delhi. Later these services were extended to other cities of India as well.

Management Team

Designation NameChairman R C BhargavaManaging Director & Chief Executive Officer

Shinzo Nakanishi

Director Amal GanguliTsuneo OhashiKeiichi AsaiShuji OishiOsamu SuzukiKenichi AyukawaDavinder Singh BrarPallavi ShroffManvinder Singh Banga

Page 6: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Shareholding Pattern

54.21%

2.75%

15.83%

20.73%

6.48%

Shareholding Pattern

Promoter & Promoter GroupMutual Funds / UTIFinancial Institutions / BanksForeign Institutional InvestorsNon-Instituions

Page 7: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Achievements

The Company is featured at 49th rank among the world's most reputed companies in the

annual World's Most Reputed Company Survey - 2009. In the passenger car sector, the

Company is ranked 3rd.

Some of the other awards/recognition won by the Company during the year are:

The Company stands 5th in all India ratings in the TNS Corporate Reputation Index

and tops the ratings in the auto sector, at first position.

JD Power Customer Satisfaction Award for the 9th time in a row.

Zigwheels “Car of the year” award for “A-star”.

“A-star” rated as the best small car of the year by Autocar- UTVi

CNBC TV18 Overdrive awards for :-

Automotive technology of the year for newly launched K10 B Engine)

Manufacturer of the year)

Special commendation to the Company for its contribution to the Indian auto

industry, a tribute to the Company's silver jubilee.

CNBC AWAAZ Con summer Award 2008 i n the automobiles category for the most

preferred brand of cars.

National award for best value engineering organization in India at the INVEST (Indian

Value Engineering Society).

Page 8: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Performance Overview (2008 – 2009)

Industry Overview

The financial year 2008-09 witnessed unprecedented fluctuation in the macroeconomic

environment both globally and in India. The Indian economy was less affected and managed

to grow well above 6%. Within the year, there was a huge swing in business and

consumption sentiment with the growth rates steeply declining in the second and third

quarters and then showing some recovery in the fourth quarter.

Car loans, which are a critical growth driver for the industry, saw a major curtailment by

banks and finance companies, owing to a liquidity crunch and court directives against forced

repossession of financed assets during default. Most commodity prices went up and this hurt

the profits of manufacturing businesses and disposable incomes of households alike. The

news of gloom and doom in the global economy also depressed consumer sentiment and

customers adopted a 'wait and watch' approach before making discretionary purchases. All

these factors hit the passenger vehicle industry severely and it could barely manage to

remain flat after six years of robust growth.

Page 9: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Table1: Industry Growth - The flatness in growth was actually an aggregate of huge quarterly swings

Table 2: Industry Growth - How did car sales move across India over time

Page 10: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Table 3: Auto Industry Growth: Indian Automobile Domestic Sales Growth Rate (%)

Table 4: Domestic Market Share for 2008-09

15.96% 3.95

%3.60

%

76.49%

Category-Wise Market Share in 2008-2009

Passenger VehiclesCommercial VehiclesThree WheelersTwo Wheelers

Page 11: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Company Overview

Page 12: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Company’s Financial Performance

The year 2008-09 witnessed a multiplicity of challenges, coming together at the same time.

In most economic cycles, commodity prices generally move in tandem with the demand

growth scenario. This year, inflation control measures by the government and lack of retail

financing impacted the revenues of vehicle manufacturers, even when the commodity prices

were at their lifetime high. Adverse foreign exchange movements also had a substantial

impact on the company as the yen appreciated by almost 30% against the rupee in a year’s

time and this raised the cost of the company’s imports.

The measures taken by the Government of India for providing the liquidity and improving the

customer sentiments through the policy cuts, cenvat rate reduction in the later part of the

year helped in mitigating the adverse impact of these factors. With the focused efforts in the

market and cost and operational efficiencies, the company managed to generate net sales of

Rs 203,583 million in FY ‘0809 as compared with Rs 178,603 million in FY ‘0708 showing

growth of 14.0%

Sales of vehicles in the domestic market increased to 722,144 as compared to 711,818 in

the previous year showing a growth of 1.5%. Exports of vehicles grew at an impressive rate

of 32% from 53,024 to 70,023 in the current year. The overall growth was 3.6% which was

achieved in spite of the difficult economic and market conditions prevailing particularly in the

latter half of the year due to the global financial and economic crisis which did not spare the

Indian economy. The Company made all out efforts to mitigate this impact undertaking

measures to curtail cost in various areas of its business operations. Earnings before

depreciation, interest, tax and amortization (EBDITA) stood at Rs. 24,333 million against Rs.

31,308 million in the previous year. Market share went up from 45.9% to 46.5% in passenger

vehicles overall.

Highlights FY ‘09

Parameters FY ‘09 FY ‘08 Change

Net Sales 203,583 178,603 13.99%

Other Income 9,985 8,371 19.28%

EBIDTA 24,334 31,30 (22.03)%

PBT 16,759 25,030 (33)%

PAT 12,187 17,308 (29.6)%

(Rs in Mn)

Page 13: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Annual Performance Ratios (As a Percentage of Net Sales)

Parameters FY ‘09 FY ‘08 Change

Material cost 79.78% 76.41% 3.37%

Manufacturing & Admin Expense

Power & Fuel

Royalty

7.70%

0.95%

3.3%

6.0%

0.82%

2.8%

1.37%

0.13%

0.50%

Selling and Distribution Expenses

Transportation costs

3.63%

1.44%

3.14%

0.91%

0.49%

0.53%

Employee cost 2.31% 1.99% 0.32%

EBIDTA 11.95% 17.53% (5.58)%

Depreciation 3.47% 3.18% 0.29%

PBT 8.23% 14% (5.77)%

PAT 5.99% 9.69% (3.70)%

Other Income 4.90% 4.69% 0.21%

Analysis – Key Points

1. Net Sales : up by 13.99 %: increase in volumes

2. Average Realization: up by 9.4 %: Higher product mix, higher market share in A3.

3. Income from Services: up by 27.8%: Increase in sales of extended warranty

packages and pre-owned cars.

4. Other Income: up by 19.3%: Higher returns on liquid surplus, sale of scrap due to

increase in steel prices.

5. Material Cost up 337 bps

a. Forex Impact on direct & indirect imports

b. Commodity price increase

6. Mfg Admin & other expenses up by 170bps

a. Running Royalty: Higher by Rs 1900 Mn( product mix), forex

b. Power & Fuel: Higher by Rs 460 Mn, product mix shift towards Manesar

facility: runs on High Speed Diesel

c. Exchange Variation: Rs 1338 Mn loss on forward contract

7. Selling & Distribution Costs up by 49 bps

Page 14: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

a. Transportation cost up by Rs.1300 Mn

8. Employee Costs up by 32 bps

a. Increase in R&D manpower

9. Depreciation Costs up by 30 bps

a. K –Series engine plant

b. One million vehicle production capacity

Page 15: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Auditor’s Report

As per the auditors (Price Waterhouse), the financial statements together with the notes, 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.

The auditors neither came across any instance of fraud on or by the Company, noticed nor reported during the year, nor have they been informed of such case by the management.

Page 16: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Director’s report for the year ended 2008-09

1. DIVIDENDS

The board recommends a dividend of Rs. 3.50 per equity share of Rs. 5 each for the year ended 31 March 2009 amounting to Rs.1011 million.

2. SHIFTING OF REGISTERED OFFICE The registered office of the Company was shifted from 11th Floor, Jeevan Prakash, 25, Kasturba Gandhi Marg, New Delhi -110 001 to Company's owned premises at 1, Nelson Mandela h Road, Vasant Kunj, New Delhi- 110 070 with effect from 15December 2008.

3. QUALITY The Company has again been awarded ISO: 27001 certification by STQC Directorate (Standardization,Testing & Quality Certificate), Ministry of Communications and Information Technology, Government of India after re-assessment. The Company is thus certified to meet international standards for maintaining information security. The Company also has an ISO 14001:2004 certification which has been similarly awarded once again on re-assessment by AIB-VincotteInternational Ltd., Brussels, Belgium.The Company's plants at Gurgaon and Manesar are ISO: 9001certified. The Company is subject to re-assessment at regular intervals for re-certification.The Company's press shop has TS 16949 certification whichis subject to re-assessment at regular intervals.

4. HUMAN RESOURCE DEVELOPMENT

The Company has always focused on employees' development. A total of 38000 man-days of training were conducted for employees across all levels with an average training of 5 days per employee during the year. The Company has spent about Rs. 95 million on training of its employees during 2008-09. The training programs vary for employees at different levels. With the aim of encouraging a competitive spirit and a winning attitude to take on future challenges among the employees in the technical and supervisory band, programs such as “Winning Strategy”, “Chunauti” and “Ahead Forever” are held. Similarly, for employees at executive and senior executive levels, program based on six sigma, lean manufacturing, negotiation skills, MSproject, finance management and vehicle financing, value stream mapping, project management, quality control tools, neuro linguistic skills, innovation and creativity, corporate business etiquette, communication and presentation skills, etc. are held. For employees at top management level, programs based on leadership, business strategy, etc. are held. The Company also has higher education schemes for its employees.

5. DIRECTOR’S RESPOSIBILITY STATEMENT

As required under section 217(2AA) of the Companies Act,1956, your directors confirm:

a. that there were no material departures in the applicable accounting standards followed while preparing the annual accounts;

Page 17: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

b. having selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

c. having taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

d. having prepared the annual accounts on a going concern basis.

6.PERSONNEL

As required by the provisions of section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of the employees are set out in Annexure B to the Directors' Report. However, as per the provisions of section 219(1)(b)(iv) of the Companies Act, 1956, the annual report is being sent to all the shareholders of the Company excluding the aforesaid information. Any shareholder interested in obtaining such particulars may write to the Company Secretary at the registered office of the Company.

7. CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard AS-21 on consolidated financial statements read with Accounting Standards AS -23 on accounting for investments in associates and AS - 27 on financial reporting for interest in joint ventures, the audited consolidated financial statements are provided in the annual report.

8.SUBSIDIARY COMPANIES AND THEIR ACCOUNTS

The Company's six subsidiaries i.e. Maruti Insurance Business Agency Limited, Maruti Insurance Distribution Services Limited, Maruti Insurance Agency Solutions Limited, Maruti Insurance Agency Network Limited, Maruti Insurance Agency Services Limited and Maruti Insurance Agency Logistics Limited are engaged in the business to sell motor insurance Policies to owners of Maruti Suzuki vehicles.In 2008-09, the insurance business generated a total income of Rs. 1152.82 million which includes dividend income of Rs. 37.35 million earned from investments in mutual funds.Profit before tax (PBT) for 2008-09 was Rs. 498.80 million. The total new policies issued during the year were 662,606 while 1,459,328 policies were renewed.

The seventh subsidiary namely True Value Solutions Limited has contributed towards smooth operations of business processes and supported the dealerships in enhancing the sale of certified pre-owned cars under the brand 'Maruti True Value'. It has contributed significantly to the efforts of customer retention by facilitating re-purchase of new cars and has made significant contribution towards enhancing dealers' profitability. In terms of approval granted by the Central Government under Section 212(8) of the Companies Act, 1956, copy of the balance sheets, profit & loss accounts, reports of the board of directors and auditors of the subsidiary companies have not been attached with the balance sheet of the Company. These documents will be made available upon request byany investor of the Company or subsidiary companies and shall be kept for inspection by any investor at the registered office of the Company.

Page 18: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

However, as directed by the Central Government, the financial data of the subsidiaries have been furnished under “Financial Statement of Subsidiary Companies” forming part of the annual report. Further, pursuant to Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India, consolidated financial statements presented by the Company include the financial information of its subsidiaries.

9. CORPORATE GOVERNANCEThe Company has complied with the corporate governance requirements, as stipulated under clause 49 of the listing agreement and the stipulated certificate of compliance is contained in this annual report.

Page 19: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Ratio Analysis

Page 20: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

LIQUIDITY AND SOLVENCY RATIOS

Ratio   31.03.09 31.03.08 31.03.07

Current Ratio Current Assets/Current

Liabilities

54911/339761.61

30979/282571.09

38341/250151.53

       

Quick Ratio Current Assets –inventory/Current

Liabilities

45888/339761.35

20599/282570.72

31327/250151.25

       

Debt Equity Ratio

Debt /Equity

6989/934490.07

9002/841540.11

6308/685390.092

       

Fixed Asset Ratio  Fixed Asset/Long

term funds

40708/1004380.40

32965/931560.35

26597/748470.355

       

Shareholders Equity Ratio

  Shareholders equity/ Total Assets

93449/1019890.91

84154/948570.88

68539/765220.89

 

Interest Coverage Ratio

EBIT/Interest

17268/51034

25626/59642.9

23174/37661.6

       

Page 21: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

INTERPRETATION OF RATIOS

LIQUIDITY RATIOS

1. CURRENT RATIO

This ratio measures the solvency of the company in the short term. Current assets are those assets which can be converted into cash within a year. Current liabilities are those liabilities which can be paid off within a year. This ratio measures the short term solvency of the firm. It states the number of times a company's CL are covered by its CA. The satisfactory Current Ratio is 2:1.

2009: 1.61

2008: 1.09

In the current year the firm has better ability to meet its current obligation than its previous year 2008.

2006-07

2007-08

2008-09

0 0.5 1 1.5 2

Current ratio

Current ratio

2. QUICK RATIO

It is the ratio that Is used to Measure Company’s ability to meet its current obligations. A quick ratio of 1:1 indicates highly solvent position. This ratio serves as a supplement to current ratio in analysing liquidity.

2009: 1.35

2008: 0.72

The liquid ratio is not so good in the year 2008. but it becomes more than 1 in the year 2009 which shows that they will pay their short term debts easily. This implies that bank is acquiring more assets which make it solvent for a particular year.

Page 22: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

2006-07

2007-08

2008-09

0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6

Quick Ratio

Quick Ratio

3. DEBT-EQUITY RATIO

This indicates the relationship between net worth of the company and loan funds. A debt equity ratio of 2:1 is accepted by financial institutions for financing projects.

2009: 0.07

2008: 0.11

From 2008 to 2009 the company’s debt equity ratio is decreasing. This shows that the company is becoming low geared.

2006-07

2007-08

2008-09

0 0.05 0.1 0.15

Debt Equity ratio

Debt Equity ra-tio

4. FIXED ASSET RATIO

This ratio indicates the amount of long term funds deployed in fixed assets. Fixed assets represent the net assets. Long term funds include share capital, reserves and surplus and long term loans.

2009: 0.40

2008: 0.35

In 2009 the ratio is higher so it shows that funds will be safer at the time of liquidation.

Page 23: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

2006-07

2007-08

2008-09

0.3 0.35 0.4 0.45

Fixed Asset Ratio

Fixed Asset Ra-tio

5. SHAREHOLDERS EQUITY RATIO

This ratio shows the relationship between shareholders funds and total assets. This ratio indicates the degree to which unsecured creditors are protected against loss in the event of liquidation.

2009: 0.91

2008: 0.88

In 2009 as the ratio is more it shows that as there is larger proportion of equity, financial position of firm is stronger.

2006-07

2007-08

2008-09

0.86 0.88 0.9 0.92

Shareholders Equity Ratio

Shareholders Equity Ratio

6. INTEREST COVERAGE RATIO

The interest coverage ratio shows how many times interest charged is covered by funds that are available for payment of interest. It shows how many times company can cover its current interest payments out of current profits.

2009: 34

2008: 42.9

Since the ratio has fallen in 2009 from 2008 it shows there has been excessive use of debt.

2006-07

2007-08

2008-09

0 10 20 30 40 50 60 70

Interest Coverage Ratio

Interest Cov-erage Ratio

Page 24: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

TURNOVER RATIOS

Ratio 31.03.09 31.03.08 31.03.07

203583/407085.01

178603/329655.41

Fixed Asset Turnover

Ratios

Sales/Net block 145922/26597

5.48Working Capital

Turnover Ratios

Net sales/Working

capital203583/20935

9.72178603/2722

65.6

145922/13326

10.95

Debtors Turnover ratio

Net credit sales/Average

Accounts Receivable

203583/787225.8

178603/7014.5

25.46

145922/7474*19.52

Debt Collection

Period 365/DTR365/25.8

14.14365/25.46

14.33

365/19.5218.69

Inventory Turnover Ratio

**COGS/Average stock 30.46 22.93 28.76

Total Assets Turnover Ratio

Sales/Total Assets

203583/1019891.99

178603/948571.88

145922/76522

1.90

*Since we have not been given values for the year ending 31-03-06 we have taken average debtors from the balance sheet as debtors as on 31-03-07.

Cogs calculated as peer schedule 18.

Page 25: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

INTERPRETATION OF RATIOS

TURNOVER RATIOS

1. FIXED ASSET TURNOVER RATIO

The fixed asset turnover ratio is calculated to analyse whether the investment in fixed asset is justified in relation to the sales achieved.

2009: 5.01

2008: 5.41

The company’s fixed asset turnover ratio has fallen from the previous year which shows that in the previous year the utilization of fixed asset was better.

2006-07

2007-08

2008-09

4.7 4.9 5.1 5.3 5.5

Fixed Asset Turnover ra-tio

Fixed Asset Turnover ratio

2. WORKING CAPITAL TURNOVER RATIO

The Working capital turnover ratio is used to indicate the number of times a unit invested in working capital produces sales. Higher the ratio, the better it is This ratio indicates the extent of working capital turned over in achieving sales of the firm.

2009: 9.72

2008:65.6

It has decreased majorly from 65.6 in 2008 to 9.72 in 2009. This shows that working capital has been efficiently used in making sales.

Page 26: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

2006-07

2007-08

2008-09

0 20 40 60

Working Capital Turnover ratio

Working Capi-tal Turnover ra-tio

3. DEBTORS TURNOVER RATIO

Debtors turnover measures whether the amount of resources tied up debtors is reasonable and whether the company has been reasonable in converting debtors into cash.

2009: 25.8

2008: 25.46

The ratio has increased in 2009 from 25.67 of 2008 to 26.33. this shows that higher the ratio better the position.

2006-07

2007-08

2008-09

0 5 10 15 20 25 30

Debtors Turnover ratio

Debtors Turnover ratio

4. DEBT COLLECTION PERIOD

This calculates how long it takes to collect amount from debtors. This actual collection period can be compared with the stated credit terms of the company. If it is longer than those terms, it indicates inefficiency in collecting debts.

2009: 14.14

2008:14.33

The debt collection period has fallen a bit since the previous year. This indicates that in 2008 there was more efficiency in collecting debts than in 2009.

Page 27: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

5. INVENTORY TURNOVER RATIO

The level of inventory in a firm may be assessed by the use of this ratio which measures how much has been tied up in this ratio. This shows whether investment in stock has been fruitful or not.

2009: 30.46

2008: 22.93

The company’s ratio has increased since the previous year which enables the firm to earn a reasonable margin of profit.

6. TOTAL ASSETS TURNOVER RATIO

This indicates the number of times total assets are being turned over in a year.

2009: 1.99

2008: 1.88

If the ratio is higher it indicates overtrading of total assets, while a low ratio indicates idle capacity.

2006-07

2007-08

2008-09

1.8 1.85 1.9 1.95 2

Total assets turnover ratio

Total assets turnover ratio

Page 28: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

PROFITABILITY RATIOS

Ratio   31.03.09 31.03.08 31.03.07

Gross Margin(%) Sales-COGS / Sales

203583-161768/203583

20.53

178603-141056/178603

21.02

16.66

Net Profit Margin(%) PAT/Sales

12187/2035835.98

17308/1786039.6

15620/145922

10.7

Operating Profit Margin(%)

Operating Profit(PBT+DEP+INT)/Sale

s24333/203583

11.931308/178603

17.5

25888/145922

17.7

Return On capital employed Profit after tax/Net worth

12187/10324111.8

17308/9566618.09

15620/7484720.86

 

INTERPRETATION OF RATIOS

PROFITABILITY RATIOS

1. GROSS PROFIT MARGIN

This ratio measures the gross profit margin on the total net sales made by the company. It represents the excess of sales proceeds during the year under observation over their cost, before taking into account administration, selling and distribution cost. It measures the efficiency of the firm’s operations.

2009: 20.53

2008: 21.02

There has been a variation in gross profit ratio. It indicates the efficiency with which products are produced.

Page 29: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

2006-07

2007-08

2008-09

0 5 10 15 20 25

GROSS PROFIT RATIO

GROSS PROFIT RATIO

2. NET PROFIT MARGIN

This ratio is designed to focus attention on the net profit margin arising from business operations before interest and tax is deducted. This ratio measures the efficiency of operations of the company.

2009: 5.98

2008: 9.6

Since it has decreased in 2009 from the previous year it Indicates management’s fall in efficiency in manufacturing, administrating and selling a product.

2006-07

2007-08

2008-09

0 2 4 6 8 10 12

Net profit margin(%)

Net profit margin(%)

3. OPERATING PROFIT MARGIN

A high ratio indicates efficiency of company to generate operating profits out of sales.

2009: 9.18

2008: 11.9

Operating profit has decreased since last year which is not good for the firm.

Page 30: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

2006-07

2007-08

2008-09

0 4 8 12 16 20

OPERATING PROFIT RATIO

OPERATING PROFIT RATIO

4. RETURN ON CAPITAL EMPLOYED

It is also called as return on investment. Strategic aim of business is to earn a return on capital. If return is not satisfactory, the deficiency should be corrected or the activity be abandoned.

2006-07

2007-08

2008-09

0 5 10 15 20 25

RETURN ON CAPITAL EMPOYED

RETURN ON CAPITAL EMPOYED

2009: 11.8

2008: 18.09

It helps in assessment of profitability of each proposal. It indicates how effectively operating assets are used in earning returns.

Page 31: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

MARKET BASED RATIOS

Ratio  Formula 31 – 03-09 31 – 03-08 31-03-07

 Earning Per Share(EPS)*

Earnings available /No of shares 42.18 59.89 54.07

Dividend PerShare(DPS) Dividend Paid/No of

Shares 3.5 5 4.5

Pay out Ratio DPS/EPS 0.12 0.083 .09

*EPS and DPS is taken as per the annual reports of the company.

INTERPRETATION OF RATIOS

1. EARNING PER SHARE

The Earning per Share measures the overall profitability in terms of per equity share of capital contributed.

2009: 42.18

2008: 59.89

The earning per share has fallen since last year from 59.89 to 42.18. This shows that the investment in shares in future might be lesser.

2006-07

2007-08

2008-09

0 10 20 30 40 50 60 70

Earning Per Share

Earning Per Share

2. DIVIDEND PER SHARE

Page 32: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Dividend per Share indicates the extent to which some part of EPS is distributed to share holders and some is retained.

2009: 3.5

2008: 5

This shows that dividend per share has fallen since previous year. It indicates that more amount of profits have been retained in the business as less is being paid in the form of dividends.

2006-07

2007-08

2008-09

0 1 2 3 4 5 6

Dividend per share

Dividend per share

3. PAYOUT RATIO

Dividend payout ratio indicates the extent of the net profits distributed to the shareholders as dividend.

2009: 0.12

2008: 0.083

The dividend payout ratio has increased since last year. This shows that more amount of net profit has been given as dividend since last year.

2006-07

2007-08

2008-09

0 0.05 0.1 0.15

Dividend Payout Ra-tio

Dividend Payout Ratio

Page 33: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Comparative Balance Sheet and Profit and loss account

Page 34: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

COMPARATIVE BALANCE SHEET for year ending 2007 and 2008

Page 35: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

SOURCES OF FUNDS SCHEDULE As on 31.03.08 As on 31.03.07

Absolute Difference

Percentage Difference

SHAREHOLDERS FUNDS

Capital 1 1445 1445 0 0

Reserves and surplus 2 82709 67094 15615 23.27%

Total 84154 68539 15615 22.78%

LOAN FUNDS

Secured Loans 3 1 635 -634 99.84%

Unsecured Loans 4 9001 5673 3328 58.66%

Total 9002 6308 2694 42.70%

DEFERRED TAX

Deferred tax liabilities 2697 2776 -79 -2.84%

Deferred tax assets (996) (1101) -105 -9.53%

Total 1701 1675 26 1.55%

TOTAL 94857 76522 18335 23.96%

APPLICATION OF FUNDS

FIXED ASSETS 5

Gross Block 72853 61468 11385 18.52%

Less: Depreciation (39888) (34871) 5017 143.87%

Total 32965 26597 6368 23.94%

Capital work in Progress

6 7363 2507 4856 193.69%

TOTAL 40328 29104 11224 38.56%

INVESTMENT 7 51807 34092 17715 51.96%

CURRENT ASSETS,LOANS & ADVANCES

Inventory 8 10380 7014 3366 47.99%

Sundry Debtors 9 6555 7474 -919 12.29%

Cash & Bank Balance 10 3305 14228 -10923 76.77%

Page 36: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Other current Assets 11 331 384 -53 -13.80%

Loans & Advances 12 10408 9241 1167 12.62%

Total 30979 38341 -7362 19.20%

LESS CURRENT LIABILITIES & PROVISION

Current liabilities 13 24562 20110

Provisions 14 3695 4905 -400 8.15%

Total 28257 25015 3242 12.96%

Net Current Assets 2722 13326 -10604 79.57%

TOTAL 94875 76522 18353 23.98%

COMPARATIVE BALANCE SHEET FOR YEAR ENDING 2008 AND 2009

SCHEDULE As on 31.03.09

As on 31.03.08

Absolute Difference

Percentage Difference

SOURCES OF FUNDS

SHAREHOLDERS FUNDS

Capital 1 1445 1445 0 0

Reserves and surplus 2 92004 82709 9295 11.24%

Page 37: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Total 93449 84154 9295 11.045%

LOAN FUNDS

Secured Loans 3 1 1 0 0

Unsecured Loans 4 6988 9001 -2013 -22.36%

Total 6989 9002 -2013 -22.36%

DEFERRED TAX

Deferred tax liabilities

2340 2697 -357 -13.23%

Deferred tax assets (789) (996) 207 -20.78%

Total 1551 1701 -150 -8.81%

TOTAL 101989 94857 7132 7.51%

APPLICATION OF FUNDS

FIXED ASSETS 5

Gross Block 87206 72853 14353 19.70%

Less: Depreciation (46498) (39888) -6610 16.57%

Total 40708 32965 7743 23.48%

Capital work in Progress

6 8613 7363 1250 16.97%

TOTAL 49321 40328 8993 22.29%

INVESTMENT 7 31733 51807 -20074 38.74%

CURRENT ASSETS,LOANS & ADVANCES

Inventory 8 9023 10380 -1357 -13.07%

Sundry Debtors 9 9189 6555 2634 40.18%

Cash & Bank Balance 10 19390 3305 16085 486.68%

Other current Assets 11 981 331 650 196.37%

Loans & Advances 12 16328 10408 5920 56.87%

Page 38: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Total 54911 30979 23932 77.2%

LESS CURRENT LIABILITIES & PROVISION

Current liabilities 13 30169 24562 5607 22.8%

Provisions 14 3807 3695 112 3.03%

Total 33976 28257 5719 20.23%

Net Current Assets 20935 2722 18213 669.10%

TOTAL 101989 94875 7114 7.5%

INTERPRETATION

COMPARATIVE BALANCE SHEET ANALYSIS

1. Shareholder’s funds have increased by 11.045% as reserves and surplus have increased by 11.24% but no change occurs in share capital.

2. Secured loans have not changed and unsecured loans have decreased by 22.36% but deferred tax liability has decreased by 13.23%.

3. Fixed assets have increased by 22.29% which shows that productivity has declined.

4. Investments have decreased by 38.74%.

5. Sundry debtors have increased by 40.18%, inventories have decreased by 13.07%,cash and bank balance have increased by 486.68% and loans and advances have increased by 56.87% but current liabilities have increased by 22.8% and provisions have increased by 3.03%,as a result, net current assets have increased by 669.10%.

Page 39: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

COMPARATIVE PROFIT & LOSS ACCOUNT for year ending 2007 and 2008

SCHEDULE As on 31.03.08

As on 31.03.07

Absolute Difference

Percentage Difference

INCOME

Gross Sales 15 209493 171442 38051 22.19%

Less Excise Duty 30890 25520 5370 21.04%

Net Sales 178603 145922 32681 22.40%

Income from Services 759 617 142 23.01%

Page 40: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Other Income 16 8371 5984 2387 39.89%

Total 187733 152523 35210 23.09%

EXPENDITURE

Consumption of raw materials and components

130342 101374 28968 28.58%

Purchases or traded goods 7771 6159 1612 26.17%

Consumption or stores 1470 1097 373 34.00%

Employee Remuneration 17 3562 2884 678 23.51%

Selling and Distribution expenses

19 5602 4999 603 12.06%

Total 159540 124771 34769 27.87%

less vehicles for own use

add Increase/decrease in work in progress

198 143 55 38.46%

Finished goods and spare parts

21 -2917 2007 -4924 -245.34

Total 156425 126635 126635 23.52%

Earnings before Interest, Tax, Depreciation and Amortization

31308 25888 5420 20.94%

Interest 20 593 376 217 57.71%

Page 41: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Depreciation 5 5682 2714 2968 109.36%

Profit Before Tax 25030 22798 2232 9.79%

less cash expenses-current tax

7509 6089 1420 23.32%

Deferred tax 26 67 -41 -61.19%

Fringe benefit tax 98 125 -27 -21.60%

Previous Years 89 125 -36 -28.80%

Profit After Tax 25030 22798 2232 9.79%

Add braught forward from previous year account

56373 43939 12434 28.30%

Profit available for appropriation

73681 59471 14210 23.89%

General reserve 1731 1562 169 10.82%

Proposed Dividend 1445 1300 145 11.15%

Corporate dividend tax 248 219 29 13.24%

Balances carried forward to balance sheet

70257 56373 13884 24.63%

Basic Diluted Earning per share in Rs

59.91 54.06 5.85 10.82%

COMPARATIVE PROFIT & LOSS ACCOUNT for year ending 2008 and

Page 42: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

2009

SCHEDULE As on 31.03.09

As on 31.03.08

Absolute Difference

Percentage Difference

INCOME

Gross Sales 15 230852 209493 21359 10.20%

Less Excise Duty 27260 209493 -3621 -11.72%

Net Sales 203583 178603 24980 13.99%

EXPENDITURE

Consumption of raw materials and components

150598 130342 20256 15.54%

Purchases or traded goods 7256 7771 -515 -6.63%

Consumption or stores 1978 1470 508 34.56%

Employee Remuneration 17 4711 3562 1149 32.26%

Manufacturing,Administrative and other expenses

18 15685 10793 4892 45.33%

Selling and Distribution expenses

19 7382 5602 1780 31.77%

Total 187610 159540 28070 17.59%

Finished goods and spare parts

21 2818 2917 5735 -196.61

Page 43: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Earnings before Interest, Tax, Depreciation and Amortization

24333 31308 -6975 -22.28%

Interest 20 510 593 -83 -14.00%

Depreciation 5 7065 5682 1383 24.34%

Profit Before Tax 16758 25030 -8272 -33.05%

less cash expenses-current tax 4592 7509 -2917 -38.85%

Deferred tax -118 26 -144 -553.85%

Fringe benefit tax 97 98 -1 -1.02%

Previous Years 0 89 -89 -100.00%

Profit After Tax 12187 17308 -5121 -29.59%

Add braught forward from previous year account

70257 56373 13884 24.63%

Profit available for appropriation

82444 73681 8763 11.89%

Proposed Dividend 1011 1445 -434 -30.03%

Corporate dividend tax 172 248 -76 -30.65%

Balances carried forward to balance sheet

80042 70257 9785 12.29%

Basic Diluted Earning per share in Rs

10 42.18 59.91 -17.73 -29.59%

Page 44: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

INTERPRETATION

A comparative income statement shows the operating results for a number of

accounting periods so that changes in data in terms of money and percentage from

one period to another may be known.

Comparative income statement is prepared with the objective to analyse the income

and expenditure for two or more years. And to review the business operations of the

last year and its likely effect on the current years operations.

Now having a look at the comparative income statement of the company for the year

2008 -2009 we note that the gross sales of the company increased by Rs 21359

which accounted for a rise by 10.20%. A decrease in the value of excise duty was

observed for 2008 to 2009 which accounted for 11.72%. this caused net sales to

increase to Rs 203583 ie 13.99% increase. The income from services recorded an

increase of Rs 211 in absolute terms whereas it was 27.80% in percentage terms.

Other incomes also rose by 19.28%.

Thus the overall change in incomes was found to be 14.28%.

Coming up to the expenditure side it was seen that the consumption of raw materials

and components rose by Rs 20256 which was a 15.54% increase. Whereas the

purchases fell by 6.63% from year 2008 to 2009.

Employee remuneration saw an increase by Rs 1149 which might have been

because of promotions or employment of more no of people at work. Manufacturing,

administrative and other expenses also rose by 45.33% which certainly shows that

the scale of operations might have increased. Other expenses like selling and

distribution also saw a rise of Rs 1780.

After taking into consideration the vehicles for own use, work in progress, finished

goods and spare parts the earnings before interests, taxes and depreciation came

out to be24333 for the year 2009 which was a 22.28% decrease from Rs 31308 in

2008.

Finally the profit after tax for the company was also seen to fall to Rs 12187 maybe

because of high tax rates imposed. The profit available for appropriation was found

to be Rs 82444. Both the general reserve and proposed dividend experienced a fall

Page 45: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

29.58% and 30.03% respectively. And the basic diluted earnings per share was

recorded as Rs 42.18 which was a 29.59% decrease from the year 2008.

Page 46: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Common size Balance sheet and Profit and

loss

Page 47: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

COMMON SIZE BALANCE SHEET FOR YEAR ENDING 2007 AND 2008

SCHEDULE As on 31.03.08 As on 31.03.07

Percentage OF

Total

Percentage OF

Total

SOURCES OF FUNDS As on 31.03.08 As on 31.03.07

SHAREHOLDERS FUNDS

Capital 1 1445 1445 1.52% 1.89%

Reserves and surplus 2 82709 67094 87.19% 87.68%

Total 84154 68539 88.71% 89.56%

LOAN FUNDS

Secured Loans 3 1 635 0.00% 0.83%

Unsecured Loans 4 9001 5673 9.49% 7.41%

Total 9002 6308 9.49% 8.24%

DEFERRED TAX

Deferred tax liabilities 2697 2776 2.84% 3.64%

Deferred tax assets (996) (1101) (1.05)% (1.44)%

Total 1701 1675 1.79% 2.2%

TOTAL 94857 76522 100% 100%

APPLICATION OF FUNDS

FIXED ASSETS 5

Gross Block 72853 61468 76.80% 80.33%

Less: Depreciation (39888) (34871) (42.05)% (45.57%)

Total 32965 26597 34.75 34.76%

Capital work in Progress

6 7363 2507 7.76% 3.28%

TOTAL 40328 29104 42.51% 38.03%

Page 48: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

INVESTMENT 7 51807 34092 54.62% 44.55%

CURRENT ASSETS,LOANS & ADVANCES

Inventory 8 10380 7014 10.94% 9.17%

Sundry Debtors 9 6555 7474 6.91% 9.77%

Cash & Bank Balance 10 3305 14228 3.48% 18.59%

Other current Assets 11 331 384 0.35% 0.50%

Loans & Advances 12 10408 9241 10.97% 12.08%

Total 30979 38341 32.65% 50.10%

LESS CURRENT LIABILITIES & PROVISION

Current liabilities 13 24562 20110 25.89% 26.28%

Provisions 14 3695 4905 3.90% 6.41%

Total 28257 25015

Net Current Assets 2722 13326 2.87% 17.41%

TOTAL 94875 76522 100.00% 100.00%

COMMON SIZE BALANCE SHEET AS ON 2008 AND 2009

SCHEDULE As on 31.03.09 As on 31.03.08

Percentage of Total

Percentage of Total

SOURCES OF FUNDS As on 31.03.09 As on 31.03.08

Page 49: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

SHAREHOLDERS FUNDS

Capital 1 1445 1445 1.42% 1.52%

Reserves and surplus 2 92004 82709 90.21% 87.19%

Total 93449 84154 91.62% 88.71%

LOAN FUNDS

Secured Loans 3 1 1 0.00% 0.00%

Unsecured Loans 4 6988 9001 6.85% 9.49%

Total 6989 9002 6.85% 9.49%

DEFERRED TAX

Deferred tax liabilities

2340 2697 2.29% 2.84%

Deferred tax assets (789) (996) (0.77)% (1.05)%

Total 1551 1701 1.52% 1.79%

TOTAL 101989 94857 100% 100%

APPLICATION OF FUNDS

FIXED ASSETS 5

Gross Block 87206 72853 85.51% 76.80%

Less: Depreciation (46498) (39888) (45.59)% (42.05)%

Total 40708 32965 39.92% 34.75%

Capital work in Progress

6 8613 7363 8.45% 7.76%

TOTAL 49321 40328 48.35% 42.51%

INVESTMENT 7 31733 51807 31.11% 54.62%

CURRENT ASSETS,LOANS & ADVANCES

Inventory 8 9023 10380 8.85% 10.94%

Page 50: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Sundry Debtors 9 9189 6555 9.01% 6.91%

Cash & Bank Balance 10 19390 3305 19.01% 3.48%

Other current Assets 11 981 331 0.96% 0.35%

Loans & Advances 12 16328 10408 16.01% 10.97%

Total 54911 30979 53.84% 32.65%

LESS CURRENT LIABILITIES & PROVISION

Current liabilities 13 30169 24562 29.58% 25.89%

Provisions 14 3807 3695 3.73% 3.90%

Total 33976 28257 33.31% 29.78%

Net Current Assets 20935 2722 20.53% 2.87%

TOTAL 101989 94875 100.00% 100.00%

INTERPRETATION

COMMON SIZE BALANCE SHEET ANALYSIS

Current assets as a percentage of total assets have increased to 53.84% in 2009 as

compared to 32.65% in 2008.Net current assets in 2009 were only 20.53% ,which were

2.87% in 2008.This increase was shared by cash and debtors while inventories showed a

decrease implying the sales were high, even though the current liabilities rose. The value of

net assets has risen substantially indicating a high liquidity. The total long term debt has

fallen by 2.64% which shows the repayment. Reserves have shown an increase in the

current year.

Page 51: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

COMMON SIZE PROFIT & LOSS ACCOUNT for year ending 2007 and 2008

SCHEDULE As on 31.03.09

As on 31.03.08

Common Size on 31.03.08

Common Size on 31.03.07

INCOME

Gross Sales 15 230852 209493 117.30% 117.49%

Less Excise Duty 27260 209493 17.30% 17.49%

Page 52: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Net Sales 203583 178603 100.00% 100.00%

Income from Services 970 759 0.42% 0.42%

Other Income 16 9985 8371 4.69% 4.10%

Total 214538 187733 105.11% 104.52%

EXPENDITURE

Consumption of raw materials and components

150598 130342 72.98% 69.47%

Purchases or traded goods 7256 7771 4.35% 4.22%

Consumption or stores 1978 1470 0.82% 0.75%

Employee Remuneration 17 4711 3562 1.99% 1.98%

Manufacturing,Administrative and other expenses

18 15685 10793 6.04% 5.66%

Selling and Distribution expenses

19 7382 5602 3.14% 3.43%

Total 187610 159540 89.33% 85.51%

Page 53: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

less vehicles for own use

add Increase/decrease in work in progress

223 198 0.11% 0.10%

Finished goods and spare parts

21 2818 2917 -1.63% 1.38%

Earnings before Interest, Tax, Depreciation and Amortization

24333 31308 17.53% 17.74%

Interest 20 510 593 0.33% 0.26%

Depreciation 5 7065 5682 3.18% 1.86%

Profit Before Tax 16758 25030 14.01% 15.62%

less cash expenses-current tax 4592 7509 4.20% 4.17%

Deferred tax -118 26 0.01% 0.05%

Fringe benefit tax 97 98 0.05% 0.09%

Previous Years 0 89 0.05% 0.09%

Profit After Tax 12187 17308 9.69% 10.70%

Page 54: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Add braught forward from previous year account

70257 56373 31.56% 30.11%

Profit available for appropriation

82444 73681 41.25% 40.76%

General Reserve 1219 1731 0.97% 1.07%

Proposed Dividend 1011 1445 0.81% 0.89%

Corporate dividend tax 172 248 0.14% 0.15%

Balances carried forward to balance sheet

80042 70257 39.34% 38.63%

Basic Diluted Earning per share in Rs

10 42.18 59.91 0.03% 0.04%

COMMON SIZE PROFIT & LOSS ACCOUNT for year ending 2008 and 2009

SCHEDULE As on 31.03.09

As on 31.03.08

Common Size on 31.03.09

Common Size on 31.03.08

INCOME

Gross Sales 15 230852 209493 113.39% 117.30%

Less Excise Duty 27260 209493 13.39% 17.30%

Net Sales 203583 178603 100.00% 100.00%

Page 55: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Income from Services 970 759 0.48% 0.42%

Other Income 16 9985 8371 4.90% 4.69%

Total 214538 187733 105.38% 105.11%

EXPENDITURE

Consumption of raw materials and components

150598 130342 73.97% 72.98%

Purchases or traded goods 7256 7771 3.56% 4.35%

Consumption or stores 1978 1470 0.97% 0.82%

Employee Remuneration 17 4711 3562 2.31% 1.99%

Manufacturing,Administrative and other expenses

18 15685 10793 7.70% 6.04%

Selling and Distribution expenses

19 7382 5602 3.63% 3.14%

Total 187610 159540 92.15% 89.33%

less vehicles for own use

add Increase/decrease in work in progress

223 198 0.11% 0.11%

Page 56: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Finished goods and spare parts 21 2818 2917 1.38% -1.63%

Total 190205 156425 99.43% 87.58%

Earnings before Interest, Tax, Depreciation and Amortization

24333 31308 11.95% 17.53%

Interest 20 510 593 0.25% 0.33%

Depreciation 5 7065 5682 3.47% 3.18%

Profit Before Tax 16758 25030 8.23% 14.01%

less cash expenses-current tax 4592 7509 2.26% 4.20%

Deferred tax -118 26 -0.06% 0.01%

Fringe benefit tax 97 98 0.05% 0.05%

Previous Years 0 89 0.00% 0.05%

Profit After Tax 12187 17308 5.99% 9.69%

Add braught forward from previous year account

70257 56373 34.51% 31.56%

Profit available for appropriation

82444 73681 40.50% 41.25%

General Reserve 1219 1731 0.60% 0.97%

Proposed Dividend 1011 1445 0.50% 0.81%

Page 57: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Corporate dividend tax 172 248 0.08% 0.14%

Balances carried forward to balance sheet

80042 70257 39.32% 39.34%

Basic Diluted Earning per share in Rs

10 42.18 59.91 0.02% 0.03%

INTERPRETATION

An income statement in which each account is expressed as a percentage

of the value of sales. This type of financial statement can be used to allow for easy

analysis between companies or between time periods of a company.

Common size income statement analysis allows an analyst to determine how the

various components of the income statement affect a company's profit.

Now the income statement of the company shows that the gross sales have

increased by 113.39% from year 2008 to 2009. As far as the excise duty is

concerned it was Rs 27260 in 2009 which was comparatively less than Rs 30890 in

2008. Thus the observed figure for net sales in 2009 was Rs 203583. The income

from services saw a gradual increase from 0.42%

to 0.48% over the whole financial year. Other incomes also rose by around 4.90%

which in absolute terms was close to Rs 9985.

Coming up to expenditures column it is seen that the consumption of raw materials

and components increased by 73.97%. Overall expenses increased b y 92.15%.at

this point after taking into consideration vehicles for own use, change in work in

progress, finished goods and spare parts etc the net expenditure changed from

16425 to 190205. The reason can be somewhat increase in the scale of operations

of the business firm.

Earnings before interests, taxes and depreciation was 24333 for year 2009 which

was comparatively lower than the increase from 2007 to 2008. Similarly the profit

after tax was a bit lower ie around Rs12187.

Page 58: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

Finally by taking into account also the previous years profits, general reserve,

proposed dividend etc the overall figure for profits was lower than that of 2008 but

still was a favorable amount depicting a clear picture of the affairs of the company.

LIMITATIONS OF THE PROJECT

1. Time constraint- Due to shortage of time we were not able to put in more efforts in the analysis.

2. Not comparable: When results of two enterprises are being compared it should be kept in mind that same accounting policies are followed.

3. Effect of price level changes: No consideration is given to price level changes in the accounting variables which affects the comparability.

4. Personal bias: Different people calculate and interpret the financial statements differently. So it is not free from personal bias.

Page 59: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

ANNEXURES

Page 60: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)

INDIVIDUAL CONTRIBUTION

FOR COMPLETING THE WHOLE ACCOUNTS PROJECT ALL GROUP MEMBERS HAVE CONTRIBUTED EQUALLY IN TERMS OF TIME AND

EFFORT. BUT TO MAKE IT SIMPLER AND CONVENIENT THE WHOLE WORK WAS BEING DIVIDED.

The details of company and the important points related to director’s statement were covered by MEETALI BANSAL.

Ratio analysis and compilation was done by RITIKA SURI

Comparative and common size balance sheet and their analysis were being prepared by NISHANT MENDIRATTA AND MEETALI BANSAL.

Comparative and common size income statements were prepared by

SAKSHI KALRA AND NAMAN POPLI.

. .

Page 61: Annual Report Analysis - Maruti Suzuki Ltd 2 (1)