Mahindra & Mahindra Limited Assignment 2

2013
COMPANY BACKGROUND
Mahindra & Mahindra was established on October 2, 1945 when K.C. Mahindra visited the United tates o! "#erica as Chair#an o! the $ndia %&&l' Mission. (e #et )arne' *oos, inventor o! the r%++ed ,+eneral &%r&ose vehicle, or -ee& and had a !lash o! ins&iration. wo%ldn,t a vehicle that had &roved its invincibilit' on the battle!ields o! /orld /ar $$ be ideal !or $ndia,s r%++ed terrain and its 0%tcha r%ral roads. wi!t action !ollowed tho%+ht. 1he Mahindra brothers 2oined hands with a distin+%ished +entle#an called 3h%la# Moha##ed. "nd, Mahindra & Moha##ed was set %& as a !ranchise !or asse#blin+ 2ee&s !ro# /ill's, U ". 1wo 'ears later, $ndia beca#e an inde&endent nation and Mahindra & Moha##ed chan+ed its na#e to Mahindra & Mahindra. 3h%la# Moha##ed #i+rated to 4a0istan &ost5&artition and beca#e the !irst 6inance Minister o! 4a0istan. Mahindra & Mahindra is $ndian co#&an' a#on+ the to& tractor #an%!act%rers in the 1he 3ro%& has a leadin+ in 0e' sectors o! the $ndian econo#'. 1he 3ro%& e#&lo's 50,000 &eo&le and has several the5art !acilities in $ndia and overseas. the onl' three world. &resence over state5o!5

Submitted To: Dr. Pawan Jain "ssistant 4ro!essor 6inance & "cco%nts

Mahindra & Mahindra has co#&rehensive #an%!act%rin+ !acilities with hi+h level o! vertical inte+ration. 1hese #an%!act%rin+ &lants 0ee& abreast with the latest technolo+' to #eet the +rowin+ #ar0et e7&ectations. 1hese Submitted By: #an%!act%rin+ !acilities have Chetan Chawhan so#e o! the best technolo+ies and e8%i&#ent in $ndia and &rovide a *oll 9o. 2012100 !or ver' challen+in+ and satis!'in+ wor0 ection ")C environ#ent. $ts &lants in M%#bai and 9asi0 #an%!act%re #%lti5 %tilit' vehicles and en+ines are &rod%ced at the $+at&%ri &lant.

The business area of the co Auto oti%e sector

!an" s!rea#s to$

1he co#&an' #an%!act%res & #ar0ets %tilit' vehicles, li+ht co##ercial vehicles that incl%de three wheeler vehicles, na#el': cor&io, )olero, Cha#&ion and #an' #ore. 1he co#&an' also e7&orts its &rod%cts to several co%ntries in ;%ro&e, "!rica, o%th "#erica, o%th "sia and the Middle ;ast. M&M has a tie %& with *ena%lt !or &rod%ction & #ar0etin+ o! <o+an. Mahindra $nternational is into &rod%cin+ tr%c0s and b%ses. &ar e'ui! ent

M&M,s !ar# e8%i&#ent se+#ent has &resence in si7 continents and has a worldwide networ0 o! =00 dealers .$ts total co#bined &rod%ction ca&acit' is 1,50,000 tractors a 'ear !ro# co%ntries li0e $ndia, U ", China and "%stralia. 1he co#&an' is also into a+ro b%siness. Tra#e( Retai) * &inance Mahindra $nter5trade >ivision &rovides steel & steel related services. $t o!!ers steel raw #aterials, #etals, 6erro allo's, etc. $t also &rocesses Cold *olled 3rain Oriented ?C*3O@ and Cold *olled 9on 3rain Oriented ?C*93O@ steels that are re8%ired !or trans!or#ers & co#&ressors. Mahindra *etails is into distrib%tion b%siness and has tie %& with bi+ na#es li0e <e+o, >isne', Mattel and others. Mahindra 6inance is into !inancin+ o! tractors and other vehicles and is also into $ns%rance bro0in+. +nfrastructure M&M has also entered $n!rastr%ct%re develo&#ent that o&erates in real estates, ;As, hos&italit', &ro2ect en+ineerin+ and desi+n. Under this it has created Mahindra (olida' & *esorts, Mahindra <i!e s&aces & Mahindra /orld Cit'. +nfor ation Techno)o,"

1ech Mahindra &rovides sol%tions & services to teleco##%nication #a2ors na#el' "lcatel, "1&1, )1, Conver+'s, ;ricsson and O2, a#on+ others. $t is also into b%siness &rocess and technolo+' cons%ltin+ services thro%+h )ristle. -"stech $t is into s%&&l' o! a%to#otive co#&onents. $t &rod%ces !or+ed and !or+ed B #achined co#&onents and +ears. -!ecia)t" Business Under this division it has co#&anies li0e Mahindra >e!ense, en+a+ed in #an%!act%rin+ de!ense related vehicles & Mahindra "shtech. Pro#ucts an# ser%ices offere# b" the co !an"$.

Auto

oti%e cor&io C'lo )olero Ma77 *an+e 9a'a Co##ander Ma2or )olero Ca#&er ><C Cha#&ion ran+e o! 1hree /heelers. 6ar# ;8%i&#ent "+ri in&%ts and services ;n+ines 6ar# $#&le#ents 1ractors

&inancia) -er%ices

<oans and M%t%al 6%nd >istrib%tion $ns%rance and *is0 Mana+e#ent ervices ation Techno)o," >ealershi& Mana+e#ent 6acilit' Mana+e#ent o!tware ol%tions ent

+nfor

+nfrastructure De%e)o!

>evelo&#ent o! $n!rastr%ct%re 4ro2ects ;n+ineerin+ cons%ltanc' $nte+rated )%siness Cities <i!eti#e holida's <ivin+ &aces and /or0in+ &aces

-"stech

Co#&osites ;n+ineerin+ ervices 6or+in+s 3ears o%rcin+ o! "%to Co#&onents ta#&in+s and teel

-!ecia)it" Business

"sh (andlin+ ;8%i&#ent !or 4ower 4lants >e!ence Dehicles $n!or#ation ec%rit' Cons%ltanc'

/i,h)i,hts of &isca) Year 0123

6or the 'ear ended March 2013, the co#bined o&eratin+ inco#e +rew to *s 3=,35E crore on rob%st a%to sales tho%+h constrained b' !lat !ar# e8%i&#ent &er!or#ance. 1he a%to sales that contrib%te F0G to total sales +rew b' rob%st 34G to *s 2E,4== crore. 9et &ro!it +rew b' 21G to *s 3E34 crore. On standalone basis, the net &ro!it o! M&M +rew b' 1E.5G to *s 3352 crore on 2FG s&i0e in to&line to *s 40441 crore. 1he reven%es o! M&M are stable and risin+ too. 6ro# *s 3502 Cr in 1999, it has increased to *s 411E= Cr in 2013. "n increase o! F.F1G is recorded in the 1st 8%arter 2013 as co#&are to 2012. 1he reven%e has #ainl' increased d%e to increase in the !ar# se+#ent vol%#e sales and rise in the sellin+ &rices. $! we co#&are M&M &ro!it with its co#&etitors co#&anies, it is showin+ hi+h +rowth over the &eriod. 1he contin%o%sl' increasin+ &ro!it +ra&h shows the !inancial stabilit' o! the co#&an'. On standalone basis, the 3ross *even%es and Other $nco#e o! Mahindra & Mahindra !or the 8%arter ended 30th -%ne 2013 stood at *s 10==F.= crore as a+ainst *s10115.= crore d%rin+ the corres&ondin+ &eriod last 'ear 5 a +rowth o! F.EG. 1he 9et 4ro!it a!ter ta7 !or the 8%arter is *s 93F.9 crore !or the c%rrent H1 as a+ainst *s. F25.E crore in the sa#e &eriod last 'ear 5 a +rowth o! 29.3G. M&M,s net &ro!it rose 29.3G to *s 93F.91 crore on F.1G +rowth in net sales to *s 990E.23 crore in H1 -%ne 2013 over H1 -%ne 2012.

Co

on -i4e -tate

ents

Ba)ance -heet -tate

ent
?*%&ees in Crores@ 0120 0122

Particu)ars 56U+TY AND 7+AB+7+T+5-hareho)#ers8 fun#s ?a@ hare ca&ital ?c@ *eserves and s%r&l%s -hare a!!)ication one" !en#in, a))ot ent Non.current )iabi)ities ?a@ <on+5ter# borrowin+s ?b@ >e!erred ta7 liabilities ?9et@ ?c@ Other <on+ ter# liabilities ?d@ <on+5ter# &rovisions Current )iabi)ities ?a@ hort5ter# borrowin+s ?b@ 1rade &a'ables ?c@ Other c%rrent liabilities ?d@ hort5ter# &rovisions TOTA7 A--5TNon.current assets ?a@ 6i7ed assets ?i@1an+ible assets ?ii@$ntan+ible assets ?iii@Ca&ital wor05in5&ro+ress ?iv@$ntan+ible assets %nder develo&#ent ?b@ 9on5c%rrent invest#ents ?c@ <on+5ter# loans and advances ?d@ Other non5c%rrent assets ?+@ 6orei+n C%rrenc' #onetar' $te# 1ranslation >i!!erence "cco%nt Current assets ?a@ C%rrent invest#ents ?b@ $nventories ?c@ 1rade receivables ?d@ Cash and cash e8%ivalents ?e@ hort5ter# loans and advances ?!@ Other c%rrent assets ?+@ 6orei+n C%rrenc' Monetar' $te# 1ranslation >i!!erence "cco%nt TOTA7

0123

295.1E 143E3.FE 29:;<.=0

294.52 11=FE.5F 202>2.1=

293.E2 10019.F5 21323.3>

31F2.44 E14.=5 415.40 441.59 9:99.0< 54.E3 55F9.F1 1052.1F 14E3.== <2;1.3= 0>9;3.;=

31F3.=3 52F.13 19F.10 4=2.EE 93<1.>0 0.39 4F9E.1= 1200.99 13E2.E1 >3:1.2> 03=22.=<

2311.95 354.3= 1=F.25 421.3= 30>9.=: 9.15 3952.EF F29.45 12E0.1E ;=;2.93 2=;3=.>:

4F51.0E 20E.=0 495.54 3EF.94 105F1.50 20=F.4F 29.=5 2<;21.2: 12E1.9E 2419.FF 220=.35 1F=1.41 FE3.40 50=.54

4045.2= 240.F4 5E9.93 224.=0 92F3.5E 14FE.E= 3E.45 53.=2 2;=02.0: 103E.90 235=.39 19==.3E 11==.43 930.99 4F5.0F 12.5=

3001.5F 131.34 534.01 239.EF =205.3E 1=E=.13 11F.02 291=>.21 F20.2F 1E94.21 12E0.31 E14.E4 =3F.94 315.31

<=93.93 0>9;3.;=

>==1.>0 03=22.=<

;990.:< 2=;3=.><

Profit * 7oss -tate

ent
?*%&ees in Crores@

Particu)ars *even%e !ro# o&erations ?3ross@ <ess. ;7cise >%t' *even%e !ro# o&erations ?9et@ Other inco#e Tota) Re%enue 5?!enses$ Cost o! #aterials cons%#ed 4%rchases o! toc05in51rade Chan+es in inventories o! !inished +oods wor05in5&ro+ress and toc05in51rade ;#&lo'ee bene!its e7&ense 6inance costs >e&reciation and a#ortiIation e7&ense Other e7&enses Tota) 5?!ense <ess. Cost o! Man%!act%red 4rod%cts Ca&italiIed Net e?!enses 4ro!it be!ore e7ce&tional and ta7 ;7ce&tional ite#s Profit before ta? 1a7 e7&ense. C%rrent ta7 <ess. M"1 Credit ;ntitle#ent 9et C%rrent 1a7 >e!erred ta7 Tota) Ta? 5?!ense Profit &or The Year ;arnin+s &er e8%it' share. ?1@ )asic ?2@ >il%ted

0123

0120

0122 25555.02 2094.FE 234E0.2E 434.15 03<=9.92

42=F4.E1 34354.51 29F1.49 2500.99 40441.1E 31=53.52 549.1F 4E5.F9 91==1.3 3 3032=.32

20F49.=F 9F52.E= 5=F.31

1==04.52 5292.5= 559F.33

14F0=.94 1F5F.23 5202.23 1431.52 F2.49 413.=E 23E1.34 01;93.2; 50.=F 019=0.0< 3910.23 11F.4= 3;2=.:2

1=EE.45 1F01.F= 191.19 1E2.F5 F10.=1 5FE.14 3533.29 2954.F= 3:>2:.= < 0<<=;.00 =3.12 F3.53 3::33.< : 0<<02.:= 93;:.9> 39=>.:0 90.E2 10=.2F 999>.1= 3:1;.<=

933.21 933.21 1E1.0E 21=9.0> 33;0.<0 5E.=5 54.E1

F03.4F 1E5.23 53=.24 1==.FE >0>.11 0<><.<= 4=.9F 4E.=9

FE1.EF FE1.EF 95.=4 <;>.;2 0::0.21 4E.21 44.33

Co

on -i4e Ba)ance -heet -tate

ent
0123 0120 0122

Particu)ars 56U+TY AND 7+AB+7+T+5-hareho)#ers8 fun#s ?a@ hare ca&ital ?c@ *eserves and s%r&l%s -hare a!!)ication one" !en#in, a))ot Non.current )iabi)ities ?a@ <on+5ter# borrowin+s ?b@ >e!erred ta7 liabilities ?9et@ ?c@ Other <on+ ter# liabilities ?d@ <on+5ter# &rovisions Current )iabi)ities ?a@ hort5ter# borrowin+s ?b@ 1rade &a'ables ?c@ Other c%rrent liabilities ?d@ hort5ter# &rovisions ent

1.0=G 52.32G ;3.91@

1.23G 49.EFG ;1.=1@

1.50G 51.2=G ;0.><@

11.5EG 2.24G 1.51G 1.E1G 2:.=0@ 0.20G 20.32G 3.=3G 5.33G 0=.:=@ 211.11 @

13.2FG 2.20G 0.=2G 2.02G 2<.30@ 0.002G 20.0EG 5.02G 5.F0G 31.><@ 211.11 @

11.=3G 1.=1G 0.9EG 2.1EG 2:.>:@ 0.05G 20.23G 3.F3G E.45G 31.9:@ 211.11 @

TOTA7 A--5TNon.current assets ?a@ 6i7ed assets ?i@1an+ible assets ?ii@$ntan+ible assets ?iii@Ca&ital wor05in5&ro+ress ?iv@$ntan+ible assets %nder develo&#ent ?b@ 9on5c%rrent invest#ents ?c@ <on+5ter# loans and advances ?d@ Other non5c%rrent assets ?+@ 6orei+n C%rrenc' #onetar' $te# 1ranslation >i!!erence "cco%nt Current assets ?a@ C%rrent invest#ents ?b@ $nventories ?c@ 1rade receivables ?d@ Cash and cash e8%ivalents ?e@ hort5ter# loans and advances ?!@ Other c%rrent assets

1F.31G 0.F5G 1.=1G 1.34G 3=.51G F.E0G 0.11G

1E.92G 1.01G 2.3=G 0.94G 3=.F=G E.1=G 0.15G 0.23G

15.3EG 0.EFG 2.F3G 1.23G 41.99G 9.5EG 0.E0G

:>.90@ 4.E0G =.=1G =.04G E.49G 2.F=G 1.=5G

::.;<@ 4.34G 9.=EG =.32G 4.9FG 3.=9G 1.99G

>0.2;@ 3.E9G =.EFG E.45G 3.15G 4.29G 1.E1G

?+@ 6orei+n C%rrenc' #onetar' $te# 1ranslation >i!!erence "cco%nt 30.;<@ 211.11 @

0.05G 33.90@ 211.11 @ 0>.<;@ 211.11 @

TOTA7

Co

on -i4e Profit * 7oss -tate

ent
0120 100.00G F.2=G 92.F2G 1.3EG =9.1<@ 0122 100.00G =.20G 91.=0G 1.F0G =3.;1@

Particu)ars *even%e !ro# o&erations ?3ross@ <ess. ;7cise >%t' *even%e !ro# o&erations ?9et@ Other inco#e Tota) Re%enue 5?!enses$ Cost o! #aterials cons%#ed 4%rchases o! toc05in51rade Chan+es in inventories o! !inished +oods wor05in5&ro+ress and toc05in51rade ;#&lo'ee bene!its e7&ense 6inance costs >e&reciation and a#ortiIation e7&ense Other e7&enses Tota) 5?!ense <ess. Cost o! Man%!act%red 4rod%cts Ca&italiIed Net e?!enses 4ro!it be!ore e7ce&tional and ta7 ;7ce&tional ite#s Profit before ta? 1a7 e7&ense. C%rrent ta7 <ess. M"1 Credit ;ntitle#ent 9et C%rrent 1a7 >e!erred ta7 Profit &or The Year ;arnin+s &er e8%it' share. ?1@ )asic ?2@ >il%ted

0123 100.00G E.93G 94.32G 1.2=G =;.:2@

4=.40G 22.F5G 50.20G 4.35G 0.45G 1.EEG =.24G <;.:9@ 0.19G <;.99@ 10.1EG 0.21G 21.3>@

54.F4G 15.41G 51.F4G 4.95G 0.4FG 1.E=G =.E0G <9.22@ 0.21G <3.<=@ 10.1=G 0.32G 21.;1@

5F.5EG E.==G 50.F9G 5.E0G 0.2=G 1.E2G 9.24G <1.3=@ 0.20G <1.2=@ 13.31G 0.4EG 23.>>@

2.1=G 2.1=G 0.3=G >.<0@ 0.13G 0.13G

2.05G 0.4=G 1.5FG 0.55G <.3<@ 0.14G 0.14G

2.9=G 2.9=G 0.3=G 21.90@ 0.1=G 0.1FG

&inancia) Ratios
5?hibit 2 Profitabi)it"$ Accountin, Mar,in &or u)a 0123 3ross 4ro!itB ales 0.10 O&eratin+ 4ro!itB ales 0.11 9et $nco#eB ales 0.10

Ratio 3ross Mar+in O&eratin+ Mar+in 9et Mar+in

0120 0.10 0.11 0.10

0122 0.13 0.14 0.13

1he &ro!itabilit' inde7 o! the co#&an' has co#e down over the three 'ears o! ti#e s&an. 1he o&eratin+ &ro!it has been decreased #ainl' d%e to slow rate o! increase in o&eratin+ &ro!it as co#&ared to sales. /e can see a dro& in 3ross #ar+in also. $ncrease in cost o! +oods sold has a!!ected this. " Co#&an'J e7&ense has risen b' 2FG whereas &ro!itabilit' has increased b' 25G. o it bro%+ht down the &ro!itabilit' inde7.
5?hibit 0 Asset Mana,e ent Ratio$ O%era)) Ratio 1otal "sset 1%rnover *et%rn on "ssets &or u)a alesB1otal "ssets 9et $nco#eB1otal "ssets 012 3 1.5E 0.1E 012 0 1.44 0.14 012 2 1.31 0.1F

$ncreases in the asset t%rnover ratio over ti#e #a' indicate a co#&an' is K+rowin+ intoK its ca&acit'. (ere co#&an' is +rowin+ as !i7ed assets have increased b' *s.=21 Crore. "lso the non5c%rrent invest#ent has also increased. ales have increased b' 24G, which has increases the overall asset t%rnover ratio.
5?hibit 3 Asset Mana,e ent Ratio$ Ke" Asset Cate,ories 012 Ratio &or u)a 3 6i7ed "sset 1%rnover alesB9et 6i7ed "sset F.3F "cco%nt *eceivable 19.4 1%rnover alesB"cco%nt *eceivables 1 >a's ales in "cco%nt "cco%nts *eceivablesB ales 1=.5 *eceivable &er >a' 4 14.= $nventor' 1%rnover CO3 B$nventor' =

012 0 E.FE 1F.2 = 20.= 3 12.0 1

012 2 E.54 20.2 = 1F.F 5 11.= =

>a's Cost o! ales in $nventories

$nventoriesBCO3 &er >a'

24.1 9

29.9 =

30.3 0

6i7ed asset t%rnover has increased !ro# E.54 to F.3F d%e to increase in sales over the 'ears. Co#&an' had co#e %& with new vehicle #odels which have raised the sales. 1he Mahindra & Mahindra has onl' 1= da's sales in acco%nt receivables. $t has able to collect o%tstandin+ receivables as 8%ic0l' as &ossible. )' 8%ic0l' t%rnin+ sales into cash, a co#&an' has the chance to &%t the cash to %se a+ain 5 ideall', to reinvest and #a0e #ore sales. On the other side the da's cost o! sales in inventor' has decreased. 1his has hel&ed the co#&an' to +ain #ore &ro!it.

5?hibit 9 Debt Mana,e ent Ratio Ratio <on+ 1er# >ebt to 1otal "ssets ;8%it' M%lti&lier &or u)a 01 23 0.1 3 1.= F 01 20 0.1 4 1.9 E 01 22 0.1 3 1.= 9

<on+ 1er# >ebtB1otal "ssets 1otal "ssetsB toc0holders, ;8%it'

;8%it' #%lti&lier o! Mahindra is ver' low which indicated that co#&an' is #ore rel'in+ on its reven%e !or !inancin+ its assets than ta0in+ debt. 1his is 2%sti!ied b' low da's cost o! sales in inventor' and low acco%nt receivables. o co#&an'J overall debt str%ct%re is stron+.
5?hibit ; DuPont Ana)"sis of RO5 Ratio 9et Mar+in 1otal "sset 1%rnover *et%rn on "ssets ?*O"@ "ssets to ;8%it' *et%rn on ;8%it' ?G@ &or u)a 9et $nco#eB ales alesB1otal "ssets 9et Mar+inL1otal "sset 1%rnover 1otal "ssetsB toc0holders, ;8%it' 9et $nco#eB toc0holder, ;8%it' 012 3 0.10 1.5E 0.1E 1.=F 29.1 5 012 0 0.10 1.44 0.14 1.9E 2=.1 3 012 2 0.13 1.31 0.1F 1.=9 32.4 9

>ecrease in ret%rn on e8%it' is d%e to increase in stoc0holdersJ ;8%it' at hi+her rate than net inco#e o! the co#&an'.

-u

ar"

"ccordin+ to the directorJs re&ort, Co#&an' will contin%es its e!!orts on develo&in+ new &rod%cts and technolo+ies to #eet the ever +rowin+

c%sto#er needs, re+%lator' re8%ire#ents, co#&etitive &ress%res and to &re&are !or the !%t%re. <oo0in+ at the +rowth, innovation and e7&ansion o! the co#&an', Mahindra & Mahindra is de!initel' a co#&an' !or lon+ ter# invest#ent. )%t co#&an'J sales is hi+hl' de&endent on the #onsoon. "lso the increasin+ diesel &rices and additional d%ties are #a0in+ an adversel' i#&act. o the !%t%re o! the co#&an' is bit %n&redictable.