EXECUTIVE SUMMARY

The project revolves around Business Analysis of Maruti Suzuki.

Business analysis is the set of tasks and techniques used to understand the structure, policies,
and operations of an organization, and to recommend solutions that enable the organization to
achieve its goals.

The project also involves fundamental analysis of financial statements. It involves looking at
revenue, expenses, assets, liabilities and all the other financial aspects of a company.
Fundamental analyst looks at this information to gain insight on a companys future
performance.

Indias largest automobile vehicle maker Maruti Suzuki India Limited, leader in passenger
vehicles, sold a total of 130,280 units in February 2017. This includes 120,735 units in
domestic market and 9545 units of exports.The Indian passenger vehicle industry, has
recorded a year-on-year sales decline of 4.4% in December 2016 with 106,414 units going
home to new car buyers . What is worrying for Maruti is that the bread-and-butter duo of the
Alto and Wagon R, which sold 31,527 units in December 2016, down a sizeable 15% YoY, is
bearing the brunt of the cash crunch, which has come about after the government initiated the
demonetisation exercise on November 8, 2016. Maruti Suzuki India has sold a total of
971,958 units, which is a 9.3% YoY growth. The company had recorded toal cumulative
domestic sales of 1,305,351 units in FY2015-16. The sales target for FY2016-17 is around
10% growth, which translates to 1,435,886 units. Hence an attempt is made to analyze the
business of Maruti Suzuki.

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 CHAPTER 1:ABOUT AUTOMOBILE INDUSTRY

1.1Introduction to the sector/industry

The Indian auto industry is one of the largest in the world. The industry accounts for 7.1 per
cent of the country's Gross Domestic Product (GDP). The Two Wheelers segment with 81 per
cent market share is the leader of the Indian Automobile market owing to a growing middle
class and a young population. Moreover, the growing interest of the companies in exploring
the rural markets further aided the growth of the sector. The overall Passenger Vehicle (PV)
segment has 13 per cent market share.
India is also a prominent auto exporter and has strong export growth expectations for the near
future. In April-March 2016, overall automobile exports grew by 1.91 per cent. PV,
Commercial Vehicles (CV), and Two Wheelers (2W) registered a growth of 5.24 per cent,
16.97 per cent, and 0.97 per cent respectively in April-March 2016 over April-March 2015.*
In addition, several initiatives by the Government of India and the major automobile players
in the Indian market are expected to make India a leader in the 2W and Four Wheeler (4W)
market in the world by 2020.

Market Size
The sales of PVs, CVs and 2Ws grew by 9.17 per cent, 3.03 per cent and 8.29 per cent
respectively, during the period April-January 2017.

Investments
In order to keep up with the growing demand, several auto makers have started investing
heavily in various segments of the industry during the last few months. The industry has
attracted Foreign Direct Investment (FDI) worth US$ 15.79 billion during the period April
2000 to September 2016, according to data released by Department of Industrial Policy and
Promotion (DIPP).
Some of the major investments and developments in the automobile sector in India are as
follows:

2
 Electric car maker Tesla Inc. is likely to introduce its products in India sometime in
the summer of 2017.
South Koreas Kia Motors Corp is close to finalising a site for its first factory in India,
slated to attract US$1 billion (Rs 6,700 crore) of investment. It is deciding between
Andhra Pradesh and Maharashtra. The target for operationalising the factory is the end
of 2018 or early 2019.
Several automobile manufacturers, from global majors such as Audi to Indian
companies such as Maruti Suzuki and Mahindra & Mahindra, are exploring the
possibilities of introducing driverless self-driven cars for India.
BMW plans to manufacture a local version of below-500 CC motorcycle, the G310R,
in TVS Motors Hosur plant in Tamil Nadu, for Indian markets.
Honda Motorcycle and Scooter India (HMSI) has inaugurated its 900th Honda
Authorised Exclusive Dealership in India, thereby taking its total dealership network
to 4,800 across the country and further plans to increase its network to 5,300 by end of
2016-17.
Hero MotoCorp Ltd seeks to enhance its participation in the Indian electric vehicle
(EV) space by pursuing its internal EV Programme in addition to investing Rs 205
crore (US$ 30.75 million) to acquire around 26-30 per cent stake in Bengaluru-based
technology start-up Ather Energy Pvt Ltd.
JustRide, a self-drive car rental firm, has raised US$ 3 million in a bridge round of
funding led by a group of global investors and a trio of Y Combinator partners, which
will be utilised to amplify JustRides car sharing platform JustConnect and Yabber, an
internet of things (IoT) device for cars that is based on the companys smart vehicle
technology (SVT).
Ford Motor Co. plans to invest Rs 1,300 crore (US$ 195 million) to build a global
technology and business centre in Chennai, which will be designed as a hub for
product development, mobility solutions and business services for India and other
markets.
Cummins has plans to make India an export hub for the world, by investing in top
components and technologies in India.
Suzuki Motor Corporation, the Japan-based automobile manufacturer, plans to invest
Rs 2,600 crore (US$ 390 million) for setting up its second assembly plant in India and
an engine and transmission unit in Mehsana, Gujarat.

3
 Mr Masayoshi Son, Chief Executive Officer, SoftBank Group, has stated that Ola
Cabs may introduce a fleet of one million electric cars in partnership with an electric
vehicle maker and the Government of India, which could help reduce pollution and
thereby transform the electric mobility sector in the country.
Chinas biggest automobile manufacturer, SAIC Motor, plans to invest US$ 1 billion
in India by 2018, and is exploring possibilities to set up manufacturing unit in one of
three states Maharashtra, Andhra Pradesh and Tamil Nadu.
Suzuki Motorcycle India Pvt Ltd has started exports of made-in-India flagship bike
Gixxer to its home country of Japan, which will be in addition to current exports to
countries in Latin America and surrounding countries.
General Motors plans to invest US$ 1 billion in India by 2020, mainly to increase the
capacity at the Talegaon plant in Maharashtra from 130,000 units a year to 220,000 by
2025.
FIAT Chrysler Automobiles has recently invested US$280 million in its Ranjangaon
plant to locally manufacture Jeep Compass, its new compact SUV which will be
launched in India in August 2017.

Government Initiatives
The Government of India encourages foreign investment in the automobile sector and allows
100 per cent FDI under the automatic route.
Some of the major initiatives taken by the Government of India are:

The Government of India plans to introduce a new Green Urban Transport Scheme
with a central assistance of about Rs 25,000 crore (US$ 3.75 billion), aimed at
boosting the growth of urban transport along low carbon path for substantial reduction
in pollution, and providing a framework for funding urban mobility projects at

4
 National, State and City level with minimum recourse to budgetary support by
encouraging innovative financing of projects.
Government of India aims to make automobiles manufacturing the main driver of
Make in India initiative, as it expects passenger vehicles market to triple to 9.4
million units by 2026, as highlighted in the Auto Mission Plan (AMP) 2016-26.
The Government plans to promote eco-friendly cars in the country i.e. CNG based
vehicle, hybrid vehicle, and electric vehicle and also made mandatory of 5 per cent
ethanol blending in petrol.
The government has formulated a Scheme for Faster Adoption and Manufacturing of
Electric and Hybrid Vehicles in India, under the National Electric Mobility Mission
2020 to encourage the progressive induction of reliable, affordable and efficient
electric and hybrid vehicles in the country.

Road Ahead
Indias automotive industry is one of the most competitive in the world. It does not cover 100
per cent of technology or components required to make a car but it is giving a good 97 per
cent, as highlighted by Mr Vicent Cobee, Corporate Vice-President, Nissan Motors Datsun.
Leading auto maker Maruti Suzuki expects Indian passenger car market to reach four million
units by 2020, up from 1.97 million units in 2014-15.
Mr Young Key Koo, Managing Director, Hyundai Motor India Ltd, has stated that India is a
key market for the company, not only in terms of volumes but also as a hub of small products
for exports to 92 countries.
Mr Joachim Drees, Global CEO, MAN Trucks & Bus AG, has stated that India has the
potential to be among the top five markets, outside of Europe, by 2020 for the company,
which is reflected in the appointment of its most experienced managers to India for increasing
volumes and exports out of India.
The Indian automotive aftermarket is estimated to grow at around 10-15 per cent to reach
US$ 16.5 billion by 2021 from around US$ 7 billion in 2016. It has the potential to generate
up to US$ 300 billion in annual revenue by 2026, create 65 million additional jobs and
contribute over 12 per cent to Indias Gross Domestic Product#.
According to Mr Guillaume Sicard, president, Nissan India Operations, the income tax rate
cut from 10 per cent to 5 per cent for individual tax payers earning under Rs 5 lakh (US$
7,472) per annum will create a positive sentiment among likely first time buyers for entry
level and small cars.

5
1.2 Performance of the sector
Majority of the auto companies reported a positive growth in sales in the month of October
2016. The October sales performance of the automobile manufacturers has been in the line
with the stellar growth of last few months which was driven by low cost of ownership, pay
out of the 7th Pay Commission as well as normal monsoon after two consecutive deficient
years of rainfall.

Seeing the ongoing demand, ICRA, a leading research firm has revised upward its domestic
passenger vehicle growth outlook for FY2017 from 8.5-9.5% earlier to 10-12% range for
FY2017, in the backdrop of better than expected ramp-up in demand momentum.

The FY2017 performance will also benefit from the lower base of FY2016, as a majority of
successful launches happened during FY2016 and hence didnt contribute to the full-year
volume. Given the low penetration levels in the country, the long-term prospects of
the industry remain favorable. ICRA expects domestic PV sales growth to accelerate to 10-
12% during FY2017 and maintains a 9-10% CAGR estimate over the next five fiscals.

"Passenger cars and two wheelers sales continue to grow. This is backed by positive customer
sentiments and better in hand cash flows to support their discretionary spends. Overall we
should see good growth this year in all the vehicle categories. Medium and heavy commercial
vehicles will bounce back once demand for freight movement picks up," said Abdul Majeed,
Partner - PriceWaterhouse.

Passenger Vehicle

Maruti Suzuki: India's leading passenger vehicle manufacturer today reported an increase in
domestic sales by 2.2% in the month of October 2016. The carmaker sold 123764 units in last
month as compared to 121063 units in the corresponding month last year.

Hyundai: South Korean car manufacturer, Hyundai Motor India Ltd registered highest-ever
domestic sales of 50,016 units and exports of 14,356 units with record cumulative sales of
64,372 units for the month of October 2016.

Volkswagen: German car manufacturer registered 70% growth in domestic sales in the
month of October 2016. The carmaker sold 5534 units as compared to 3255 units sold in the
corresponding month of the previous year.

Tata Motors - Passenger Vehicles: In October 2016, Tata Motors passenger vehicles, in the
domestic market, recorded highest sales in the last four years at 16,311 units, with a growth of
28% compared to 12,747 units sold in October 2015.

Toyota Kirloskar Motor: The carmaker today reported that it sold a total of 11,651 units in

6
the domestic market. The company also exported 974 units of the Etios series in October
clocking a total of 12,625 units. Toyota Kirloskar Motor had sold 12,403 units in the
domestic market and exported 1,198 units of Etios series in October 2015.

Renault: The French carmaker registered the monthly domestic sales of 12,409 units in
October 2016 as against 7,396 units in the corresponding month last year, thereby registering
a growth of 67.8%. The automaker has crossed the 1 lakh sales mark with cumulative sales of
1,11,387 units for the period Jan-Oct 2016. The company sold 35,736 units in the
corresponding period last year, thereby posting a growth of 211.7%.

Honda Cars India: Japanese carmaker Honda reported 22.8 per cent decline in domestic
sales at 15,567 units in October this year.
The company had sold 20,166 units in the same month of last year, the automaker said in a
statement. The carmaker sold 535 units of Brio, 3,011 units of Jazz, 4,009 units of Amaze,
6,378 units of City, 498 units of Mobilio, 1,070 units of BR-V, 41 units of CR-V, and 25
units of recently launched Accord Hybrid.

Ford: The company's October domestic wholesales stood at 7,508 vehicles against 10,008
vehicles in the same month last year, while exports grew to 14,535 vehicles compared to
10,412 units in October 2015. While, its domestic sales were down by 25 percent, exports
grew by 40 percent. The company's combined domestic wholesales and exports grew to
22,043 vehicles in October in comparison to 20,420 vehicles in October 2015.

Mahindra & Mahindra: Indian automotive manufacturer M&M sold 48,729 units in the
domestic market in October 2016 as against 48,815 units during same month last year. Its
exports grew by 28 percent and stood at 3,279 units. The company sold 24,737 passenger
vehicles and 23,399 utility vehicles in October 2016, thereby representing 3 percent growth in
each segments. However, Mahindra commercial vehicles witnessed de-growth of 4 percent
and sold 18,059 units.

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 ABOUT MARUTI SUZUKI

1.3Introduction to the Company

Maruti Suzuki started out in 1982 in Gurgaon, Haryana. Little did the then quiet suburb of
New Delhi know, that it was going to become the epicenter of the automobile revolution in
India. The year marked the birth of the Maruti Suzuki factory. India turned out 40,000 cars
every year. The new Maruti Suzuki 800 hit the streets to begin a whole new chapter in the
Indian automobile industry.
Maruti Suzuki set out with an obsession for customer delight, one that was unheard in the
corridors of automobile manufacturers then. It was about a commitment to create value
through innovation, quality, creativity, partnerships, openness and learning. It created a road
that was going to lead the world in to a whole new direction, laid out by Maruti Suzuki.
Today, Maruti Suzuki alone makes 1.5 million Maruti Suzuki family cars every year. Thats
one car every 12 seconds. It drove up head and shoulders above every major global auto
company. Yet the story was not just about making a mark. It was about revolutionary cars
that delivered great performance, efficiency and environment friendliness with low cost of
ownership. Thats what we call true value. It built our story with a belief in small cars for a
big future. The story encouraged millions of Indians to make driving a way of life. India
stepped up with our vision to take on the fast lane. A comradeship had begun. Something
incredible had begun.
So, what drives Maruti Suzuki? Millions of Indians whove put their faith in us. A team of
over 13200 dedicated and passionate professionals that turned out 15 car models with over
150 variants. The drive is backed up by a nationwide service network spanning over 1500
cities and towns and a sales network that spreads across 1471 cities, 2 state of art factories,
which together turn out 15 lakh cars annually. And a commitment to make Indian roads safer
through a network of training infrastructure that imparts driving skills.
Finally, the inspiration comes from one place Indias hopes, dreams and aspirations. The
Maruti Suzuki journey has been nothing less than spectacular. But to be honest, It only just
begun.

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HISTORY OF MARUTI SUZUKI

In 1981, when there were basically only 2 car models running on the Indian roads
:Ambassador and premier Padmini, a fledgeling company was setup that had a stake from the
Indian government and a small Japanese manufacturer in those days. With the setting up of
this indigeneous company gave the birth to the Automobile revolution in India. The company
that made history year after year since its first model known as the 800, Maruti has defined
the modern Indian automotive industry.

The History: Maruti company named after the son of Hanuman- Marut- the GOD of the
Wind, has truly created a sandstorm in the Indian Automotive world after its inception in
1981. Initially supported by late Sanjay Gandhi, son of the late Prime minister, Indira Gandhi
and borrowing the Japanese technology from its parent Suzuki motors ,Maruti Udyog started
manufacturing cars from 1983, Since then Maruti has overtook every rival and has been the
leader of the car manufacturing in India in terms of production, revenues and profits

With over 15 models ranging from the Grand Vitara Brezza to the new models such as the
Baleno RS,Ciaz and the Swift series, Maruti continues its unimaginable dominance in the
indian subcontinent. In 2007 , the Suzuki motor corporation increased its stake in the share
holdings and Maruti udyog was renamed as Maruti Suzuki. Suzuki motors being a global
leader in manufacturing compact cars at one time was actually manufacturing lesser cars than
the Maruti Suzuki itself. As of now Maruti Suzuki remains a subsidiary of the Suzuki motor
corporation from 2007 onwards and the government of India doesnt have any stake .

With its largest plant in Gurgaon (Haryana) ,followed by Manesar , Maruti produces the
largest number of cars in a year .

Maruti Suzuki Nexa (stylized as NEXA) is an automotive sales network of Maruti

Suzuki. Nexa was launched in July 2015 and the company claims it offers a "premium
experience". The Nexa showrooms have a separate range of cars from those available from
the main Maruti Suzuki dealerships.

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Vision and Values of Maruti Suzuki

Customer Obsession

Fast First and Flexible mover

Innovation and creativity

Networking and partnership

Maruti Suzuki Global Reach

Maruti Suzuki exports cars to over 125 countries. Among them are the highly competitive and
mature European auto markets like the Netherlands, Germany, France, Italy and UK- a
testament to our product quality and manufacturing capabilities maintained across all Maruti
Suzuki cars. The industry has acknowledged our efforts in building and sustaining new
international markets with the Business World International Business Awards 2012, in the
Exports (Auto & Engineering) Category. Such consistent performance and its recognition by
the industry, has always kept Maruti Suzuki in news.

Maruti Suzuki Leaders

Mr. R. C. Bhargava- Chairman

Mr. Kenichi Ayukawa- Managing Director & CEO

Mr. Toshiaki Hasuike- Director

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1.4 Introduction to the project

Maruti Suzuki is one the major player in the Automobile industry in India, conducting
business and financial analysis for Maruti Suzuki Ind Limited is found importance at this
juncture.

Business analysis:

Business analysis of Maruti Suzuki is being done by BCG matrix & Porters Five Force
model.

Fundamental Analysis:

The role of financial reporting by companies is to provide information about their

performance, financial position and changes in the financial position that is useful to a wide
range of users in making economic decisions. The role of financial statement analysis is to
take financial reports prepared by companies, combined with other information, to evaluate
the past, current and prospective performance and financial position of a company for the
purpose of making investment, credit and other economic decisions.

11
 Chapter 2

Project Details

2.1 Objective

The contribution of Maruti Suzuki in the growth of the automobile industry is very high.
Hence an attempt is made to analyze the business of Maruti Suzuki.

The following were the objective to analyze the business of Maruti Suzuki:

1. To understand strategic business strength of the Maruti Suzuki Ltd

2. To understand the financial strength of Maruti Suzuki Ltd:

Profitability position of Maruti Suzuki

Returns of the company

Cash Position of the company

Liquidity position of the company

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2.2 Literature Review

Business analysis is about understanding how your organization functions to fulfill its
purposes. It entails defining the abilities the firm needs to provide products to the external
stakeholders. Maruti Suzuki have to understand how the organizational goals connect to
specific objectives. It also have to make a detailed plan to help achieve the goals and
objectives. In business analysis, you will define how the stakeholders and different
organizational units interact.

Business analysis needs to be conducted to get an overview of the current state of the
company. It is used to identify the business needs too. Most often, the analysis is performed
to state and confirm solutions which meet business needs or goals.

It is the Business analysts task to analyze and synthesize information provided by the
immense group of people who interact with the firm. Customers, executives, staff and IT
professionals send this information. The analysts do not only focus on the expressed desires
but elicit the actual needs of stakeholders. The analyst facilitates communication between
organizational units sometimes.

Fundamental analysis is the process of reviewing and evaluating a company's financial

statements (such as the balance sheet or profit and loss statement), thereby gaining an
understanding of the financial health of the company and enabling more effective decision
making. Financial statements record financial data; however, this information must be
evaluated through financial statement analysis to become more useful to investors,
shareholders, managers and other interested parties.

Ratio Analysis is a form of Financial Statement Analysis that is used to obtain a quick
indication of a firm's financial performance in several key areas. The ratios are categorized as
Short-term Solvency Ratios, Debt Management Ratios, Asset Management Ratios,
Profitability Ratios, and Market Value Ratios.

13
2.3 Methodology

The entire project is broadly into:

Business Analysis:

Business Analysis of the company using BCG matrix & Porters Five Force model.

Fundamental Analysis:

The role of fundamental analysis is to take financial reports prepared by companies,

combined with other information, to evaluate the past, current and prospective performance
and financial position of a company for the purpose of making investment, credit and other
economic decisions.

The historical data us of last 5 years from 2012 to 2016 and then ratio analysis is formulated
for those 5 years. Based on the analysis thee investor can make their decision accordingly.

14
2.4 Limitation of the project

The limitation of the Business & Financial analysis was:

1. The data that were used for the analysis were both historical and secondary

2. The projection was not made, only analysis was done based on the financial statements.

It is important to know that financial statement analysis has limits; simply manipulating
numbers hides the actual size of the company. Quantitative financial analysis is an art, and
different analyst may get slightly different results from the same information, or may return
different data about the same business.

15
 Chapter 3
Analysis & Findings

3.1 About the Company

The country's largest carmaker, Maruti Suzuki India, registered a cumulative growth of
10.9 per cent in January 2017 with total sales accounting for 130280 units. In
comparison, the company sold 117451 vehicles during the same month in 2016. Sales
in the domestic market, on the other hand, were far better as the company saw a growth
of 11.7 per cent. The company sold 120735 in India in the month of February 2017,
compared to the 108115 units sold in February 2016.

As for the exports, the company registered a growth of 2.2 per cent by selling 95 45
vehicles last month compared to the 9336 units exported in February 2016 .

Maruti Suzuki Sales Feb 2017 Feb 2016 Growth/Decline

Domestic Sales 120735 108115 11.7%
Exports 9545 9336 2.2%
Total Sales 130280 117451 10.9%
Source:Maruti Suzuki annual report

Maruti Suzuki dominates sales chart in February 2017 too. Its market share grew from 46.7%
in December 2016 to 49.4% in February 2017

Source:Maruti Suzuki annual report

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 SALES VOLUME OF MARUTI SUZUKI

Q3 FY17 Q3 FY16
Market % to Total Numbe Growth
Number sales r % to Total sales

Domestic 356,503 92.1% 342,995 91.7% 3.9%

Exports 30,748 7.9% 31,187 8.3% (1.4)%

Total Sales 387,251 100% 374,182 100% 3.5%

Q3 FY17 Q3 FY16
Numbe
Segments Number % to Domestic r % to Domestic Growth
sales sales

Mini 104,342 29.3% 110,810 32.3% (5.8)%

Compact 142,842 40.1% 143,028 41.7% (0.1)%

Super Compact 8,057 2.3% 10,395 3.0% (22.5)%

Mid Size 15,504 4.3% 14,240 4.2% 8.9%

Vans 34,252 9.6% 37,231 10.9% (8.0)%

UVs 51,295 14.4% 27,291 8.0% 88.0%

LCV 211 0.1% - - -

Domestic 356,503 100% 342,995 100% 3.9%

Source:Maruti Suzuki annual report

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 BCG Matrix for Maruti Suzuki

BCG Matrix for MSIL Maruti Suzuki, one of Indias leading automobile manufacturer and
the market leader in the car segment, both in terms of volume of vehicles sold and revenue
earned.
STAR: The Company has long run opportunity for growth and profitability. They have high
relative market share and high growth rate. Swift,Swift desire,Baleno,Ciaz is the fast growing
and has potential to gain substantial profit in the market.
QUESTION MARK: These are also called as wild cats that are new products with potential
for success but there cash needs are high and cash generation is low. Maruti Sx4, Vitara
Brezza, Ritz fall in the category of question mark
CASH COW: It has high relative market share but compete in low growth rate as they
generate cash in excess of their needs. Eco and Wagon R have fallen to ladder 3 & 4 due to
introduction of Alto800 and Celerio.
DOG: The dogs have no market share and do not have potential to bring in much cash.
Business of SX4 and OMINI has liquidated and trim down.

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 PORTERS FIVE FORCES MODEL

Michael Porter identified 5 forces that determined the long run attractiveness of a
business.We would analyze Porters five forces in context of the Maruti Suzuki.

a) Threat of New Entrants: Increasing Although most of the major global players are
present in the Indian market; few more are expected to enter due to the welcoming
government policies and expected retaliation.

b) Threat of Substitutes: Low to Medium Maruti Suzuki faces serious threat from
consumer shifting to hybrid or electric cars. Currently, the electric car market in India
is dominated by sole player Reva Electric Car Company. However brands like Tata
Motors, Chevrolet and Nissan are also planning to launch their electric car this year.

c) Bargaining power of Supplier: Low Automakers are the key to the supply chain
of the automotive industry. Maruti Suzuki has manufacturing units where engines are
manufactured and parts supplied by first tier suppliers and second tier suppliers are
assembled. There are a large number of automobile component suppliers whose
switching costs are very high. Thus reducing the bargaining power of the suppliers

d) Bargaining power of buyers: Increasing Today, consumers are considered kings

in the automobile market. There is an increasing awareness among them and they are
given a humongous number of choices. Buyers get incentives in the form of cost
discounts and better after sales services. This further increases the bargaining power
of the buyers.

e) Competitive Rivalry: High Competition in certain segments is very high e.g.,

small and mid-car segment. Brands like Hyundai, Chevrolet, Tata and Skoda have
given huge competition to Maruti Suzuki. In the recent past Volkswagen, Honda, Ford
has also given competition to the premium car segment.

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 Financial Analysis

Financial Analysis is the process of evaluating business, projects, budgets and other finance
related entities to determine their suitability for investment.

Financial Analysis often compare Financial Ratios:

Past performance

Future performance

Comparative performance

The three basic elements of the Financial Analysis are:

Balance Sheet

Income Statement

Cash Flow

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 FINANCIALS OF MARUTI SUZUKI
BALANCE SHEET

FINANCE - BALANCE SHEET - Maruti Suzuki India Ltd (Curr: Rs in Cr.) As on 21/03/2017
COMPANY/FINANCE/BALANCE SHEET/5496/Maruti SuzukiCmbDetail0CmbCommonsize0
2016 2015 2014 2013 2012
SOURCES OF FUNDS :
Share Capital 151 151 151 151 144.5
Reserves Total 26856.1 23553.2 20827 18427.9 15042.9
Equity Share Warrants 0 0 0 0 0
Equity Application Money 0 0 0 0 0
Total Shareholders Funds 27007.1 23704.2 20978 18578.9 15187.4
Secured Loans 0 0 1363.5 0 0
Unsecured Loans 230.9 515.6 460.4 1389.2 1236.9
Total Debt 230.9 515.6 1823.9 1389.2 1236.9
Other Liabilities 424.4 398 436.6 476.2 265.9

Total Liabilities 27662.4 24617.8 23238.5 20444.3 16690.2

APPLICATION OF FUNDS :
Gross Block 29409.2 26461.7 22701.8 19800.7 14734.7
Less : Accumulated Depreciation 16641.4 14202.4 11911.4 10001.5 7214
Less:Impairment of Assets 0 0 0 0 0
Net Block 12767.8 12259.3 10790.4 9799.2 7520.7
Lease Adjustment 0 0 0 0 0
Capital Work in Progress 1006.9 1882.8 2621.4 1940.9 941.9
Producing Properties 0 0 0 0 0
Investments 17785.7 12814 10117.9 7078.3 6147.4
Current Assets, Loans & Advances
Inventories 3132.1 2685.9 1705.9 1840.7 1796.5
Sundry Debtors 1298.6 1069.8 1413.7 1469.9 937.6
Cash and Bank 39.1 18.3 629.7 775 2436.1
Loans and Advances 1806.7 1425.8 1629 1655.6 1154.7
Total Current Assets 6276.5 5199.8 5378.3 5741.2 6324.9
Less : Current Liabilities and Provisions
Current Liabilities 9224.6 7090.1 6096.9 5233 4780.5
Provisions 1834.5 1360.4 677.7 648.2 529.2
Total Current Liabilities 11059.1 8450.5 6774.6 5881.2 5309.7
Net Current Assets -4782.6 -3250.7 -1396.3 -140 1015.2
Miscellaneous Expenses not written off 0 0 0 0 0
Deferred Tax Assets 151.3 106.2 104.7 78.3 82.5
Deferred Tax Liability 625.4 587.2 691.3 487 384.8
Net Deferred Tax -474.1 -481 -586.6 -408.7 -302.3
Other Assets 1358.7 1393.4 1691.7 2174.6 1367.3

Total Assets 27662.4 24617.8 23238.5 20444.3 16690.2

Source:capital line

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 PROFIT AND LOSS

FINANCE - PROFIT AND LOSS - Maruti Suzuki India Ltd (Curr: Rs in Cr.) As on
21/03/2017
COMPANY/FINANCE/PROFIT AND LOSS/5496/Maruti
SuzukiCmbDetail0CmbCommonsize0CmbAnnual0
2016 2015 2014 2013 2012
INCOME :
Sales Turnover 65262.8 55133.6 48824.3 49090 39495.3
Excise Duty 7516.5 5163 5178 5502.1 3908.2
Net Sales 57746.3 49970.6 43646.3 43587.9 35587.1
Other Income 461.9 831.6 731.7 812.4 826.8
Stock Adjustments -6.9 455.9 -18.5 -23.4 129.7

Total Income 58201.3 51258.1 44359.5 44376.9 36543.6

EXPENDITURE :
Raw Materials 38833.3 35533 31330.3 32535.6 28238
Power & Fuel Cost 692.6 712.3 594.1 493.7 229.5
Employee Cost 1988.7 1606.6 1368.1 1069.6 801.3
Other Manufacturing Expenses 426.9 304.1 312.3 335.5 181.5
Selling and Administration Expenses 5371.5 4315 3701.2 3776.7 2906.2
Miscellaneous Expenses 1447.9 1242.6 1134.7 1167.6 890
Less: Pre-operative Expenses Capitalised 0 0 0 43.8 42.7

Total Expenditure 48760.9 43713.6 38440.7 39334.9 33203.8

Operating Profit 9440.4 7544.5 5918.8 5042 3339.8

Interest 81.5 206 175.9 189.8 55.2
Gross Profit 9358.9 7338.5 5742.9 4852.2 3284.6
Depreciation 2823.9 2470.3 2084.4 1861.2 1138.4
Profit Before Tax 6535 4868.2 3658.5 2991 2146.2
Tax 2041.4 1232.2 747.9 632.4 413.8
Fringe Benefit tax 0 0 0 0 0
Deferred Tax -77.8 -75.2 127.6 -33.5 97.2
Reported Net Profit 4571.4 3711.2 2783 2392.1 1635.2
Extraordinary Items 113.82 467.83 331.21 285.89 174.09
Adjusted Net Profit 4457.58 3243.37 2451.79 2106.21 1461.11
Source:capital line

22
 CASH FLOW STATEMENT

FINANCE - CASH FLOW - Maruti Suzuki India Ltd (Curr: Rs in Cr.) As on 21/03/2017

COMPANY/FINANCE/CASH FLOW/5496/Maruti SuzukiCmbDetail0

2016 2015 2014 2013 2012

Cash Flow Summary

Cash and Cash Equivalents at Beginning of the

year 18.3 69.7 124.9 176.1 95.5

Net Cash from Operating Activities 8433.1 6320.7 4903.6 4301.1 2559.9

- - -
Net Cash Used in Investing Activities -7175.9 -4410 4892.9 3385.9 3095.8

-
Net Cash Used in Financing Activities -1236.4 1962.1 -65.9 -966.3 616.5

Net Inc/(Dec) in Cash and Cash Equivalent 20.8 -51.4 -55.2 -51.1 80.6

Cash and Cash Equivalents at End of the year 39.1 18.3 69.7 125 176.1
Source:capital line

23
RATIO ANALYSIS

Ratio Analysis is a form of Financial Statement Analysis that is used to obtain a quick
indication of a firm's financial performance in several key areas. The ratios are categorized as
Short-term Solvency Ratios, Debt Management Ratios, Asset Management Ratios,
Profitability Ratios, and Market Value Ratios.

Ratio Analysis as a tool possesses several important features. The data, which are provided by
financial statements, are readily available. The computation of ratios facilitates the
comparison of firms which differ in size. Ratios can be used to compare a firm's financial
performance with industry averages. In addition, ratios can be used in a form of trend analysis
to identify areas where performance has improved or deteriorated over time.

Financial Ratios 2016 2015 2014 2013 2012

I. Liquidity Ratio

Current Ratio 0.63 0.93 1.76 1.63 1.69

Quick Ratio 0.36 0.63 1.54 1.35 1.42

II. Profitability Ratio

Return on Equity 16.92 15.65 13.26 12.87 10.76

Return on Asset 11.66 11.06 9.11 8.94 7.33

Net profit margin 7.91 7.42 6.36 5.48 4.59

III. Debt Ratio

Debt Equity Ratio 0.00 0.01 0.08 0.07 0.07

IV. Turnover Ratio

Asset Turnover Ratio 147.32 148.93 143.11 163.04 159.56

Inventory Turnover Ratio (Times) 18.44 19.11 25.62 23.68 19.81

Retention ratio(%) 76.87 79.65 86.97 89.89 86.74

Source:capital line

24
I. LIQUIDITY RATIO:

Current Ratio:

The current ratio is a financial ratio that measures whether or not a firm has enough
resources to pay its debts over the next 12 months. It compares a firm's current assets to
its current liabilities. Higher the current ratio, the greater is the short-term solvency. The
general norm of current ratio in India is 1.33 and internationally it is 2.

current ratio
2

1.5

1 current ratio

0.5

0
2012 2013 2014 2015 2016

Source:capital line

The current ratio of Maruti Suzuki has increased in 2014 and decreased till 2016.

QUICK RATIO
2

1.5

1 QUICK RATIO

0.5

0
2012 2013 2014 2015 2016

Source:capital line

The quick ratio is a measure of how well a company can meet its short-term financial
liabilities. Also known as the acid-test ratio

25
Return on Equity

Return on equity (ROE) is the amount of net income returned as a percentage

of shareholders equity. Return on equity measures a corporation's profitability by
revealing how much profit a company generates with the money shareholders have
invested.

RETURN ON EQUITY
20

15

10 RETURN ON EQUITY

0
2012 2013 2014 2015 2016

Source:capital line

The returns available to equity shareholders has been increasing from 2012 to 2016

RETURN ON ASSET
12
10
8
6 RETURN ON ASSET
4
2
0
2012 2013 2014 2015 2016

Source:capital line

The ROA of the company is showing a increasing rapidly from 2012 to2016.. This states that
the company has taken effective steps to use its assets efficiently to improve the earnings of
the company

26
Net Profit Margin

Net profit ratio is a popular profitability ratio that shows relationship between net profit after
tax and net sales. It is computed by dividing the net profit (after tax) by net sales.The net
profit margin of Maruti suzuki has been increasing year on year due to the increase in sales.

NET PROFIT MARGIN

8

4 NET PROFIT MARGIN

0
2012 2013 2014 2015 2016

Source:capital line

Debt Equity Ratio

Debt/Equity Ratio is a debt ratio used to measure a company's financial leverage, calculated
by dividing a company's total liabilities by its stockholders' equity. The D/E ratio indicates
how much debt a company is using to finance its assets relative to the amount of value
represented in shareholders' equity.

DEBT EQUITY RATIO

0.08

0.06

0.04 DEBT EQUITY RATIO

0.02

0
2012 2013 2014 2015 2016

Source:capital line

27
Inventory Turnover Ratio

Inventory turnover is an efficiency ratio which calculates the number of times per period a
business sells and replaces its entire batch of inventories. It is the ratio of cost of goods sold
by a business during an accounting period to the average inventories of the business during
the period.

INVENTORY TURNOVER RATIO

30
25
20
15 INVENTORY
TURNOVER RATIO
10
5
0
2012 2013 2014 2015 2016

Source:capital line

Retention Ratio

The retention ratio refers to the percentage of net income that is retained to grow the
business, rather than being paid out as dividends. It is the opposite of the payoutratio, which
measures the percentage of earnings paid out to shareholders as dividends.

RETENTION RATIO
90

85

80 RETENTION RATIO

75

70
2012 2013 2014 2015 2016

Source:capital line

28
Asset Turnover Ratio

Asset turnover ratio is the ratio of a company's sales to its assets. It is an efficiency ratio
which tells how successfully the company is using its assets to generate revenue.The asset
turnover ratio was increasing till 2013 and then decreased in 2014.Maruti Suzuki should use
its assets efficiently to generate revenue.

ASSET TURNOVER RATIO

165
160
155
150
ASSET TURNOVERT RATIO
145
140
135
130
2012 2013 2014 2015 2016

Source:capital line

29
 Chapter 4
Conclusions
4.1 Conclusions

From the project, knowledge of auto sector its business and financial position of the
company can be gained. Fundamental analysis helped in learning about the financial health of
the company.

Following are some suggestions to increase the profitability of the company:

1. Improve the Liquidity position:

The liquidity position of the company is not good due to less non-cash current assets when
compared to current liabilities. Thats the reason for the company to take necessary steps to
improve the asset position of the company.

2. Repay the Debts:

The company must take necessary steps to repay the debt capital as the burden of the
company to pay interest has increased. Over the most recent five years, the company has
raised more debt from outcasts.

3. Reduce Inventory:

The average inventory days of Maruti Suzuki is forty-eight days which is marginally on a
higher side. Hence the company should find a way to decrease the inventory days by reducing
the inventory as lot of working capital is held up in the company has inventory.

4. Prompt Collections from customers:

The average number of days taken to collect the receivables from the customer is 36 days.
The company must take necessary steps in sending reminders to its customers, so that they
can promptly collect the dues from the customers on time.

5. Increase Sales:

Maruti Suzuki being the market leader has highest number of sales in units. The company
should further try to increase its sale. Hence the company must take necessary steps to
increase the advertisement given to their products so that the sales will considerably increase
which will in turn increase the earnings of the company.

30
 Bibliography

http://www.marutisuzuki.com

http://www.business-standard.com

http://www.investopedia.com

http://www.economictimes.com

31