CHAPTER -III

PROFILE OF THE MARUTI SUZUKI

3.1GROWTH OF AUTOMOBILE INDUSTRY IN INDIA

India is well recognized automobile manufacturing hub in the world because of its low
cost production. Cheap labor, easy availability and low cost of raw materials and weak currency
are the factors that are driving manufacturing industry. India is 7th largest producer of
automobiles in the world with an average annual production of 23.36 million vehicles and is
expected to become 3rd largest automotive market by volume, by 2016.

Automobile accounts to 7.1% of the country’s GDP by volume. As expected, more

than six million vehicles will be sold annually in India, by 2020. Automobile component industry
reached a mammoth us$ 41 billion in financial year 2014-15 and is expected to reach us$ 110.7
billion by 2020. Growing working population and expanding middle class are the main drivers
for the growth of automobile and automobile components industry in India.

The study elucidates the situation of India and predicts the growth of its automobile
industry. Report talks about growth, market trends, progress, challenges, opportunities,
government regulations, technologies in use, growth forecast, major companies, upcoming
companies and projects etc. In addition to it, the report also talks about economic conditions of
and future forecast of its current economic scenario and effect of its current policy changes in to
its economy, reason and implications on the growth of this sector. Lastly, the report is segmented
by various types of minerals and metals available in the country.

3.1.1COMPANIES MENTIONED:

1. Maruti

2. Tata motors

3. General motors

4. Mahindra and Mahindra

5. Renault

6. Nissan

7. MRF

8. Bridgestone

1
9. Michelin

10. Continental

11. Honda

12. Toyota

13. Volkswagen group

14. BMW

15. Mercedes

16. Fiat

17. Ford

18. Bharat forge

19. Bosch

20. Volvo

2
3.2PROFILE OF MARUTI SUZUKI:
Maruti Suzuki India Limited is a public incorporated on 24 February 1981. It is
classified as Non-government Company and is registered at Registrar of companies, Delhi. Its
authorized share capital is Rs. 18,755,000,300 and its paid up capital is Rs. 1,510,000,000. It is
involved in manufacture of motor vehicles.

Maruti Suzuki India limited’s Annual General Meeting (AGM) was last held on 27 August 2019
and as per records from Ministry of Corporate Affairs (MCA), its balance sheet was last filed on
31 March 2019.

Directors of Maruti Suzuki India Limited are Ravindra Chandra Bhargava , Kenichi Ayukawa ,
Rajinder pal Singh, Renu Sud Karnad, Lira Goswami, Hisashi Takeuchi, Seiji Kobayashi,
Osamu Suzuki, Kinji Saito, Davinder Singh Brar, Takahiko Hashimoto, Toshihiro Suzuki.

Maruti Suzuki India Limited’s corporate Identification Number (CIN)

L34103DL1981PLC011375 and its registration number is 11375. Its Email address is
sanjeev.grover@maruti.co,in and its registered address is plot No.1, Nelson Mandela Road
Vansant Kinjo New Delhi DL 110070 IN,-,.

COMPANY DETAILS
Company Name : Maruti Suzuki India Limited

Founder : Sanjay Gandhi

Type : public

Traded as : BSE: 532500

NSE: MARUTI

BSE SENSEX constituent

Key people : R.C. Bhargava (chairman)

Kenichi Ayukawa (Managing Director and CEO)

CIN : L34103DL1981PLC011375

ISIN : INE585B01010

Industry : Automotive

Headquarters : New Delhi, India

Area served : India

3
Products : Automobile

Production Output : 1,568,603 units

Revenue : Rs 886,301 million

Operating Income : Rs 106,238 million

Net Income : Rs 76,506 million

Total Assets : Rs 639,687 million

Total equity : Rs 471,097 million

Number of employees : 40,000

Parent : Suzuki Motor Corporation (56.21%)

Government of India (43.79%)

Website : WWW.Marutisuzuki.Com

4
3.3 HISTORY
Maruti Udyog Limited was founded by the Government of India in 1981, only to merge with
the Japanese automobile company Suzuki in October 1982. The first manufacturing factory of
Maruti was established in Guru Gram, Haryana, in the same year.

In 1982, a license and joint venture agreement (JVA) was signed between Maruti Udyog Ltd,
and Suzuki of Japan .at first, Maruti Suzuki was mainly an importer of cars. In India’s closed
market, Maruti received the right to import 40,000 fully built-up Suzuki in the first two years,
and even after that the early goal was to use only 33% indigenous parts. This upset the local
manufacturers considerably. There were also some concern that the Indian market was too small
to absorb the comparatively large production planned by Maruti Suzuki, with the government
even considering adjusting the petrol tax and lowering the excise duty in order to boost sales.
Local production commenced in December 1983. In 1984, the Maruti Van with the same three-
cylinder engine as the 800 was released and the installed capacity of the plant in Gorgon reached
40,000 units.

In 1985, the Suzuki SJ410-based Gypsy, a 970 cc 4WD off-road vehicle, was launched. In 1986,
the original 800 was replaced by an all-new model of the 796 cc hatchback Suzuki Alto and the
100,000th vehicle was produced by the company. In 1987, the company started exporting to the
west, when a lot of 500 cars were sent to Hungary. By 1988, the capacity of the Gorgon plant
was increased to 100,000 units per annum.

Market liberalization
In 1989, the Maruti 1000 was introduced and the 970 cc, three-box was India’s first
contemporary sedan. By 1991, 65percent of the components, for ann. vehicle produced, were
indigenized. After liberalization of the Indian economy in 1991, Suzuki increased its stake in
Maruti to 50 percent, making the company a 50-50 Joint Venture with the Government of India
the other stake holder.

In 1993, the Zen, a 993 cc, hatchback was launched and in 1994 the 1298 cc Esteem was
introduced. Maruti produced its 1 millionth vehicle since the commencement of production in
1994. Maruti second plant was opened with annual capacity reaching 200,000 units. Maruti
launched a 24-hour emergency on-road vehicle service. In 1998, the new Maruti 800 was
released, the first change in design since 1986. Zen D, a 1527 cc diesel hatchback, and Maruti
first diesel vehicle, and a redesigned Omni were introduced. In 1999, the 1.6 liter Maruti Bale no
three-box saloon and Wagon R were also launched.

In 2000, Maruti became the first car company in India to launch a Call Center for internal and
customer services. The new Alto model was released. In 2001, Maruti True Value, selling and
buying used cars was launched. In October of the same year the Maruti Versa was launched. In
2002, Esteem Diesel was introduced. Two new subsidiaries were also started: Maruti insurance

5
Distributor Services and Maruti insurance Brokers Limited. Suzuki Motor Corporation increased
its stake in Maruti to 54.2 percent.

In 2003, the new Suzuki Grand Vitoria XL-7 was introduced while the Zen and the Wagon R
were upgraded and redesigned. The four millionth Maruti vehicles were built and they entered
into a partnership with the State Bank Of India. Maruti UdYog Ltd was listed on BSE and NSE
after a public issue, which was oversubscribed tenfold. In 2004, the Alto became India’s
bestselling car overtaking the Maruti 800 after nearly two decades. The five-seater Versa 5-
seater, a new variant, was created while the Esteem was re-launched. Maruti Udyog closed the
financial year 2003-04 with an annual sale of 472,122 units, the highest ever since the company
began operations and the fiftieth lakh (5 millionths) car rolled out in April 2005. The 1.3 liter
Suzuki Swift five-door hatchback was introduced in 2005.

In 2006 Suzuki and Maruti set up another joint venture ,”Maruti Suzuki Automobile India”, to
build two new manufacturing plants, one for vehicles and one for engines. Cleaner cars were also
introduced, with several new models meeting the new “Bharat Stage III” standards. In February
2012, Maruti Suzuki sold its ten millionth vehicles in India. In July 2014 it had a market share of
more 45%.

Maruti Suzuki is now looking to shift its current manufacturing facility located in the downtown
Gorgon as apparently it is short of space and logistics. It is hunting for a huge 700 acres of plot
of land.

On 25 April 2019, Maruti Suzuki announced that it would phase out production of diesel cars by
1 April 2020, when the Bharat Stage VI standards come into effect. The new standards would
require a significant investment from the company to upgrade its existing diesel engines to
comply with the more stringent emission standards. Chairman R.C. Bhargava stated, “we have
taken this decision so that in 2022 we are able to meet the corporate Average Fuel Efficiency
norms and higher share of CNG vehicles will help us comply with the norms. I hope the union
government’s policies will help grow the market forcing vehicles. “Diesel cars accounted for
about 23% of Maruti Suzuki annual sales.

6
 CHAPTER –IV

FINANCIAL PERFORMANCE OF MARUTI SUZUKI

4.1. TO STUDY ON PROFIT PROFITABILITY POSITION OF THE

COMPANY
The profitability position of the Maruti Suzuki limited has been analyzed with me treading and
profit and loss account. The following rations are calculated.

4.2TO ANALYSE ABOUT LIQUIDITY POSITION OF THE COMPANY

1. LIQUIDITY RATIO
It is essential for a firm to be able to meet its obligation as they became due. Liquidity
Ratios help in establishing a relationship between cast and other current assets to current
obligations to provide a quick measure of liquidity. A firms should ensure that it does not suffer
from lack of liquidity is also that it does not have excess liquidity. A very high degree of
liquidity is also bad, idle assets earn nothing. They firm’s funds will be unnecessarily tied up in
current asset. The most common ratios, which indicate the extent of liquidity or lack of it, are:
The liquidity ratios are as follows.

 CURRENT RATIO
 LIQUID RATIO

7
A) CURRENT RATIO
Current ratio is the most common ratio for measuring liquidity. Being related to
working capital analysis it also called the working capital ratio. Current ratio expresses
relationship between current assets and current liabilities. The current ratio is the total current
assets to total current liabilities. Current ratio is calculated by current dividing current assets by
current liabilities.

CURRENT ASSETS

CURRENT RATIO = ________________

CURRENT LIABILITY

Table: 4.2.1

YEAR CURRENT CURRENT RATIO

ASSETS LIABILITIES
2014-2015 8197.90 8823,00 0.93

2015-2016 7846.00 11039.20 0.71

2016-2017 8776.20 13226.40 0.66

2017-2018 7921.40 15442.10 0.51

2018-2019 12361.60 14150.30 0.87

MEAN 0.736

SOURCE: ANNUAL REPORT

The table 4.2.1 shows that a fluctuating trend. The current ratio for the year 2015 is 0.93 and it is
decreased to 0.71 in the year 2016. In the year 2017 ratio is decreased to 0.66.in the year 2018
ratio is decreased to 0.51 but it is increased to 0.87. The year 2019 the average current ratio of
the company is 0.736.

8
 Chart: 4.2.1

20000

15000
CURRENT ASSETS
10000 CURRENT LIABILITIES

5000 RATIO

0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

9
B) LIQUID RATIO
This ratio is termed as test ratio or liquidity ratio. This ratio is ascertained by
comparing the liquid assets (i.e.., assets which are immediately convertible into cash without
much loss) to current liabilities. Prepaid advances and stock are not taken as liquid assets.

LIQUID ASSETS

LIQUID RATIO = _______________

LIQUID LIABILITY

Table: 4.2.2

LIQUIDITY RATIO(IN CRORES)

YEAR CURRENT CURRENT RATIO
ASSETS LIABILITIES
2014-2015 5582.90 8823.00 0.63
2015-2016 4713.90 11039.20 0.43

2016-2017 5514.00 13226.40 0.42

2017-2018 4760.60 15442.10 0.31
2018-2019 9035.90 14150.30 0.64
MEAN 0.486
SOURCE: ANNUAL REPORT

The table 4.2.2 shows that a fluctuating trend in earlier year that is in the year
2015 the ratio is 0.63 it is decreased to 0.43 in the year 2016. In the year 2017 ratio is decreased
to 0.42 in the year the year 2018 ratio is decreased to 0.31. In the year 2019 ratio is increased to
0.64 the average liquid ratio of the company during the period of the study is 0.486.

10
 Chart: 4.2.2

20000

15000

10000
CURRENT ASSETS
5000 CURRENT LIABILITIES
RATIO
0
CURRENT ASSETS

11
II) ACTIVITY RATIO:
Funds of creditors and owners are invested in various assets to generate sales and
profits. Activity ratio are employed to evaluated the efficiency with which the firm manages and
utilizes it assets. These ratios are also called turnover ratio. Because, they indicate the speed with
which assets are being converted or turned over into sales. Activity ratios, thus, involve a
relationship between sales and assets. A proper balance between sales and assets generally
reflects that assets are managed well

 STOCK TURNOVER RATIO

 STOCK TURNOVER PERIOD
 DEBTORS TURNOVER RATIO
 FIXED ASSETS TURNOVER RATIO
 AVERAGE COLLETION RATIO
 WORKING CAPITAL TURNOVER RATIO

12
A) STOCK TURNOVER RATIO
In accounting, the inventory turnover is measure is measure of the number of items
inventory turnover equals the cost of goods sold divided by the average inventory. Inventory
turnover is also known as inventory turns, stock turn, stock turns, turns and stock turnover. A
ratio showing how many times a company’s is sold and replaced over a period.

COST OF GOODS SOLD

STOCK TURNOVER RATIO = ___________________

AVERAGE INVENTORY

Table: 4.2.3

STOCK TURNOVER RATIO (IN CRORES)

YEAR COST OF GOODS AVERAGE

SOLD INVENTORY RATIO
2014-2015 45102.40 2360.15 19.11
2015-2016 50094.40 2726.97 18.37
2016-2017 58074.50 2784.01 20.86
2017-2018 68759.30 2725.29 25.23
2018-2019 75554.70 2920.55 25.87

MEAN 88.744

SOURCE: ANNUAL REPORT

The table 4.2.3 shows for the year 2015 is 19.11But it increased to 18.37 in the year
2106. In the year 2017 the ratio decreased to 20.86. In the next year’s 2018, 2019 the ratio is
25.23 and 25.87. The average turnover ratio is increased to 88.744.

13
 Chart: 4.2.3

STOCK TURNOVER RATIO(INCRORS)RATIO

2014-2015
2015-2016
2016-2017
2017-2018
2018-2019

14
B) STOCK TURNOVER PERIOD
A ratio showing how many times a company’s inventory is sold and replaced
over a period. The days in the period can then be divided by the inventory turnover formula to
calculate the days it takes to sell the inventory on hand of “inventory turnover days”.

DAYS MONTHS IN YEAR

STOCK TURNOVER RATIO = ____________________

STOCK TURNOVER RATIO

Table: 4.2.4

STOCK TURN OVER PERIOD (IN CRORES)

YEAR DAYS IN THE STOCK TURN OVER RATIO

YEAR RATIO
2014-2015 365 19.11 19.09
2015-2016 365 18.37 19.86

2016-2017 365 20.86 17.49

2017-2018 365 25.23 14.47
2018-2019 365 25.87 14.11
MEAN 17.004
SOURCE: ANNUAL REPORT

It is clear from the table 4.2.4.that the stock turnover period shows an average of
17.004 for the past five accounting years. It is further clear from the above table that stock
turnover period is fluctuating.

15
 Chart: 4.2.4

DAYS IN THE YEAR

2014-2015
2015-2016
2016-2017
2017-2018
2018-2019
AVERAGE

16
C) DEBTORS TURNOVER RATIO
This is called “debtors velocity” or “receivable turnover”. A firm sells good on
credit and cash basis. When the extend credits to customers, book debts (debtors of account
receivable) are create in the firm’s account: debtors expected to be converted in to cash over
short period and thus include in current assets.

NET SALES

DEBTORS TURNOVER RATIO = ___________________

AVERAGE DEBTORS

Table: 4.2.5

DEBTORS TURN OVER RATIO (IN CRORES)

YEAR NET SALES AVERAGE RATIO
RECEIVABLE
2014-2015 49970.60 1069.80 46.71
2015-2016 57538.10 1322.20 43.52
2016-2017 68034.80 1199.20 56.73
2017-2018 79762.70 1461.80 54.56
2018-2019 86020.30 2310.40 37.23
MEAN 47.75

SOURCE: ANNUAL REPORT

The table 4.2.5 shown that there is fluctuating trend in the year 2015-16 to 2018-
2019 .it shows that there is steady increase in the year 2016 to 2019 but in2019 it shows decrease
value, and fluctuating in nature.

17
 Chart: 4.2.5

DEBTOR TURN OVER RATIO (IN

CRORES)RATIO

2014-2015
2015-2016
2016-2017
2017-2018
2018-2019
AVERAGE

18
D) FIXED ASSETS TURNOVER RATIO
It is also known as sales to fixed asset ratio. This ratio measures the efficiency and
profit earning capacity of firm. Higher the ratio greater is the utilization of fixed assets. Lower
ratio means under-utilization of fixed assets.

COST OF SALES

FIXED ASSETS TURNOVER RATIO = _________________

FIXED ASSETS

Table 4.2.6

FIXED ASSETS TURNOVER RATIO(IN CRORES)

YEAR SALES/COST OF FIXED ASSETS RATIO

SALES
2014-2015 45102.40 14142.10 3.19
2015-2016 50094.40 13516.90 3.71
2016-2017 58074.50 14545.00 3.99
2017-2018 68759.30 15484.90 4.44

2018-2019 75554.70 17007.90 4.44

MEAN 3.954

SOURCE: ANNUAL REPORT

The above table 4.2.6 that there is fluctuating trend in fixed assets turnover ratio during
the period 2016 to 2019. In the last year it shows decrease. Levels fluctuate from year to year it
reveals that effective utilization of fixed assets with sales in the study period.

19
 Chart: 4.2.6

FIXED ASSETS TURN OVER RATIO (IN CRORES) RATIO

80000

70000

60000

50000

40000 SALES/COST OF SALES

NET WORKING CAPITAL
30000
RATIO
20000

10000

20
E) AVERAGE COLLECTION PERIOD
The liquidity position of the firm depends on the quality of debtors to great
extent. Financial analysts employ two ratios to judge quality or liquidity of debtors- Debtors
Turnover and Average Collection Period.

DAYS IN A YEAR

AVERAGE COLLECTION PERIOD = ______________________________

DEBTORS TURN OVER RATIO

Table: 4.2.7

AVERAGE COLLECTION PERIOD (IN CRORES)

YEAR DAYS IN THE YEAR DEBTORS TURN RATIO

OVER
RATIO
2014-2015 365 46.71 7.81
2015-2016 365 43.52 8.39
2016-2017 365 56.73 6.43
2017-2018 365 54.56 6.69
2018-2019 365 37.23 9.80

MEAN 7.824

SOURCE: ANNUAL REPORT

The above Table 4.2.7 indicates that the company has maintained ideal ratio for the
period during 2015-16 to 2018-19. It shows fluctuating value which should be given attention.

21
 Chart: 4.2.7

AVERAGE COLLECTION PERIOD ( IN CRORES) RATIO

100%

95%

RATIO
90%
DEBTOR TURN OVER RATIO
SALES/COST OF SALES
85%

80%

75%

22
F) WORKING CAPITAL TURNOVER RATIO
The working capital turnover ratio measures how well a company is utilizing its
working capital to support a given leave of sales. Working capital is current assets minus current
liabilities. A high turnover ratio indicates that management is being extremely efficient in using a
firm’s short-term assets and liabilities to support sales.

SALES

WORKING CAPITAL TURNOVER RATIO = _______________________

NET WORKING CAPITAL

Table: 4.2.8

WORKING CAPITAL TURNOVER RATIO (IN CRORES)

YEAR SALES/COST OF NET WORKING RATIO

SALES CAPITAL
2014-2015 53768.50 1882.80 28.56
2015-2016 63957.70 1006.90 63.52
2016-2017 76140.80 1252.30 60.80
2017-2018 80336.50 2125.90 37.79

2018-2019 83026.50 1600.10 51.89

MEAN 48.512

SOURCE: ANNUAL REPORT

The table 4.2.8 shows a fluctuating trend from 2015 to 2017 and the ratio is 28.56,
63.52 and 60.80. But in the year 2018 it decreased to 37.79 in the next year 2019 it is 51.89. The
ratio indicates the number of times the working capital is turned high in the year 2015. The
average ratio operating efficiency is good.

23
 Chart: 4.2.8

100%

99%

98%
RATIO
97%
NETWORKING CAPITAL

96% SALES/COST OF SALES

95%

94%
2014- 2015- 2016- 2017- 2018-
2015 2016 2017 2018 2019

24
III) SOLVENCY RATIO
It is known as debt ratio. It is a difference of 100 and proprietary ratio. This ratio is
found out between total assets and external liabilities of company. External liabilities mean all
long period a

 DEBT EQUITY RATIO

 FIXED ASSETS RATIO
 PROPRIETARY RATIO

A) DEBT EQUITY RATIO

This financing of total assets of a business concern is done owner’s equity as well
as outside debts (known as external equity). How much fund has been provided by the owners
and how much by out sides in the acquisition of total assets is a very signicant factor affecting
the following long-term solvency of concern.

SHARE HOLDERS FUND

DEBT EQUITY RATIO = ______________________

TOTAL LONG TERM FUND

25
 Table: 4.2.9

DEBT EQUITY RATIO (IN CRORES)

YEAR SHAREHOLDERS TOTAL LONG RATIO
FUNDS TERM
FUND
2014-2015 23704.20 1023.80 23.15
2015-2016 29884.20 1016.60 29.39
2016-2017 36431.10 1593.10 22.87
2017-2018 41757.30 2170.70 19.24
2018-2019 46141.50 2640.00 17.48

MEAN 22.426
SOURCE: ANNUAL REPOR

The above table 4.2.9 shows that there is fluctuating trends in debt equity ratio
during 2015-2016 to 2018-2019. The company has maintained the ratio for the period during
2019 it increased the average level of debt equity is good.

Chart 4.2.9

450000

400000

350000

300000

250000 SHARE HOLDERS FUND

200000 TOTAL LONG TERM FUND

RATIO
150000

100000

50000

0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

26
B) FIXED ASSETS RATIO
Increase in this ratio means that trading is stock or mechanization has been used. A decline
in the ratio means that debtors and stock are increased two or more intensively used.

FIXED ASSETS

FIXED ASSETS RATIO = _________________

LONG TERM FUND

Table: 4.2.10

FIXED ASSETS RATIO (IN CRORES)

YEAR FIXED ASSETS LONG TERM FUND RATIO

2014-2015 14142.10 1023.80 13.81

2015-2016 13516.90 1016.60 13.29

2016-2017 14545.00 1593.10 9.13

2017-2018 15484.90 2170.70 7.13

2018-2019 17007.90 2640.00 6.44

MEAN 9.960
SOURCE: ANNUAL REPORT

The fixed asset turnover table 4.2.10 shows a fluctuating trend from earlier year to last
year. It implies that in the year 2015 fixed asset turn ratio is 13.81. in the year 2016-2017 the
ratio is fluctuating as 13.29 to 9.13 in the year 2018 ratio increased to 7.13. And in 2019 the ratio
decreased to 6.44. The average fixed asset turnover ratio of the factory.

27
 Chart: 4.2.10

FIXED ASSETS RATIO(IN CRORES)RATIO

100%
90%
80%
70%
60% RATIO
50% LONG TERM FUND
40%
30% FIXET ASSETS
20%
10%
0%

28
C) PROPRIETARY RATIO
Proprietary ratio relates the shareholders fund to assets it is variant of the debt equity
ratio. This ratio shows the long-term or future solvency of the business. It is calculated by
dividing shareholder’s funds by total assets.

SHARE HOLDER’S FUND

PROPRIETARY RATIO = ______________________

TOTAL TANGIBLE ASSETS

Table: 4.2.11

PROPRIETARY RAIO (IN CRORES)

YEAR TOTAL LONG RATIO

SHAREHOLDERS TANGIBLE ASSETS
FUND
2014-2015 23704.20 33551.00 0.707

2015-2016 29884.20 41940.00 0.712

2016-2017 36431.10 51250.60 0.711

2017-2018 41757.30 59370.10 0.703

2018-2019 46141.50 62931.80 0.733

MEAN 0.7132

SOURCE: ANNUAL REPORT

The table 4.2.11 shows that in the year 2015 is 0.707 and in the following
year ratio is 0.712. In the year 2017 it increased to 0.711. it decreased to 0.703 in the year 2018
and in 2019 the ratio is 0.733.It shows a low risk. The average proprietary ratio of the company
is good.

29
 Chart: 4.2.11

PROPRIETORY RATIO(IN CRORES) RATIO

2014-2015
2015-2016
2016-2017
2017-2018
2018-2019
AVERAGE

30
IV) PROFITABILITY RATIO
Profitability is an indication of the efficiency with which the operation of the
business is carried on. A lower profitability may arise due to the lack of control over the
expenses. Bankers look at the profitability ratios as an indicator whether or not the firm corns
substantially more than it pays interest for the use of borrowed funds and ultimate repayment of
their Debt appears. The profitability ratio for the bank is as follows.

 GROSS PROFIT RATIO

 NET PROFIT RATIO
 RETURN ON TOTAL ASSETS

A) GROSS PROFIT RATIO

A high profit margin ratio is a sign of good management. A low gross profit margin
may reflect higher cost of goods sold due to the firm’s inability to purchase raw material at
favorable terms. Inefficient utilization of plant and machinery, or over-investment in plant and
machinery, resulting in higher cost of production. It is calculating by dividing the gross profit by
sales.

GROSS PROFIT

GROSS PROFIT RATIO = _________________ ×100

NET SALES

31
 Table :4.2.12

GROSS PROFIT RATIO (IN CRORES)

YEAR GROSS PROFIT NET SALES RATIO
2014-2015 4868.20 49970.60 9.74
2015-2016 7443.70 57538.10 12.93
2016-2017 9960.30 68034.80 14.64
2017-2018 11003.40 79762.70 13.79
2018-2019 10465.60 86020.30 12.16
MEAN 12.652

SOURCE: ANNUAL REPORT

This table 4.2.12 shows a fluctuating trend, in the year 2015 the ratio is 9.74% then it
increased to 12.93% in the year 2016, it increased in the year 2017 to 14.64%. In the last year it
declined to 13.79%. The average profit ratio is 12.652%. So the ratio shows the good
management level.

Chart: 4.2.12

GROSS PROFIT

2014-2015
2015-2016
2016-2017
2017-2018
2018-2019
AVERAGE

32
B) NET PROFIT RATIO
Net profit can be obtained when operating expenses, interest and taxes subtracted from
the gross profit. The net profit margin ratio is measured by divided profit after tax by sales. It
helps to measure the ratio on net profit.

NET PROFIT

NET PROFIT RATIO = _______________ ×100

NET SALES

Table: 4.2.13

NET PROFIT RATIO (IN CRORES)

YEAR NET PROFIT NET SALES RATIO

2014-2015 3711.20 49970.60 7.42

2015-2016 5364.30 57538.10 9.32

2016-2017 7350.20 68034.80 10.80

2017-2018 7721.80 79762.70 9.68

2018-2019 7500.60 86020.30 8.71

MEAN 9.186

SOURCE: ANNUAL REPORT

The above table 4.2.13 shows that net profit of the ratio for the year 2015 shows that
7.42%. In the next year 2016, 2017 it is 9.32% and 10.80%. In the year 2018 the ratio is 9.68%
but in the last year 2019 net profit ratio declined.

33
 Chart: 4.2.13

NET PROFIT RATIO (IN CRORES)RATIO

2014-2015
2015-2016
2016-2017
2017-2018
2018-2019
AVERAGE

34
C) RETURN ON TOTAL ASSETS
Profitability can be measured in terms of relationship between net profit and
assets. This ratio is known as profit – to-assets ratio. It measures the profitability of investments.
The overall profitability can be known

There are various approaches possible define net profits and assets, according to the
purpose and intent of calculation of the ratio.

NET PROIT

RETURN ON TOTAL ASSETS = ________________ × 100

TOTAL ASSETS

Table: 4.2.14

RETURN ON TOTAL ASSETS (IN CRORES)

YEAR NET PROFIT TOTAL ASSETS RATIO
2014-2015 3711.20 33551.00 11.06
2015-2016 5364.30 41940.00 12.79

2016-2017 7350.20 51250.60 14.34

2017-2018 7721.80 59370.10 13.00

2018-2019 7500.60 62931.80 11.91
MEAN 12.62
SOURCE: ANNUAL REPORT

The above table 4.2.14 shows the relationship between return on total assets and
net profit from year 2015 to 2019; the return on total assets ratio shows there is fluctuating trend
during this period the year 2019 it was slight decreased.

35
 Chart: 4.2.14

RETURN ON TOTAL ASSETS(IN CRORES) RATIO

100%
90%
80%
70%
60%
50% RATIO
40% TOTAL ASSETS
30%
NET PROFIT
20%
10%
0%

36
TREND ANALYSIS
Trend analysis is the practice of collecting information and attempting to spot pattern,
or trend in the information. Although trend analysis is often used to predict the future events. It
could used to estimate uncertain events in the past, such as net profit sales etc..,

FORMULA

Y=a+bx

A = £ y/n B = £ xy/£ x^2

TREND ANALYSIS ON NET PROFIT

Table: 4.2.15

TREND ANALYSIS ON NET PROFIT

YEAR NET PROFIT

2014-2015 3711.20
2015-2016 5364.30
2016-2017 7350.20
2017-2018 7721.80
2018-2019 7500.60

SOURCE: ANNUAL REPORT

It is inferred from the table 4.2.15 that the trend analysis on net profit shows an
increased line for the five accounting years from 2015-2016 to 2017-2018 and increases during
as per trend during 2019.

37
 Chart: 4.2.15

CHART TITLE
9000
8000
7000
6000
5000
4000 NET PROFIT
3000
2000
1000
0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

38
TREND ANALYSIS OF NET SALES
Table: 4.2.16

TREND ANALYSIS ON NET SALES

YEAR NET SALES

2014-2015 49970.60
2015-2016 57538.10
2016-2017 68034.80
2017-2018 79762.70
2018-2019 86020.30
SOURCE: ANNUAL REPORT

It is inferred from the table 4.2.16 that the sales line shows an increase trend for the
five years from 2015 to 2019 and as per trend line the sales volume of the society increased in
2019.

Chart: 4.2.16

NET SALES
100000
90000
80000
70000
60000
50000
NET SALES
40000
30000
20000
10000
0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

39
TREND ANALYSIS ON WORKING CAPITAL
Table: 4.2.17

TREND ANALYSIS ON WORKING CAPITAL

YEAR NET WORKING CAPITAL

2014-2015 1882.80
2015-2016 1006.90
2016-2017 1252.30
2017-2018 2125.90
2018-2019 1600.10
SOURCE: ANNUAL REPORT

It is inferred from the table 4.2.17 that the working capital line shows an increased
trend for the five years from 2015 to 2019 and as per trend line the sales volume of the society
increased in 2018.

Chart: 4.2.17

NETWORKING CAPITAL
100%
90%
80%
70%
60%
50%
40%
30% NETWORKING CAPITAL
20%
10%
0%

40
 CHAPTER –V

FINDINGS, SUGGESTIONS AND CONCLUSION

5.1 SUMMARY OF FINDINGS

The study has been done on the working capital management of the Maruti Suzuki
Limited, the primary objective of the study is to examine whether the working capital position of
the company is managed properly and significantly.

For the purpose of analysis, a variety of financial ratios such as working capital ratios,
profitability ratios, turnover ratios, liquid ratio, solvency ratio etc., were used to achieve the
objectives of the study. Trend analyses were applied to analyze the effective management of
working capital.

This chapter covers the summary of major findings of the study and offers a few
suggestions for efficient and effective management of working capital in the Maruti Suzuki
Limited.

5.1.1 FINANCIAL PERFORMANCE

 The ratio of growth of inventories is in a good position but the inventories growth
rate is low.
 The annual growth ratio of fixed assets is in a good position but the fixed assets
growth rate is low.
 The mean value of working capital is in a good position and also the growth rate is
higher.
 The annual rate of capital turnover ratio is in a good position and also the growth
rate is higher.
 The growth ratio of total current ratio is in a good position and also the growth rate
is higher.
 The growth ratio of liquid ratio is in a good position and also the growth rate is
higher.
 The l growth ratio of gross profit ratio is in a good position and also the growth rate
is low.
 The growth ratio of net profit ratio is in a good position and also the growth rate is
low.
 The growth ratio of return on assets is in a good position and also the growth rate is
low.
 The annual growth ratio of net sales is in a good position and also the growth rate is
higher.

41
  The annual growth ratio of net profit is in a good position and also the growth rate
is low.
 The annual growth ratio of working capital is in a good position and also the growth
rate is low.

5.1.2TREND AND FORECASTING ANALYSIS

 In relation to working capital that the significant trend equations forecast positive
trend in the future years of Maruti Suzuki Limited.

 With regard to net profit that the significant of trend equations forecast negative
trend in the future years of Maruti Suzuki Limited.

 In relation to net sales that the significant trend equations forecast negative trend in
the future years of Maruti Suzuki Limited.

42
5.2SUGGESTIONS
The above findings if the study, the following points are suggested to improve the
management of working capital in the Maruti Suzuki Limited.

 The Maruti Suzuki Limited for the study has positive net working capital; they should
concentrate more to increase total current assets.
 It has been reveals that the liquidity positions of all the Maruti Suzuki Limited were
satisfactory. So the management of Maruti Suzuki Limited shall estimate the working
capital needed properly and arrange for funds to meet the working capital requirements
in order to utilize the short term funds effectively.
 Maruti Suzuki Limited has low investment inventory, the management of Maruti Suzuki
Limited should take steps to control the inventory positions.
 Net profit of Maruti Suzuki Limited, there a negative trend. So the management of the
Maruti Suzuki Limited should maintain the proportion of various components of working
capital in a positive manner.
 The short term liability should be paid on the last date this will help to increase liquidity
of the company from working capital point of view.

43
 5.3 CONCLUSION
The study was under to analyze the finance performance of “THE MARUTI SUZUKI
LIMITED “for comparison of turnover ratios, solvency ratio and profitability ratio. Based on
analysis made conclusion has been drawn regarding the financial position of “THE MARUTI
SUZUKI LIMITED” with the help of financial ratio the efficiency of the company was known.

Thus, the study can be concluded that with the implementation of some measures
suggested by researcher, by an effective financial management techniques and control over the
working capital of Maruti Suzuki and by its effective utilization of capacity levels. Can be
concluded the company’s overall operations efficiency is in the satisfactory position.

44
 5.4 BIBLOGRAPHY

BOOKS
 Financial management –principles and practice, DR. Maheshwari. S,N, Sulthan Chand &
sons, New Delhi.
 Financial management – pandey .I.M Vikas publishing House pvt.Ltd.,New Delhi.
 Working capital management, Bhalla. V.K.Anmol publication pvt.Ltd.,New Delhi.
 Financial management, Khan M.Y and John P.K, Tea McGraw Hill publishing Company
Limited, New Delhi.
 Cost and Management Accounting, Jain S.P and Narang K.L Kalyani publishers, New
Delhi.
 Research Methodology Methods and Techniques Second Revised Edition, Kothari C.R,
New Age international (P) Limited, Publishers, New Delhi – 110002.
 Statistics for Management by Richard Levin, David S. Rubin 7th edition prentice-Hall of
India Private Limited.
 Research Methodology in Commerce and Management by K.V Rao Sterling publisher’s
private limited 1st edition.
 Business Research Methodology by Donald R. Cooper and Pamela S. Schindler, 6th
edition. Tata McGraw Hill.

45
5.5 REFERENCES
1. John sagan, ‘Towards a Theory of Working Capital Management” The Journals of Finance,

May 1955,pp. 121-129.

2. B. Appavadhanulu, “Working Capital and Choice of Techniques”, Indian Economic

Journal,

July – Sept. vol XIX, pp.34-41.

3. Knight WD (1972) “Working Capital Management Satisfying Versus

Optimization”,Financial Management, Sep, pp.33.

5.6 WEBSITES
 WWW.moneycontrol.com
 WWW.Wikipedia.org
 WWW.marutisuzuki.com

46
 5.7 APPENDIX

FINANCIAL DETAILS OF THE MARUTI SUZSUKI LIMITED

2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

Current asset 8197.90 7846.00 8776.20 7921.40 12361.60

Current liability 8823.00 11039.20 13226.40 15442.10 14150.30

Liquid assets 5582.90 4713.90 5514.00 4760.60 9035.90

Net profit 3711,20 5364.30 7350.20 7721.80 7500.60

Net sales 49970.60 57538.10 68034.80 79762.70 86020.30

Gross profit 4868.20 7443.70 9960.30 11003.40 10465.60

Fixed assets 14142.10 13516.90 14545.00 15484.90 17007.90

Working capital 1882.80 1006.90 1252.30 2125.90 1600.10

Share holder fund 23704.20 29884.20 36431.10 41757.30 46141.50

Total tangible assets 33551.00 41940.00 51250.60 59370.10 62931.80

long term funds 1023.80 1016.60 1593.10 2170.70 2640.00

Debtors 1069.80 1322.20 1199.20 1461.80 2310.40

Average inventory 2360.15 2726.97 2784.01 2725.29 2920.55

47