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Financial Performance in Maruti Suzuki

Article · August 2019

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 Int. J. Manag. Bus. Res., 9 (3), 01-07, August 2019

Financial Performance in Maruti Suzuki

1*
Raja Narayanan, 2Sandhir Sharma
1*
Professor, Chitkara Business School, Chitkara University, NH 64, Rajpura, Punjab,
India.
2
Professor and Dean, Chitkara Business School, Chitkara University, NH 64,
Rajpura, Punjab, India.
1*
Corresponding Author, E-mail: rajanarayanan40@gmail.com
2
E-mail: sandhir@chitkara.edu.in

Received: 05 June 2019 Accepted: 15 July 2019

ABSTRACT:

The achievement of every business is purely depending up on their operational activity in

financial. In the financial market will give more idea about handlining the money related risk.
Especially EPS and DPS will give you clear picture about the company performance. So, the
management always show more concentrate on financial activity and who will handling
financial position. This paper will focus on the financial performance of Marathi Suzuki
Company‟s financial position using some financial tools to evaluate the company
performance.

Keywords: Finance, Motor Company, Financial Position, Maruti Suzuki.

frequently identified to be low, even if it is

INTRODUCTION
Maruthi Suzuki India (MSI), previously
famous vehicle production in India. It is a
56.21% kept for the Japanese Car and
Motorcycle production automobile business.
Up to early 2019, it had nearly 53 percentage
of market share for India Passenger car
marker, no matter for manufacturing, service,
finance, human resource and IT. However,
every corporate group gets adequate cash for
booming its events, achievement of the
business rest on how well the group able to
be handle them. That is, it be subject to how
fit a corporate body, how effectively invest
their capital, like debt and equity form and it
will be result of how generate their profit.
Success of the business is purely by how the
firm it finances to their assets and make use
of the resource to generate income, the
company can be stand healthy if its financial
performance constantly getting profit.
Sometime business is measured to be
incompetent, if the production level is
making profit.
FINANCIAL PERFORMANCE
Financial performance investigation is
the progression of defining the action and
monetary features of a business from
accounting and financial statements. The
object of an such instigations is to identify
the effectiveness and performance of the
firm‟s management, it will be reflecting in
the financial record and report as well.
Basically the word “performance” is birth
from the word „Perfourmen‟ meaning to do /
carry / to tender. It mentions to the
performance of accomplishment:
implementation, achievement, contentment
etc. In a wider logic, performance denotes to
the achievement of an agreed duty evaluate
in contradiction with preset values of
accuracy, extensiveness, price and haste.
Performance is used to specify the business
achievement, circumstances, and protests.
The object of financial evaluation is to

1
 Int. J. Manag. Bus. Res., 9 (3), 01-07, August 2019
identify the competence and presentation of
the business administration, as reproduced in
the financial history. The investigation
efforts to amount the business soundness,
liquidness, effectiveness and other pointers,
so that the business is led in a lucid and usual
way. More exactly, any investigation on
economic performance of a corporate body
seeks to reside upon primarily,
1. Evaluating the quick and short term
as well as long term solvency.
2. Measuring the acid form and
effectiveness.
3. Classifying the competence of
monetary processes.
4. Examining the issues influential in
solvency level liquidness and
effectiveness.
PERVIOUS APPROACHES
The aim of this part is to investigate
work applicable to Car Businesses as well as
earlier studys from journals, article, books,
newspaper, TV and radios which is focus on
financial analysis and performance of the
business under various business. The
researcher identified Sharma (2014), in her
schoolwork on „Indian Automotive Industry‟
has examined the sales and competences of
various business in vehicle manufacturing.
The study al so, shows that the development
in the vehicle is predictable to produce due
to growing disposable revenue and
cumulative consumerism. The worldwide
vehicle producer will remain to assign a
increasing quantity of the foreign direct
investment in India (FDI), rising vehicle –
producing first and latter auto engineering
Research and Development facilities. Many
businesses are conscious of the fact that their
labour cost benefit is beginning to erode as
both shop floor and managerial wage costs
rise. But, they are positive that output
developments through low cost automation
and improved management efficiency will
compensate to rising direct wage cost. But,
Mr. Kale (2015), recognize previous retro
the Indian automobile professional has bare
increasing the high-tech complication and
significant expansion. The Indian automobile
manufacturing contains of home-grown
companies with original enterprise and
expansion competence, well recognized
worldwide products and has selling presence
2
in Indian and also other unindustrialized
bazaars. Balakrishnan, Jagathy (2016),
absorbed on Globalization and liberalization,
with the access of countless protuberant
external producers, different the vehicle set-
up in India, since initial 1990s. Constructors
such as Ford, General Motors, Honda,
Toyota, Suzuki, Hyundai, Renault,
Mitsubishi, Benz, BMW, Volkswagen and
Nissan set up their industrial components in
India in dual undertaking with their Indian
complement businesses by manufacture use
of the Foreign Direct Investment strategy of
the Government of India. These producers
ongoing apprehending the emotions of
Indian car customs with their choice of
technical and pioneering creation landscapes,
with excellence and dependability. With the
array of selections accessible to the Indian
passenger car buyers, it radically altered the
way the car acquisitions in India and mainly
in the State of Kerala. This distorted the
vehicle division from a venders ‟marketplace
to purchasers”. Car customers ongoing
emerging their own personal favorites and
purchasing decorations, which were
previously unidentified in the Indian vehicle
section. Ray (2017) tries to appraise the
presentation of Indian auto manufacturing
industry in footings of numerous economic
pointers, sales trend, production trend, export
trend etc. for the retro of 2013-14 to2017-
18.The result recommends that the vehicle
manufacturing has been transitory finished
wild stages considered by improved debt
weight, short operation of properties, and
above all, massive liquidness crisis .The key
to achievement in the manufacturing is to
recover labor efficiency, labor suppleness,
and capital competence. Dharmaraj and
Kathirvel (2018), the Indian Automobile
Industry noticeable a new trip in the 1991
with the monetary radical New Industrial
Policy Act 1991, inaugural involuntary
direction which allowable the 100 per cent
Foreign Direct Investment (FDI). Now, an
effort is complete to find out the
consequence of FDI on the monetary
presentation of Indian Vehicle Industry. For
this determination, sixteen businesses were
nominated and analyzed over various
financial ratios. Expressive numerical tools
like Mean, Standard Deviation and Student‟s
paired „t‟ Test were rummage-sale to test the
 Int. J. Manag. Bus. Res., 9 (3), 01-07, August 2019
hypothesis. The liquidity examination
presented little vicissitudes and effectiveness
examines presented an cumulative tendency
during post FDI when associated to pre FDI.
The competence examination presented that
the businesses are professionally using the
obtainable resources throughout pole FDI as
associated to pre FDI. It is resolved that
foreign direct investment in India helpful
impact on the financial variables of the
Automobile Companies. In this light
discussion above, the researcher could
identify that automobile industry have lot of
challenges due to incompetence as will as
failed to manage financial obligations. In this
paper is trying to find out the financial
position of Marathi Suzi industry in India
Ltd.,
NEED FOR THE STUDY
The attention of the numerous
collections linked to a business and affected
by the economic presentation of the business.
So it is considerable of implication for these
collections to examine the economic
presentation of the business they are
attentive in. The study focusses on general
economic situation of more specifically
Maruti Suzuki company throughout the
specific period based on the selected
variables, which may attention not only for
the individual businesses in the
manufacturing but also transports and
procedure of expansional working features of
the complete manufacturing. The study is
considerable significant to the organization
from the opinion of policymaking
determination, to recognize the strength,
weakness areas of the company and in
conclusion helps to exploit the inherent
worth of the company. Hence, the above
assumption the following research question
has been seated out for the researcher
RQ1. What is the financial performance in
Maruti Suzuki right now?
RQ2. Does the effectiveness and acid status
of Maruti Suzuki industry is satisfactory?
RQ3. How does appearing the growth rate of
Maruti Suzuki in Financial parameters?
Objectives
RO1: To identify the Economic Recital
of Maruti Suzuki.
3
RO2: To investigate profitability and
acid status of the Maruti Suzuki Company
Limited.
RO3: To inspect the constancy and
development degree of nominated economic
strictures of the specific Maruti Suzuki
Company.
TOOLS AND TECHNIQUE
The study has descriptive and systematic
in countryside both primary as well as
secondary data where used. data were
composed as of the several data base,
periodical magazines. Variables relating to
performance of liquidity, influence and
effectiveness were composed from the
balance sheet and profit and loss account of
the Maruti Suzuki India Limited Company
for the period of 5 years i.e from 2013-14 to
2017-18.
DATA ANALYSIS &
INTERPRETATIONS
A Balance sheet might be defined as a
declaration of the fiscal situation of a
apprehension at a given data. The fiscal
situation of a concern is discovered by its
assets on a given data and its liabilities on
that date. Additional of properties over
obligations characterizes Capital, such extra
may be occupied as an pointer of the fiscal
reliability of a concern.
In the Table 1 shows horizontal vise
trend analysis of the Marathi Suzuki
Company, in general the financial position of
the company is seeming to be good. The
company kept their general reserves amount
always increasing trend, thus 2014 its kept as
100% which it was 200 % in 2018. Hence
the net worth of the company showing
increasing trend, because reserves amount is
in increasing trend. While we see the other
hand, the unsecured loan and total debt has
decreeing trend, so the company may settle
up their loans and advances. The
accumulated depreciation and capital works
in progress is showing decreeing trend.
Hence, the researcher identifies the company
have good form of the fixed assets positions.
The investment, debtors, loans and advances
and current liabilities its shows decreasing
trend, however inventory only keeping in the
form of ideal.
 Int. J. Manag. Bus. Res., 9 (3), 01-07, August 2019

Table 1: Source of Fund: Trend Analysis

Sources of Fund 2014 2015 2016 2017 2018
Total Share Capital 100 100 100 100 100
Equity Share Capital 100 100 100 100 100
Reserves 100 113 143 174 200
Net worth, 100 113 142 174 199
Unsecured loans 100 11 5 29 1
Total Debt 100 11 5 29 7
Total liabilities 100 105 132 163 185
Gross Block 100 116 68 82 94
Less: Accum Depreciation 100 119 23 Missing 66
Net block 100 114 116 123 124
Capital work in process 100 72 38 86 81
Investment 100 127 197 281 349
Inventories 100 153 184 191 185
Sundry Debtors 100 76 94 85 103
Cash and Bank Balances 100 3 7 2 11
Total Current Assets 100 99 120 119 125
Loans and advances 100 89 123 115 120
Total CA, Loans & Advances 100 94 121 117 123
Current Liabilities 100 115 165 198 242
Provisions 100 189 47 54 67
Total CL & Provisions 100 123 152 182 222
Net Current Asset 100 354 402 705 1028
Sources: Primary, Trend Analysis
So its clearly show the company taking which is the achievement of the company.
very much initiative about keeping their Net profit signifies the additional of gross
inventory. The net current assets form is very profit desirable other income over sales
strong position, because it has increased expense with sales costs and other expenses.
more than 1000 times from 2014. At the The debit side of P&L a/c displays the
same time, in the balance sheet , cash at bank expenses and the credit side the incomes. If
is decreasing from 2014-2158 and it is not the total of the credit side is extra, it will be
good for the organization. The percentage net profit. And if the debit side occurs to be
changes in investments and advances is a extra, it would be net loss. In Profit and loss
little bit but is satisfactory. The borrowing account we can see that Total revenue is
from financial institutions is decreasing from increasing from 55,999 to 81,808 . It is due
11% to 1% due to which the interest expense to because maruti suzuki has launched new
is decreasing and income is increasing which variants of their existing cars like the most
is very good for the company. In Balance popular Swift and dzire facelift model which
Sheet amount has amplified progressively made huge profits to the company and
from the year 2013-14 -2017-18 i.e (22,663) company gained more revenue in 2017 i.e.
to (41,868) as we can see that Maruti Suzuki from 70,334 to 81,808 Crores profit. This
the development has been a considerable ratio actions the overall efficacy of
one, year-on-year and in the local market manufacture, management, marketing,
itself the company listed a 14.5 per cent backing, assessing and tax management.
development and the net worth of the Effectiveness ratio of business
company also amplified from preceding five demonstrations substantial growth in 5
years i.e. 20,978 to 41,757 crores as because year.Company‟s sales have amplified in five
of the presentation of NEXA, and many years and At the same time company has
other schemes as the new dealership for been positive in regulatory the expenditures
premium cars was launched like baleno and i.e. manufacturing & other expenses. It is a
ciaz and the book value of maruti Suzuki clear directory of cost control, managerial
also increased in the market fom 694 to 1382 competence & sales elevation.

4
 Int. J. Manag. Bus. Res., 9 (3), 01-07, August 2019

Table 2: Ratio comparations relationship between the returns belonging to

Ratios 201 2017 2016 2015 2014 the equity shareholders and the dividend paid
8 to them. Thus, is calculated as: Payout ratio
Basic 255. 243. 177. 122. 92.1 = dividend per share / Earning per share.
EPS 62 32 58 85 3 Inventory turnover ration always in right
Cash 347. 329. 271. 204. 161. place maintain by the company.
EPS 01 55 01 69 17 Table 3: Performance of the company
Divide 80.0 75.0 35.0 25.0 12.0
nd / 0 0 0 0 0
Share
Net 255. 243. 177. 122. 92.1
profit / 69 38 63 86 5
Share
Net 9.68 10.8 9.32 7.42 6.36
Profit 0
margi
n
Return 13.0 14.3 12.7 11.0 9.11
on 0 4 9 6
Assest
Assets 134. 132. 137. 148. 143.
turnov 34 74 19 93 11
er
ratio
Invent 25.2 20.8 18.3 19.1 25.6 Figure 1: EPS and DPS
ory 3 6 7 1 2 This ratio displays the association
turnov between Earning Per Share and Dividend Per
er Share, this ratio stands at and natural average
ratio keeping this company every year. In figure 1.
We can see the payout ratio is growing from
From the table number 2 shows the
preceding 5 years as the Earning Per Share in
company financial performance for 2014 –
2013-14 was 94.4 but now it continually
2018, Earning per Share (EPS) its increase
exposed growing in earlier 5 years and
nearly 250% over the last five years, its just
presently it is 260.9 and Before Dividend Per
92.13 to 255.62 for 2018, its seems to be
Share in 2013-14 was 12.0 as in 2013-14
company have generate very good EPS over
company give less bonuses to shareholders
the years. Cash Earnings Per Share
as they retain more for the growth of the
(EPS) reflects cash flow created by a
company and now company has made a good
business on per share basis. It is diverse from
development in the market. So, they allocate
earnings per share, which appearances at net
more dividend to their shareholders and it
income or profit of a company on per share
has been augmented uninterruptedly which
basis. Cash EPS is considered by adding all
involved more shareholders to invest in
the non-cash transactions like depreciation,
Maruti Suzuki and attained a good market
amortization, deferred tax and intangibles
share among participants and now currently
like royalty to net income of the company
dividend per share in 2017-18 is 80.0 which
and then divide it by total number of shares.
is the good pointer of the growth of the
Hence, Marathi Suzuki Companies‟ Basic
Maruti Suzuki.
EPS always lesser then Cash EPS, at the
Table: 4 Liquidity form
same time its incur 255.62 from 92.13 on
2014. Even though the company have huge
EPS dividend Per Share have only 80 in
2018, but in 2014 it was in only 12 per share.
Net profit margin is 9.68 but net profit per
shar it represents 255.69. return on assets is
also taking good places. This is the

5
 Int. J. Manag. Bus. Res., 9 (3), 01-07, August 2019
Figure 2: Liquidity form
Current ratios show the association
among current asst and current liabilities and
display the capability of the firm to return
capacity, its current liabilities by applying its
current asset. The current ratio for Maruthi
Suzuki 2014 was .49 that increases in 2018
to 0.77 That was a company maintain good
sign for working capital in a company. But
due to financial collapse in 2014, its ratio
was disturb to 0.49 But that was also a good
ratio. The quick ratio expressions the
connection between the quick asset and the
current liabilities and displays the business
aptitude to pay back its current liability
within its short period of time. In figure 2 the
researcher identify the liquidness ratio is
growing as mutually the current ratio and
quick ratio amount a company's short-
term liquidity, or its aptitude to produce
sufficient cash to pay off all arrears must
they develop due at once. Even though
they're both actions of a business's economic
fitness, they're slightly different. In all 5
years the liquid ratio is Cumulative, which is
better for the company to meet the resolve.
The liquid ratio of the Maruti Suzuki limited
has Increased from 0.68 to 0.77 in 2016-
2017 to 2017-18 which shows that company
follow high liquidity or able to pay short-
term obligations in upcoming futures. Liquid
ratio of Company is favorable because the
quick assets of the company are more than
the quick liabilities.The liquid ratio shows
the company‟s ability to meet its immediate
obligations promptly.
Table 5: Debt / Equity Ratio
6
Figure 3: Debt / Equity ratio
In Figure 3 of Debt/Equity Ratio we can
see that The debt equity ratio is significant
instrument in financial analysis to consider
the financial structure of the business. It
couriers and virtual deference between the
outside impartialities & inside justices. This
ratio is very important from the point of view
of creditors & owners. The rate of debt
equity ratio is reduced from 0.35 to 0.31
during the year 2016-2017 to 2017-2018.
This shows that with the decrease in debt, the
shareholders fund amplified because a
inferior percentage of debt means that a
business is using less influence and has a
stronger equity position and the main reason
is increasing profitability, better management
of inventory, and restructuring debt.. The
lower ratio viewed as favorable from long
term creditor‟s point of view.
CONCLUSION
The investigator investigated the
financial position of Maruti Suzuki India
Limited as of Five years assessment and the
connected Profit and Loss Account These
economic reports are the accountability of
the company's administration. In fast an
opinion on these economic statements
founded on investigation includes
examining, on a test basis, indication
supporting the amounts and exposes in the
financial statements. An analysis also
comprises measuring the accounting
principles used and significant
approximations, financial position of the
Maruti Suzuki Limited. The company
analysis done by the researcher on Maruti
Suzuki Limited, organized out that the
automobile industry in India is wealthy and
rising with revolutionizing knowledge. Cars
in the market through different marketing
strategies such as pricing strategy, products
development etc. Finally “Maruti Suzuki”
has it financial trend in uphill order from
preceding five years.
 Int. J. Manag. Bus. Res., 9 (3), 01-07, August 2019

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