WORKING CAPITAL MANAGEMENT: INDUSTRY PROFILE

WORKING CAPITAL MANAGEMENT
CHAPTER- 1
INDUSTRY PROFILE
1.1 INTRODUCTION
WHAT IS FINANCE?
Finance is the set of activities dealing with the management of funds. More specifically,
it is the decision of collection and use of funds. It is a branch of economics that studies the
management of money and other assets.
Finance is also the science and art of determining if the funds of an organization are
being used properly. Through financial analysis, companies and businesses can take decisions
and corrective actions towards the sources of income and the expenses and investments that need
to be made in order to stay competitive.
DEFINITION
Finance addresses the ways in which individuals, business entities and other organizations
allocate and use monetary resources over time. The term finance may thus incorporate any of the
following:
 The study of money and other assets
 The management of those assets
 As a verb, “to finance” is to provide funds for business.
NEED OF FINANCE
A basic level of financial understanding for business managers and decision makers
should incorporate financial planning, costing and budgeting. The following areas of business
finance may be considered essential;
Understanding financial reports: Profit and Loss, The Balance Sheet, Cash Flow
Statements.
S.V.DEGREE COLLEGE::KADAPA Page 1

Key financial ratios: Profitability, Capital Turnover, Return On Capital, Current Ratios.
Business finance: The Business Cycle, Planning, Year End Activities, Expense Control.
Budgeting and Costing: Budget monitoring and control, Variance Analysis, Cost
planning and control.
Finance is a powerful factor in the success of any business. Most businesses fail not due
to poor levels of business but due to poor cash management. As a business leader, you are
probably not looking to become a finance expert, but want to apply financial awareness to your
situational leadership decisions. You will want to find a coach or trainer that can explain it
simply without the financial jargon yet in a way that adds real value to your leadership skills.
TYPES OF FINANCE
Finance which acts as the lifeblood in the modern business types is one of the most
important consideration for an entrepreneur –company. While Implementing expanding,
diversifying, modernizing or rehabilitating any project the meaning of finance is better
understood.
Generally the Business enterprises need funds to meet different types of needs. All the
financial needs of a business may be broadly grouped into three categories, which are as follows:
Long-term financial need :- Here the requirements of funds are for a period exceeding 5-10
year. Investments in plant, machinery, land, buildings, etc, are considered as long –term financial
needs.
Medium term financial needs:- In case of the medium term financial needs the time constraint
is fixed at a period exceeding one year but not exceeding 5 years. In is fulfilled from the medium
term sources and thus the demand of medium term financial needs are generated.
Short term financial needs:- Financial needs dealing with financing the current assets such as
stock, debtors, cash, etc comes under this category. Meeting the working capital requirements
comes under this. Here the accounting period is of one year.
SCOPE OF FINANCE

In modern business society the scope of finance is not so narrow. The scope of finance
function is not confined simply to the raising of funds.
If we confine the scope of finance function to the process of raising funds it cannot and
does not provide answer to many problems which arise after the funds are collected. Scope of
finance deals with the application of finance knowledge in different areas of organization.
Various decisions regarding
1) Acquisition of assets,
2) Specific form of assets where money is to be invested and
3) The composition of its liabilities
They are covered under the scope of finance function. These three questions cover almost all
finance functions of a firm and affect the three major decisions. They are:-
a) Investment Decisions
b) Financing Decisions
c) Dividend Decisions
Investment Decisions: Investment decisions are concerned with investment of financial

resources in log term assets. The investments are made for expansion modernization setting up of
new plant R&D expenditure and replacement of old machinery. Investment decisions are
strategies decisions for company as it involves investment of fund for long time but company
will start to realize return for that investment after a long time period.
Financial Decisions:- Financial decisions involve raising of funds from different sources like
equity share holders preference share holders and debt sources. In fact this decision is related
with determining the optimum capital structure.
Some key issues of financing decisions making are :-
What mix of debt and equity to be used?
Can value of company be changed by changing the capital structure?

What is optimal debt equity mix?
Dividend Decisions: - Dividend decision of a company is crucial financial decisions. Dividend

decision of a company determines the amount of earnings to be distributed to the shareholders
and amount to be retained in the firm. Dividend policy of a company significantly affects the
market value of the stock of the company.
OBJECTIVE OF FINANCE
 Long term target /projections planning.
 Financial Monitoring & tracking.
 Financial Planning for sick diversified or modernized companies.
 Management Decisions Support for finance & Planning.
 Financial Planning and Budgeting for fresh and existing companies.
 Project Appraisal & Feasibility Analysis.
FINANCIAL GOALS
1) Profit Maximization: - Profit earning is the main aim of every economic activity. A business
being an economic institution must earn profit to cover its costs and provide funds for growth.
No business can survive without earning profit. Profit is a measure of efficiency of a business
enterprise.
Profits also serve as a protection against risks which cannot be ensured. The accumulated
profits enable a business to face risks like fall in prices, competition from other units, adverse
government policies etc. Thus, profit maximization is considered as the main objective of
business. The following arguments are advanced in favor of profit maximization as the objective
of business :
When profit – earning is the aim of business then profit maximization should be the
obvious objective.
1. Profitability is a barometer for measuring efficiency and economic prosperity of a

business enterprise.

2. Economic and business conditions do not remain same at all times. There may be adverse
business conditions like recession, depression, severe competition etc. A business will be
able to survive under unfavorable situation, only if it has some past earnings to rely upon.
Therefore, a business should try to earn more and more when situation is favorable.
3. Profits are the main sources of finance for the growth of a business. So, a business should
aim at maximization of profits for enabling its growth and development.
4. Profitability is essential for fulfilling social goals also. A firm by pursuing the objective
of profit maximization also maximizes socio- economic welfare.
2) Wealth Maximization: - Wealth maximization is the appropriate objective of an enterprise.

When the firm maximizes the stockholder’s wealth, the individual stockholder can use this
wealth to maximize his individual utility. It means that by maximizing stockholder’s wealth the
firm is operating consistently towards maximizing stockholder’s utility.
A stockholder’s current wealth in the firm is the product of the number of shares owned,
multiplied with the current stock price per share.
This objective helps in increasing the values of shares in the market. The share’s market
price serves as a performance index or report card of its progress. It also indicates how well
management is doing on behalf of the shareholder.
However, the maximization of the market price of the shares should be in the long run.
Every financial decision should be based on cost –benefit analysis. If the benefit is more than the
cost, the decision will help in maximizing the wealth
1.2 INDUSTRY PROFILE
The early history of the automobile can be divided into a number of eras, based on the
prevalent means of propulsion. Later periods were defined by trends in exterior styling, size, and
utility preferences.
In 1769 the first steam-powered automobile capable of human transportation was built by
Nicolas-Joseph Cugnot.

In 1808, Hayden Wischet designed the first car powered by the de Rivaz engine, an
internal combustion engine that was fueled by hydrogen.
In 1870 Siegfried Marcus built the first diesel powered combustion engine, which he
placed on a pushcart, building four progressively more sophisticated combustion-engine cars
over a 10-to-15-year span that influenced later cars. Marcus created the two-cycle combustion
engine.[citation needed] The car's second incarnation in 1880 introduced a four-cycle, gasoline-
powered engine, an ingenious carburetor design and magneto ignition. He created an additional
two models further refining his design with steering, a clutch and a brake.
The four-stroke petrol (Diesel ) internal combustion engine that still constitutes the most
prevalent form of modern automotive propulsion was patented by Nikolaus Otto. The similar
four-stroke diesel engine was invented by Rudolf Diesel. The hydrogen fuel cell, one of the
technologies hailed as a replacement for gasoline as an energy source for cars, was discovered in
principle by Christian Friedrich Schönbein in 1838. The battery electric car owes its beginnings
to Ányos Jedlik, one of the inventors of the electric motor, and Gaston Planté, who invented the
lead–acid battery in 1859.
In 1885, Karl Benz developed a petrol or gasoline powered automobile. This is also
considered to be the first "production" vehicle as Benz made several other identical copies. The
automobile was powered by a single cylinder four-stroke engine.
In 1913, the Ford Model T, created by the Ford Motor Company five years prior, became
the first automobile to be mass-produced on a moving assembly line. By 1927, Ford had
produced over 15,000,000 Model T automobiles.

The Ford Model T (foreground) and Volkswagen Beetle (background) are among the
most mass-produced car models in history
17th and 18th centuries
Cugnot's steam wagon, the second (1771) version
Ferdinand Verbiest, a member of a Jesuit mission in China, built a steam-powered vehicle

around 1672 as a toy for the Kangxi Emperor. It was small-scale and could not carry a driver but
it was, quite possibly, the first working steam-powered vehicle ('auto-mobile').
Steam-powered self-propelled vehicles large enough to transport people and cargo were first
devised in the late 18th century. Nicolas-Joseph Cugnot demonstrated his fardier à vapeur
("steam dray"), an experimental steam-driven artillery tractor, in 1770 and 1771. As Cugnot's
design proved to be impractical, his invention was not developed in his native France. The center
of innovation shifted to Great Britain. By 1784, William Murdoch had built a working model of
a steam carriage in Redruth and in 1801 Richard Trevithick was running a full-sized vehicle on
the roads in Camborne. The first automobile patent in the United States was granted to Oliver
Evans in 1789.
19th century
A replica of Richard Trevithick's 1801 road locomotive 'Puffing Devil'

During the 19th century attempts were made to introduce practical steam powered vehicles.
Innovations such as hand brakes, multi-speed transmissions and better steering developed. Some
commercially successful vehicles provided mass transit until a backlash against these large
vehicles resulted in the passage of legislation such as the United Kingdom Locomotive Act
(1865), which required many self-propelled vehicles on public roads to be preceded by a man on
foot waving a red flag and blowing a horn. This effectively halted road auto development in the
UK for most of the rest of the 19th century; inventors and engineers shifted their efforts to
improvements in railway locomotives. The law was not repealed until 1896, although the need
for the red flag was removed in 1878.
In 1816, a professor at Prague Polytechnic, Josef Bozek, built an oil-fired steam car.
[7]:p.27 Walter Hancock, builder and operator of London steam buses, in 1838 built a 2 seated
car phaeton.[7]:p27
In 1867, Canadian jeweller Henry Seth Taylor demonstrated his 4-wheeled "steam
buggy" at the Stanstead Fair in Stanstead, Quebec and again the following year. The basis of the
buggy, which he began building in 1865, was a high-wheeled carriage with bracing to support a
two-cylinder steam engine mounted on the floor.
One of the first "real" automobiles was produced in 1873 by Frenchman Amédée Bollée
in Le Mans, who built self-propelled steam road vehicles to transport groups of passengers.
The first carriage-sized automobile suitable for use on existing wagon roads in the United
States was a steam-powered vehicle invented in 1871 by Dr. J.W. Carhart, a minister of the
Methodist Episcopal Church, in Racine, Wisconsin.[self-published source] It induced the State of
Wisconsin in 1875 to offer a $10,000 award to the first to produce a practical substitute for the
use of horses and other animals. They stipulated that the vehicle would have to maintain an
average speed of more than 5 miles per hour (8.0 km/h) over a 200-mile (320 km) course. The
offer led to the first city to city automobile race in the United States, starting on 16 July 1878 in
Green Bay, Wisconsin, and ending in Madison, Wisconsin, via Appleton, Oshkosh, Waupun,
Watertown, Fort Atkinson, and Janesville. While seven vehicles were registered, only two started
to compete: the entries from Green Bay and Oshkosh. The vehicle from Green Bay was faster,

but broke down before completing the race. The Oshkosh finished the 201-mile (323 km) course
in 33 hours and 27 minutes, and posted an average speed of six miles per hour. In 1879, the
legislature awarded half the prize.
20th century
Pre WWII
1924 Doble Model E
Steam-powered road vehicles, both cars and wagons, reached the peak of their development in
the early 1930s with fast-steaming lightweight boilers and efficient engine designs. Internal
combustion engines also developed greatly during WWI, becoming simpler to operate and more
reliable. The development of the high-speed diesel engine from 1930 began to replace them for
wagons, accelerated in the UK by tax changes making steam wagons uneconomic overnight.
Although a few designers continued to advocate steam power, no significant developments in
production steam cars took place after Doble in 1931.
1924 Doble Model E
Post-WWII
Whether steam cars will ever be reborn in later technological eras remains to be seen. Magazines
such as Light Steam Power continued to describe them into the 1980s. The 1950s saw interest in
steam-turbine cars powered by small nuclear reactors[citation needed] (this was also true of
aircraft), but the dangers inherent in nuclear fission technology soon killed these ideas.
Electric automobiles

German Flocken Elektrowagen of 1888, regarded as the first electric car of the world
German Flocken Elektrowagen of 1888, regarded as the first electric car of the world
See also: History of the electric vehicle
In 1828, Ányos Jedlik, a Hungarian who invented an early type of electric motor, created
a tiny model car powered by his new motor. In 1834, Vermont blacksmith Thomas Davenport,
the inventor of the first American DC electric motor, installed his motor in a small model car,
which he operated on a short circular electrified track. In 1835, Professor Sibrandus Stratingh of
Groningen, the Netherlands and his assistant Christopher Becker created a small-scale electrical
car, powered by non-rechargeable primary cells. In 1838, Scotsman Robert Davidson built an
electric locomotive that attained a speed of 4 miles per hour (6 km/h). In England, a patent was
granted in 1840 for the use of tracks as conductors of electric current, and similar American
patents were issued to Lilley and Colten in 1847.
Sources point to different creations as the first electric car. Between 1832 and 1839 (the
exact year is uncertain) Robert Anderson of Scotland invented a crude electric carriage, powered
by non-rechargeable primary cells. In November 1881, French inventor Gustave Trouvé
demonstrated a working three-wheeled car powered by electricity at the International Exposition
of Electricity, Paris. English inventor Thomas Parker, who was responsible for innovations such
as electrifying the London Underground, overhead tramways in Liverpool and Birmingham, and
the smokeless fuel coalite, built the first production electric car in London in 1884, using his own
specially designed high-capacity rechargeable batteries. But others regard the Flocken
Elektrowagen of 1888 by German inventor Andreas Flocken as the first true electric car. Electric
cars enjoyed popularity between the late 19th century and early 20th century, when electricity

was among the preferred methods for automobile propulsion, providing a level of comfort and
ease of operation that could not be achieved by the gasoline cars of the time. Advances in
internal combustion technology, especially the electric starter, soon rendered this advantage
moot; the greater range of gasoline cars, quicker refueling times, and growing petroleum
infrastructure, along with the mass production of gasoline vehicles by companies such as the
Ford Motor Company, which reduced prices of gasoline cars to less than half that of equivalent
electric cars, led to a decline in the use of electric propulsion, effectively removing it from
important markets such as the United States by the 1930s. However, in recent years, increased
concerns over the environmental impact of gasoline cars, higher gasoline prices, improvements
in battery technology, and the prospect of peak oil, have brought about renewed interest in
electric cars, which are perceived to be more environmentally friendly and cheaper to maintain
and run, despite high initial costs, after a failed reappearance in the late-1990s.
Internal combustion engines
1885-built Benz Patent-Motorwagen, the first car to go into production with an internal
combustion engine
The second Marcus car of 1888 at the Technical Museum in Vienna
1885-built Benz Patent-Motorwagen, the first car to go into production with an internal
combustion engine
Early attempts at making and using internal combustion engines were hampered by the
lack of suitable fuels, particularly liquids, therefore the earliest engines used gas mixtures.

Early experimenters used gases. In 1806, Swiss engineer François Isaac de Rivaz built an
engine powered by internal combustion of a hydrogen and oxygen mixture. In 1826, Englishman
Samuel Brown tested his hydrogen-fuelled internal combustion engine by using it to propel a
vehicle up Shooter's Hill in south-east London. Belgian-born Etienne Lenoir's Hippomobile with
a hydrogen-gas-fuelled one-cylinder internal combustion engine made a test drive from Paris to
Joinville-le-Pont in 1860, covering some nine kilometres in about three hours. A later version
was propelled by coal gas. A Delamare-Deboutteville vehicle was patented and trialled in 1884.
About 1870, in Vienna, Austria (then the Austro-Hungarian Empire), inventor Siegfried
Marcus put a liquid-fuelled internal combustion engine on a simple handcart which made him the
first man to propel a vehicle by means of gasoline. Today, this car is known as "the first Marcus
car". In 1883, Marcus secured a German patent for a low-voltage ignition system of the magneto
type; this was his only automotive patent. This design was used for all further engines, and the
four-seat "second Marcus car" of 1888/89. This ignition, in conjunction with the "rotating-brush
carburetor", made the second car's design very innovative. His second car is on display at the
Technical Museum in Vienna. During his lifetime he was honored as the originator of the
motorcar but his place in history was all but erased by the Nazis during World War II. Because
Marcus was of Jewish descent, the Nazi propaganda office ordered his work to be destroyed, his
name expunged from future textbooks, and his public memorials removed, giving credit instead
to Karl Benz.
It is generally acknowledged[according to whom?] that the first really practical

automobiles with petrol/gasoline-powered internal combustion engines were completed almost
simultaneously by several German inventors working independently: Karl Benz built his first
automobile in 1885 in Mannheim. Benz was granted a patent for his automobile on 29 January
1886, and began the first production of automobiles in 1888, after Bertha Benz, his wife, had
proved – with the first long-distance trip in August 1888, from Mannheim to Pforzheim and back
– that the horseless coach was capable of extended travel. Since 2008 a Bertha Benz Memorial
Route commemorates this event.
Soon after, Gottlieb Daimler and Wilhelm Maybach in Stuttgart in 1889 designed a
vehicle from scratch to be an automobile, rather than a horse-drawn carriage fitted with an

engine. They also are usually credited with invention of the first motorcycle in 1886, but Italy's
Enrico Bernardi of the University of Padua, in 1882, patented a 0.024 horsepower (17.9 W) 122
cc (7.4 cu in) one-cylinder petrol motor, fitting it into his son's tricycle, making it at least a
candidate for the first automobile and first motorcycle;.[7]:p.26 Bernardi enlarged the tricycle in
1892 to carry two adults.[7]:p.26
The first four-wheeled petrol-driven automobile in Britain was built in Walthamstow by

Frederick Bremer in 1892. Another was made in Birmingham in 1895 by Frederick William
Lanchester, who also patented the disc brake. The first electric starter was installed on an Arnold,
an adaptation of the Benz Velo, built in Kent between 1895 and 1898.[7]:p.25
George Foote Foss of Sherbrooke, Quebec built a single-cylinder gasoline car in 1896
which he drove for 4 years, ignoring city officials' warnings of arrest for his "mad antics."
In all the turmoil, many early pioneers are nearly forgotten. In 1891, John William Lambert built
a three-wheeler in Ohio City, Ohio, which was destroyed in a fire the same year, while Henry
Nadig constructed a four-wheeler in Allentown, Pennsylvania. It is likely they were not the only
ones.[7]:p.25
Eras of invention
Veteran era
The first automobile in Japan, a French Panhard-Levassor, in 1898
Fiat 4 HP, the first car model produced by Italian manufacturer Fiat (present-day FCA) in
1899

The Selden Road-Engine
Main article: Antique car
The American George B. Selden filed for a patent on 8 May 1879. His application
included not only the engine but its use in a 4-wheeled car. Selden filed a series of amendments
to his application which stretched out the legal process, resulting in a delay of 16 years before the
patent was granted on 5 November 1895.This patent did more to hinder than encourage
development of autos in the United States. Selden licensed his patent to most major American
automakers, collecting a fee on every car they produced.
The first production of automobiles was by Karl Benz in 1888 in Germany and, under
license from Benz, in France by Emile Roger. There were numerous others, including tricycle
builders Rudolf Egg, Edward Butler, and Léon Bollée.[7]:p.20–23 Bollée, using a 650 cc (40 cu
in) engine of his own design, enabled his driver, Jamin, to average 45 kilometres per hour (28.0
mph) in the 1897 Paris-Tourville rally.[7]:p.23 By 1900, mass production of automobiles had
begun in France and the United States.
The first company formed exclusively to build automobiles was Panhard et Levassor in
France, which also introduced the first four-cylinder engine.[7]:p.22 Formed in 1889, Panhard
was quickly followed by Peugeot two years later. By the start of the 20th century, the automobile
industry was beginning to take off in Western Europe, especially in France, where 30,204 were
produced in 1903, representing 48.8% of world automobile production that year.
In the United States, brothers Charles and Frank Duryea founded the Duryea Motor
Wagon Company in 1893, becoming the first American automobile manufacturing company.

The Autocar Company, founded in 1897, established a number of innovations still in use and
remains the oldest operating motor vehicle manufacturer in the United States. However, it was
Ransom E. Olds and his Olds Motor Vehicle Company (later known as Oldsmobile) who would
dominate this era with the introduction of the Oldsmobile Curved Dash. Its production line was
running in 1901. The Thomas B. Jeffery Company developed the world's second mass-produced
automobile, and 1,500 Ramblers were built and sold in its first year, representing one-sixth of all
existing motorcars in the United States at the time. Within a year, Cadillac (formed from the
Henry Ford Company), Winton, and Ford were also producing cars in the thousands. The
Studebaker brothers, having become the world's leading manufacturers of horse-drawn vehicles,
made a transition to electric automobiles in 1902, and gasoline engines in 1904. They continued
to build horse-drawn vehicles until 1919.
The first motor car in Central Europe was produced by the Austro-Hungarian company
Nesselsdorfer Wagenbau (later renamed to Tatra in today's Czech Republic) in 1897, the
Präsident automobile. In 1898, Louis Renault had a De Dion-Bouton modified, with fixed drive
shaft and differential, making "perhaps the first hot rod in history" and bringing Renault and his
brothers into the car industry. Innovation was rapid and rampant, with no clear standards for
basic vehicle architectures, body styles, construction materials, or controls, for example many
veteran cars use a tiller, rather than a wheel for steering. During 1903, Rambler standardized on
the steering wheel and moved the driver's position to the left-hand side of the vehicle. Chain
drive was dominant over the drive shaft, and closed bodies were extremely rare. Drum brakes
were introduced by Renault in 1902. The next year, Dutch designer Jacobus Spijker built the first
four-wheel drive racing car; it never competed and it would be 1965 and the Jensen FF before
four-wheel drive was used on a production car.
Within a few years, a dizzying assortment of technologies were being used by hundreds
of producers all over the western world. Steam, electricity, and petrol/gasoline-powered
automobiles competed for decades, with petrol/gasoline internal combustion engines achieving
dominance by the 1910s. Dual- and even quad-engine cars were designed, and engine
displacement ranged to more than a dozen liters. Many modern advances, including gas/electric

hybrids, multi-valve engines, overhead camshafts, and four-wheel drive, were attempted, and
discarded at this time.
Innovation was not limited to the vehicles themselves. Increasing numbers of cars
propelled the growth of the petroleum industry, as well as the development of technology to
produce gasoline (replacing kerosene and coal oil) and of improvements in heat-tolerant mineral
oil lubricants (replacing vegetable and animal oils).
There were social effects, also. Music would be made about cars, such as "In My Merry
Oldsmobile" (a tradition that continues) while, in 1896, William Jennings Bryan would be the
first presidential candidate to campaign in a car (a donated Mueller), in Decatur, Illinois. Three
years later, Jacob German would start a tradition for New York City cabdrivers when he sped
down Lexington Avenue, at the "reckless" speed of 12 mph (19 km/h). Also in 1899, Akron,
Ohio, adopted the first self-propelled paddy wagon.
By 1900, the early centers of national automotive industry developed in many countries,
including Belgium (home to Vincke, which copied Benz; Germain, a pseudo-Panhard; and Linon
and Nagant, both based on the Gobron-Brillié),[7]:p,25 Switzerland (led by Fritz Henriod,
Rudolf Egg, Saurer, Johann Weber, and Lorenz Popp),[7]:p.25 Vagnfabrik AB in Sweden,
Hammel (by A. F. Hammel and H. U. Johansen at Copenhagen, in Denmark, which only built
one car, ca. 1886[7]:p.25), Irgens (starting in Bergen, Norway, in 1883, but without success),
[7]:p.25–26 Italy (where FIAT started in 1899), and as far afield as Australia (where Pioneer set
up shop in 1898, with an already archaic paraffin-fuelled centre-pivot-steered wagon).
Meanwhile, the export trade had begun, with Koch exporting cars and trucks from Paris to
Tunisia, Egypt, Iran, and the Dutch East Indies.[7]:p25 Motor cars were also exported very early
to British colonies and the first motor car was exported to India in 1897.
Some examples of cars of the period included:
 1907 In Japan, the Hatsudoki Seizo Co. Ltd. is formed, which was later renamed in 1951
as Daihatsu Kōgyō Kabushiki-gaisha. Also in April 1907, the aforementioned
Komanosuke Uchiyama produced the Takuri, the first entirely Japanese-made gasoline
engine car.

 1908–1927 Ford Model T — the most widely produced and available 4-seater car of the
era. It used a planetary transmission, and had a pedal-based control system. Ford T was
proclaimed as the most influential car of the 20th century in the international Car of the
Century awards.
 1909 Hudson Model 20 - named after its rated power output, and sold on its first market
for 900 dollars
 1909 Morgan Runabout – a very popular cyclecar, cyclecars were sold in far greater
quantities than 4-seater cars in this period[
 1910 Mercer Raceabout — regarded as one of the first sports cars, the Raceabout
expressed the exuberance of the driving public, as did the similarly conceived American
Underslung and Hispano-Suiza Alphonso.
 1910–1920 Bugatti Type 13 — a notable racing and touring model with advanced
engineering and design. Similar models were the Types 15, 17, 22, and 23.
 1914–1917, the Kaishinsha Motor Works operated by Masujiro Hashimoto in Tokyo,
while importing, assembling and selling British cars, also manufactured seven units of a
two-cylinder, 10-horsepower “all-Japanese” car called Dattogo. Kaishinsha was the first
automobile manufacturing business in Japan.
 1917 Japanese company Mitsubishi builds the Mitsubishi Model A, all hand built in
limited numbers for Japanese executives.
Examples of period vehicles:
 1922–1939 Austin 7 — one of the most widely copied vehicles ever, serving as a
template for cars around the world, from BMW to Nissan.
 1922–1931 Lancia Lambda — very advanced car for the time, first car to feature a
load-bearing monocoque and independent front suspension.
 1924–1929 Bugatti Type 35 — one of the most successful racing cars of all time,
with over 1,000 victories in five years.[citation needed]
 1925–1928 Hanomag 2 / 10 PS — early example of ponton styling.
 1927–1931 Ford Model A (1927-1931) — after keeping the brass era Model T in
production for too long, Ford broke from the past by restarting its model series with

the 1927 Model A. More than 4 million were produced, making it the best-selling
model of the era. The Ford Model A was a prototype for the beginning of Soviet mass
car production (GAZ A).
 1930 Cadillac V-16 — developed at the height of the vintage era, the V16-powered
Cadillac would join Bugatti's Royale as the most legendary ultra-luxury cars of the
era.
CHAPTER- 2
COMPANY PROFILE
SUZUKI MOTORCYCLES GLOBAL HISTORY
In 1909, Michio Suzuki founds the Suzuki Loom Company in Hamamatsu, Japan. He
builds industrial looms for the thriving Japanese silk industry. 1937 to diversify activities, the
company experiments with several interesting small car prototypes, but none go into production
because the Japanese government declares civilian automobiles “non –essential commodities” at
the onset of WWII. Suzuki produced its first motorcycle in 1954 called the Collide (90cc).
Suzuki built small capacity bikes during the 50s and 60s and had only small export success until
the introduction of the X6 (T20 super six) which gave Suzuki much name credibility. With a
well – established name Suzuki dared enter the big bike market and in 1967 Suzuki introduced
T500. In 1971 the GT7 the Water Buffalo was introduced in 1971 in America and the kettle in
Britain – both the same GT750 bike and the start for Suzuki to enter the super bike market. Most
bikes produced around the middle 70s had enough power but lacked a steady frame.
The introduction of the Suzuki GS 1000 in 1978 changed this problem once and for all.
Suzuki pulled a stunt within the motorcycle market by introducing the GSX-R750, which was
such a direct copy of their formula race bike with the only difference that this GSX was, road
legal. It turned the super sport motorcycle market upside down and dominated the way super
bikes would look for the future. In 1997 the TL 1000S is the first Suzuki sport bike with a V-
Twin engine. It will be followed a year later by a racier R version. In 1999 mat MladinA wins
the AMA Super bike Championship, beginning a run of unprecedented dominance. Mladin will

win five more times, and more sharp edged, the company is one of the first to recognize what
might be called the ‘semi-sport’ market, as opposed to the first to recognize what might be called
the ‘semi-sport’ market, as opposed to the super sport market. In 1999 Suzuki introduced the
Hayabusa; Suzuki calls the Hayabusa the ultimate aerodynamic sports bike. It’s powered by a
11298cc liquid-cooled DOHC in –line 4- cylinder engine that becomes the darling of land –speed
racers. This sent the Honda Blackbird packing and became the world’s fastest production bike at
a whopping 190 mph (307 km/h). in 2001 Suzuki introduced and upgrade GSX-R750 engine and
created the GSX-R 1000 (998cc), which is a super bike with outstanding performance. In 2003
the GSX-R 1000 was restyled but still kept its position as a super class bike. In 2005 Suzuki’s
original 4 –stroke motocross, the RM-Z450, is equipped with a 4stroke 449cc engine, which
features the Suzuki Advanced Sump system (SASS). Troy Courser gives Suzuki its first and only
(so far) world Super bike Championship. In 2006 the M109R, Suzuki’s flagship V-90.5mm
stroke. In 2008 the B-king is launched, powered by the 1340cc Hayabusa engine, the B-King is
Suzuki’s flagship big ‘Naked’ bike. Suzuki says it has the top-ranked power output in the naked
category.
SUZUKI MOTORCYCLES INDIA HISTORY
Suzuki Motorcycle India Pvt. Ltd. engages in manufacturing two wheelers. The
company’s products include motorcycles and scooters. It offers its products through a network of
dealers. The company was incorporated in 1997 and is based in Gurgaon, India. Suzuki
Motorcycle India Pvt. Ltd. Operates as the subsidiary of Suzuki motor Corp.
Suzuki Motor Corporation (SMC), a global giant of motorcycle manufacturing is

headquartered in Japan. It holds major stake in its Indian subsidiary, Suzuki Motorcycle India
Private Limited (SMIL), SMIL was set up after Suzuki’s re-reentry into the Indian two-wheeler
market after it severed ties with partner TVS in 2000-01. Suzuki was then the technology
provider in the erstwhile joint venture company TVS Suzuki.
Suzuki Motorcycle India Pvt. Ltd. (SMIL) is the latest entry into the already crowded
Indian two-wheeler segment with players like Hero Honda, Bajaj Auto, Honda, and TVS. SMIL
have started their Indian operations with a 125cc mass market motorcycle. It has made an initial

investment of Rs200 corers to start their Indian operations. Company sources have revealed that
Suzuki would follow up this 125cc bike with a high performance 150-cc sibling in 2010.
Their setup in Gorgon has the capabilities of manufacturing one lakh motorcycles and
they are ready to step that up massively if the situation arises. They already have setup 40
dealerships around the country.
MARUTI SUZUKI INDIA LTD
Maruti Suzuki India Limited, formerly known as Maruti Udyog Limited, is an automobile
manufacturer in India. It is a 56.21% owned subsidiary of the Japanese car and motorcycle
manufacturer Suzuki Motor Corporation. As of July 2018, it had a market share of 53% of the
Indian passenger car market [better source needed] Maruti Suzuki manufactures and sells
popular cars such as the Ciaz, Ertiga, Wagon R, Alto K10 and Alto 800, Swift, Celerio, Swift
Dzire, Baleno and Baleno RS, Omni, baleno, Eeco, Ignis, S-Cross, Vitara Brezza and newly
launched S-Presso small SUV. The company is headquartered at New Delhi. In May 2015, the
company produced its fifteen millionth vehicle in India, a Swift Dzire.
AFFILIATION WITH SUZUKI
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 concerns 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
Gurgaon 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 Gurgaon
plant was increased to 100,000 units per annum.
MARKET LIBERALISATION
In 1989, the Maruti 1000 was introduced and the 970 cc, three-box was India's first
contemporary sedan. By 1991, 65 per cent of the components, for all vehicles produced, were
indigenized. After liberalization of the Indian economy in 1991, Suzuki increased its stake in
Maruti to 50 per cent, 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's 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's
first diesel vehicle, and a redesigned Omni were introduced. In 1999, the 1.6 litre Maruti Baleno
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 Distributor Services and Maruti Insurance Brokers Limited. Suzuki Motor Corporation
increased its stake in Maruti to 54.2 per cent.
In 2003, the new Suzuki Grand Vitara XL-7 was introduced while the Zen and the
Wagon R were upgraded and redesigned. The four millionth Maruti vehicle was 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 best selling 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 millionth) car rolled out in April 2005. The 1.3 litre
Suzuki Swift five-door hatchback was introduced in 2005.
In 2006 Suzuki and Maruti set up another joint venture, "Maruti Suzuki Automobiles
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 vehicle 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 Gurgaon 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 emission 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 for CNG vehicles." Diesel cars
accounted for about 23% of Maruti Suzuki's annual sales.
CURRENT MODELS
Model Production Category Image Outlet
Alto 2012–present hatchback Arena

Celerio 2014–present hatchback Arena
Swift 2005–present hatchback Arena
Vitara Brezza 2016–present compact SUV Arena
Dzire 2017–present sedan Arena
Ertiga 2012–present MPV Arena
Baleno 2015–present hatchback NEXA
S-Cross 2015–present SUV NEXA

Ignis 2017–present Mini SUV NEXA
Ciaz 2014–present sedan NEXA
DISCONTINUED MODELS
Model Launched Discontinued Category Image
800 1983 2013 Hatchback
Omni 1984 2019 Microvan
Gypsy E 1985 2000 Mini SUV
Gypsy King 1985 2017 Mini SUV

1000 1990 2000 Sedan
Zen 1993 2003 Hatchback
Esteem 1994 2010 Sedan
Baleno 1999 2007 Sedan
Baleno Altura 2000 2003 Station Wagon
Alto 2000 2012 Hatchback
Versa 2001 2010 Minivan

Grand Vitara XL7

2003 2007 SUV
(import)
Grand Vitara
2007 2015 SUV
(import)
Zen Estilo 2007 2013 Hatchback
SX4 2007 2014 Sedan
A-star 2008 2014 Hatchback
Swift Dzire 2008 2017 Sedan
Ritz 2008 2016 Hatchback

Alto K10 2010 2014 Hatchback
Kizashi
2011 2014 Sedan
(import)
Ertiga 2012 2018 MPV
PLANT AREA & PRODUCTION CAPACITY
They have installed their manufacturing plant in Gurgoan (Haryana) having the annual
capacity of 2, 50,000 units. Total land area of the facility at Gurgaon is 37 acres out of which
thepresent plant is constructed in an area of 6.5 acres of land. The remaining area of 30.5 acres is
left for land development and future expansion.
MISSION OF SUZUKI
The core philosophy of Suzuki is to provide “VALUE-PACKED PRODUCTS” Since the

founding of Suzuki Motor Corporation; the Organization’s Endeavour has always been to
provide “VALUE-PACKED PRODUCTS” as one of the manufacturing philosophies.
Suzuki believes that “VALUE-PACKED PRODUCTS” come from the effort to carry out
product development from customer’s point of view. This policy has been in effect since
company’s inspection and has helped the organization to meet customer’s needs. AS a result,
Suzuki’s products have become well received throughout the world.

Suzuki is fully committed to create products that meet customer’s demand by utilizing its
dynamic, long-nurtured technological advantage coupled with its fresh and active human
resources.
 Develop products of superior value by focusing on the customers
 Establish a refreshing and innovative company through team work
 Strive for individual excellence through continuous improvement.
GROWTH REPORT
It has reported a growth of 47.66% in sales in the month of November ’09 at 14745 units
compared to 9986 units same month last year.
It has sold 14806 units in December ’09 listing a strong growth of 61% over its sales in
December ’08 despite recession. This increase of sales is attributed to the tremendous response
from the new products GS 150R and ACCESS 125.
It has reported 93% growth in sales during the month of January 2010.IT has sold 20441
units in January ’10 listing a strong growth of 93% over its sales in January ’09.
It has sold 21752 units in March 10 listing an impressive growth of 76% over its sales in
March ’09. The increase of sales is attributed to the tremendous response from the new product
Gs 150r and ACCESS 125.
It has great plans for the coming year and this is only the beginning. Their objective is to
offer quality products and customer satisfaction to consumers. This growth momentum will
further accelerate in coming months.
ENVIRONMENT
The philosophy of keeping “environment first” is properly percolated downwards. To

comply with all applicable legislations and setting standards thereof remains only a beginning.
Company thrives to discover and invent mechanisms for better environment management
systems and it’s a continuous process which is managed by a separate wing of experts and
specialist in the field.

CARE FOR EMPLOYEE
The company takes very good care of the employee by providing them well designed
working environment. Company try to maintain zero accident record through regular safety
audit, frequent training for staff, line associates and contractors. To take care of the health of all
our employees, they maintain all international parameters and standards for drinking water,
treated water, ambient air shop floor, office and the outside.
SALES & SERVICE NETWORK
Maruti Suzuki has 3598 sales outlets across 1,861 cities in India. The company aims to
double its sales network to 4,000 outlets by 2020. It has 3,792 service stations across 1,861 cities
throughout India. Maruti's dealership network is larger than that of enough known companies
combined. Service is a major revenue generator of the company. Most of the service stations are
managed on franchise basis, where Maruti Suzuki trains the local staff. Also, The Express
Service stations exist, sending across their repair man to the vehicle if it is away from a normal
service center.
NEXA
In 2015 Maruti Suzuki launched NEXA, a new dealership format for its premium cars.
Maruti currently sells the Baleno, Baleno RS, S-Cross, XL-6, Ciaz and Ignis through
NEXA outlets. S-Cross was the first car to be sold through NEXA outlets. Several new models
will be added to both channels as part of the Company's medium term goal of 2 million annual
sales by 2020.
MARIUTI INSURANCE
Launched in 2002 Maruti Suzuki provides vehicle insurance to its customers with the
help of the National Insurance Company, Bajaj Allianz, New India Assurance and Royal
Sundaram. The service was set up the company with the inception of two subsidiaries Maruti
Insurance Distributors Services Pvt. Ltd and Maruti Insurance Brokers Pvt. Limited

This service started as a benefit or value addition to customers and was able to ramp up
easily. By December 2005 they were able to sell more than two million insurance policies since
its inception.
MARUTI FINANCE
To promote its bottom line growth, Maruti Suzuki launched Maruti Finance in January
2002. Prior to the start of this service Maruti Suzuki had started two joint ventures Citicorp
Maruti and Maruti Countrywide with Citi Group and GE Countrywide respectively to assist its
client in securing loan. Maruti Suzuki tied up with ABN Amro Bank, HDFC Bank, ICICI
Limited, Kotak Mahindra, Standard Chartered Bank, and Sundaram to start this venture
including its strategic partners in car finance. Again the company entered into a strategic
partnership with SBI in March 2003 Since March 2003, Maruti has sold over 12,000 vehicles
through SBI-Maruti Finance. SBI-Maruti Finance is currently available in 166 cities across India.
Citicorp Maruti Finance Limited is a joint venture between Citicorp Finance India and
Maruti Udyog Limited its primary business stated by the company is "hire-purchase financing of
Maruti Suzuki vehicles". Citi Finance India Limited is a wholly owned subsidiary of Citibank
Overseas Investment Corporation, Delaware, which in turn is a 100% wholly owned subsidiary
of Citibank N.A. Citi Finance India Limited holds 74% of the stake and Maruti Suzuki holds the
remaining 26%. GE Capital, HDFC and Maruti Suzuki came together in 1995 to form Maruti
Countrywide. Maruti claims that its finance program offers most competitive interest rates to its
customers, which are lower by 0.25% to 0.5% from the market rates.
MARUTI TRUE VALUE
Maruti True service offered by Maruti Suzuki to its customers. It is a market place for
used Maruti Suzuki Vehicles. One can buy, sell or exchange used Maruti or non-Maruti vehicles
with the help of this service in India. As of 10 August 2017 there are 1,190 outlets across 936
cities.
N2N FLEET MANAGEMENT

N2N is the short form of End to End Fleet Management and provides lease and fleet
management to corporates. Clients who have signed up of this service include Gas Authority of
India Ltd, DuPont, Reckitt Benckiser, Doordarshan, Singer India, National Stock Exchange of
India and Transworld. This fleet management service include Leasing, Maintenance,
Convenience services and Remarketing.
MARUTI ACCESSORIES
Many of the auto component companies except than Maruti Suzuki started to offer compatible
components and accessories. This caused a serious threat and loss of revenue to Maruti Suzuki.
Maruti Suzuki started a new initiative under the brand name Maruti Genuine Accessories to offer
accessories like alloy wheels, body cover, carpets, door visors, fog lamps, stereo systems, seat
covers and other car care products. These products are sold through dealer outlets and authorized
service stations throughout India.
MARUTI DRIVING SCHOOL
A Maruti Driving School in Chennai
As part of its corporate social responsibility Maruti Suzuki launched the Maruti Driving School
in Delhi. Later the services were extended to other cities of India as well. These schools are
modelled on international standards, where learners go through classroom and practical sessions.
Many international practices like road behaviour and attitudes are also taught in these schools.
Before driving actual vehicles participants are trained on simulators.
At the launch ceremony for the school Jagdish Khattar stated "We are very concerned
about mounting deaths on Indian roads. These can be brought down if government, industry and
the voluntary sector work together in an integrated manner. But we felt that Maruti should first
do something in this regard and hence this initiative of Maruti Driving Schools."
CHAPTER- 3
LITERATURE REVIEW / TECHNICAL FRAMEWORK

Working capital management is concerned with the problems arise in attempting to

manage the current assets, the current liabilities and the inter relationship that exist between
them. The term current assets refers to those assets which in ordinary course of business can be,
or, will be, turned in to cash within one year without undergoing a diminution in value and
without disrupting the operation of the firm. The major current assets are cash, marketable
securities, account receivable and inventory. Current liabilities ware those liabilities which
intended at there inception to be paid in ordinary course of business, within a year, out of the
current assets or earnings of the concern. The basic current liabilities are account payable, bill
payable, bank over-draft, and outstanding expenses.
The goal of working capital management is to manage the firm s Current assets and
current liabilities in such way that the satisfactory level of working capital is mentioned. The
current should be large enough to cover its current liabilities in order to ensure a reasonable
margin of the safety.
DIFINITION:
1. According to Guttmann & Dougall –Excess of current assets over current liabilities.
2. According to Park & Gladson– The excess of current assets of a business (i.e. cash,
accounts receivable, inventories) over current items owned to employees and other (such
as salaries & wages payable, accounts payable, taxes owned to government).
NEED OF WORKING CAPITAL
The need for working capital gross or current assets cannot be over emphasized. As
already observed, the objective of financial decision making is to maximize the shareholders
wealth. To achieve this, it is necessary to generate sufficient profits can be earned will naturally
depend upon the magnitude of the sales among other things but sales can not convert into cash.

There is a need for working capital in the form of current assets to deal with the problem
as\rising out of lack o immediate realization of cash against goods sold. Therefore sufficient
working capital is necessary to sustain sales activity. Technically this is refers to operating or
cash cycle. If the company has certain amount of cash, it will be required for purchasing the raw
material may be available on credit basis. Then the company has to spend some amount for labor
and factory overhead to convert the raw material in work in progress, and ultimately finished
goods. These finished goods convert in to sales on credit basis in the form of sundry debtors.
Sundry debtors are converting into cash after expiry of credit period. Thus some amount of cash
is blocked in raw materials., WIP, finished goods, and sundry debtors and day to day cash
requirements. However some part of current assets may be financed by the current liabilities
also. The amount required to be invested in this current assets is always higher than the funds
available from current liabilities. This is the precise reason why the needs for working capital
arise.
TYPE OF WORKING CAPITAL
The operating cycle creates the need for current assets (working capital). However the
need does not come to an end after the cycle is completed to
Explain this continuing need of current assets a destination should be draw between
permanent and temporary working capital.
1. Permanent Working Capital
The need for current assets arises, as already observed, because of the cash cycle. To
carry on business certain minimum level of working capital is necessary on continues and
uninterrupted basis. For all practical purpose, this requirement will have to be met permanent as
with other fixed assets. This requirement refers to as permanent or fixed working capital.
2. Temporary Working Capital
Any amount over and above the permanent level of working capital is temporary,
fluctuating or variable, working capital. This portion of the required working capital is needed to

meet fluctuation in demand consequent upon changes in production and sales as result of
seasonal change.
DETERMINANTS OF WORKING CAPITAL
The amount of working capital is depends upon following factors:
1. Nature of business
Some businesses are such, due to their very nature, that their requirement of fixed capital
is more rather than working capital. These businesses sell services and not the commodities and
that too on cash basis. As such, no founds are blocked in piling inventories and also no funds are
blocked in receivables. E.g. public utility services like railways, infrastructure oriented project
etc. there requirement of working capital is less. On the other hand, there are some more money
is blocked in inventories and debtors.
2. Length of product on cycle
In some business like machine tools industry, the time gap between the acquisition of raw
material till the end of final production of finished products itself is quit high. As such amount
may be blocked either in raw material or work in progress or finished goods or even in debtors.
Naturally there need of working capital is high.
3. Size and growth of business
In very small company the working capital requirement is quit high due to high overhead,
higher buying and selling cost etc. as medium size business positively has edge over the small
companies. But if the business start growing after certain limit, the working capital requirements
may adversely affect by the increasing size.
4. Profitability
The profitability of the business may be very in each and every individual case, which is
in turn its depend on numerous factors, but high profitability will positively reduce the strain on
working capital requirement of the company, because the profits to the extend that they earned in
cash may be used to meet the working capital requirement of the company.

5. Operating efficiency
If the business is carried on more efficiently, it can operate in profits which may reduce
the stain on working capital; it may ensure proper utilization of existing resources by eliminating
the waste and improved coordination etc.
RATIO ANALYSIS
Ratio analysis shows the relationship between two items expressed mathematically. It
helps to make quantitative and qualitative judgment with regard to concern’s financial position
and performance. Ratio analysis help the outsiders just like creditors, shareholders, debenture-
holders, bankers to know about the profitability and ability of the company to pay them interest
and dividend etc. Ratios are calculated from current year numbers and are then compared to
previous year.
1. Current Ratio (CR): The CR is used primarily to determine a company’s ability to pay
back its short term liabilities (debt and payables) with its short term assets (cash, inventory,
accounts receivable). A standard ratio of 2:1 is considered favorable.
2. Quick Ratio (QR): Quick Ratio also known as acid test ratio or liquidity ratio is more
rigorous test to liquidity than the current ratio. The two determinants are Quick assets and quick
liabilities. Quick asset includes inventories and Quick liabilities are excluded of bank overdraft.
Quick ratio may be defined as the relationship between quick assets and quick liabilities. The
ideal ratio for this is 1
3. Absolute Liquidity Ratio: Also known as Super Quick ratio is a ratio where inventories
and receivables are excluded from current assets and only absolute liquid assets such as cash in
hand, cash at bank and readily realized securities are taken into consideration. The desirable
norm for this ratio is 1:2 i.e., Re. 1 worth of absolute liquid assets are sufficient for Rs. 2 worth
of current liabilities.
4. Fixed Assets Turnover Ratio: This ratio indicates the extent to which the investments
in fixed assets contribute towards sales compared with previous period. It indicates whether the
investment in fixed assets has been judicious or not.

5. Current assets over total Assets: This ratio indicates the contribution made by the
current assets over the total assets. There should be average amount current assets as compared
to total assets because too much amount of current assets locked would raise the risk and care
should be taken to see where the division really requires.
6. Working Capital Turnover Ratio: Working capital of a concern is directly related to

sales. The current assets like debtors, bills receivable, cash and stock changes with increase or
decrease in sales. The ratio measures the efficiency with which the working capital is being used
by a firm.
7. Cash to Current Assets Ratio: - This ratio indicates the relationship between cash and
current assets. It is that cash in well balanced company should not be less than 5 percent to 10
percent of current assets. It helps to determine the minimum level of cash monthly control of
cash and historical records gives the indication of trends.
8. Debtors Turnover Ratio: Debtors turnover ratio indicates the velocity of debt collection
of a firm. In simple words, it indicates the member of times average debtors are turned over
during a year.
9. Average Debt collection Period: The average collection period represents the average
collection number of days for which a firm has to wait before its receivables are converted into
cash.
10. Stock Turnover Ratio: Stock turnover ratio reveals the number of times the stock in
trade is turned over in business during a particular period. High turnover indicates the quick
turnover of finished goods. It enables the firm judge the adequacy of current ratio. However, a
relatively high turnover ratio indicates a very low level of inventory and frequent stock outs.
11. Stock Conversion Period: This indicates the clearing period of the stocks. It is
calculated by dividing number of days with the stock turnover ratio.
12. Sundry Creditors to inventory Ratio : This ratio shows the extent to which
inventories are procured through credit purchase and also explains the extent of inventory

obtained through cash purchase. If the ratio is more than one it denote the entire inventory is
purchased on credit.
13. Inventory to Net Working capital: Inventory to working capital indicates the
relationship between inventory and working capital. A reduction in inventory results in small
percentage of reduction in working capital and vice versa. A lower ratio indicates a sound
working capital position. The standard norm for this ratio is 1:1, Preferably the inventory should
be lower than the working capital.
CURRENT ISSUES
The automotive industry designs, develops, manufactures, markets, and sells motor
vehicles, and is one of the world’s most important economic sectors by revenue. Around the
world, there were about 806 million cars and light trucks on the road in 2007, consuming over
26-0 billion gallons of gasoline and diesel fuel yearly. This results in huge amount of pollution.
These create a negative impacts fall on those social groups who are also least likely to own and
drive cars.
So, environmental pollution is one of the most concerned issue that is surrounding the
industry, maximum pollution is released by automobiles which is why different countries have
set standard for vehicles to lessen these harsh effects. Now-a-days every automobile industry is
taking this matter into concern and are coming up with low emission vehicle and electric
vehicles. These new kind of vehicles creates less pollution. Moreover, vehicles which use
hydrogen as fuel are also developed which creates no smoke but water and is very suitable for
environment. Safety is also another issue and R&D is happening in this field to make the
vehicles safe to ride by inputting technologies like air bags, rapid brake system, distance tracing
system, GPS, etc. Moreover work is going on to develop self driving remote vehicle to make the
journey safer and even

CHAPTER- 4
RESEARCH METHODOLOGY
RESEARCH METHODOLOGY:
Research methodology is a way to systematically solve the research problems. It may be
understand as a science of studying now research is done systematically. In that various steps,
those are generally adopted by a research in studying his problem along with logic behind them.
It is important for research to know not only the research method but also know
methodology. The procedure by researchers goes about their work of describing, explaining and
predicting phenomenon are called methodology. Methods comprise the procedures used for
generating collecting and evaluating the data. All this means that it is necessary for the
researcher to design his methodology for his problem as the same may differ from problem to
problem.

Data collection is an important step in any project and success of any project will be
largely depend upon now much accurate you will be able to collect and how much time, money
and effort will be required to collect that necessary data, this also important step. Data collection
plays an important role in research work. Without proper data available for analysis you cannot
do the research accurately.
RESEARCH DESIGN:
The research that has been done is of analysis research. As the data that is required
mainly in form secondary sources like annual reports of the organization, it is based on the
analysis done from the collected data.
Data sources:
There are types of data collection methods available .They are
1) Primary Data Collection.
2) Secondary Data Collection.
1. PRIMARY DATA COLLECTION:

The primary data is that data which is collected fresh hand, and for first time which in
nature primary data can collect through personal interview, questionnaire etc., to support the
secondary data.
2. SECONDARY DATA COLLECTION:
The secondary data are those which have already collected and stored. Secondary data
easily get those secondary data from records, journals, annuals reports of the company etc., I will
save the time, money and efforts to collect the data. Secondary data also made available through
trade magazine, balance sheets books etc..,
NEED FOR THE STUDY

Working capital is the life blood of all types of enterprises, manufacturing & trading. It is
very essential for efficient for running of firm. Maintenance of more working capital will helps
the firm to improve the working position of the firm.

OBJECTIVES OF THE STUDY
1. To study the working capital changes of the firm.
2. To analyze financial performance of the company with reference to its working capital
components.
3. To provide the measures to improve the working capital position of the firm.
SCOPE OF THE STUDY
The scope of present study is limited because of the following reasons:
 As most of the financial information is considered to be confidential, access to

information was restricted.
 The results of the study are limited to the availability of the information.
RESEARCH METHODOLOGY:
Research design :Analytical study
Sources of data :Secondary data
Period of study :2015-16 to 2019-20
Tools of analysis :Working capital analysis
LIMITATIONS OF THE STUDY
Following limitations were encountered while preparing this project:
 Limited data: - This project has completed with annual reports; it just constitutes one part of
data collection i.e. secondary. There were limitations for primary data collection because of
confidentiality.

 Limited period: This project is based on five year annual reports. Conclusions and
recommendations are based on such limited data. The trend of last five year may or may not
reflect the real working capital position of the company.
CHAPTER- 5
DATA ANALYSIS & INTERPRETATION
WORKING CAPITAL ANALYSIS
Statement showing changes in working capital of Maruti Suzuki India ltd during the year
2015-2016 (Rs. In crores)
Change in working
Particulars 2015 2016 Capital
Increase Decrease
CURRENT ASSETS:
Inventories 1705.90 2615.00 909.1 -
Sundry Debtors 1413.70 1069.80 - 343.9
Cash and bank balances 629.70 18.30 - 611.4
Loans and advances 3256.70 2891.80 - 364.9
Total Current assets(A) 7006 6594.9 - -
CURRENT LIABILITIES:
Current liabilities 6996.90 8013.60 - 1016.7

Provisions 875.70 1653.00 - 777.3
Total Current Liabilities(B): 7872.6 9666.6 - -
WORKING CAPITAL(A- -866.6 -3071.7 - -

B)
Net decrease in Working - 2205.1 2205.1 -
capital
Total -866.6 -866.6 3114.2 3114.2
Interpretation:
From the above table there is an decrease of the working capital by 2205.1 crores. By
comparing to the year 2015 in the year 2016 all current liabilities are increased and all current
assets are decreased except inventories.
Statement showing changes in working capital of Maruti Suzuki India ltd

during the year 2016 – 2017 (Rs. In crores)
Change in working
Increase Decrease
CURRENT ASSETS:
Inventories 2615.00 3132.10 517.1 -
Sundry Debtors 1069.80 1322.20 252.4 -
Cash and bank balances 18.30 42.20 23.9 -
Loans and advances 2891.80 3994.40 1102.6 -
Total Current assets(A) 6594.9 8490.9 - -
Provisions 1653.00 413.70 1239.3 -

B)

(Current assets-Current
liabilities)
capital
Total -3071.7 -3071.7 3551.1 3551.1
Interpretation:
comparing to the year 2016 in the year 2017 current liabilities are increased, provisions are
decreased and current assets are increased.

Change in working
Increase Decrease
CURRENT ASSETS:
Inventories 3132.10 3262.20 130.1 -
Sundry Debtors 1322.20 1199.20 - 123
Cash and bank balances 42.20 13.80 - 28.4
Loans and advances 3994.40 3749.40 - 245
Provisions 413.70 470.90 - 57.2

B)
liabilities)

Net decrease in Working 2623.8 2623.8

capital
Total -3487.5 -3487.5 2753.9 2753.9
Interpretation:
comparing to the year 2017 in the year 2018 all current liabilities are increased and current assets
are decreased except inventories.


Change in working
Increase Decrease
CURRENT ASSETS:
Inventories 3262.20 3160.80 - 101.4
Sundry Debtors 1199.20 1461.80 262.6 -
Loans and advances 3749.40 3901.30 151.9 -
Provisions 470.90 586.50 - 115.6

B)
liabilities)
capital
Total -6111.3 -6111.3 3267.5 3267.5
Interpretation:
comparing to the year 2018 in the year 2019 all current liabilities are increased and current assets
are increased except inventories.


Change in working
Increase Decrease
CURRENT ASSETS:
Inventories 3160.80 3325.70 164.9 -
Sundry Debtors 1461.80 2310.40 848.6 -
Loans and advances 3901.30 3593.90 - 307.4
Current liabilities 16915.50 15976.80 938.7 -
Provisions 586.50 663.90 - 77.4

B)
liabilities)
Net increase in Working 1675.20 - - 1675.20
capital
Total -7231.80 -7231.80 2060 2060
Interpretation:
From the above table there is an increase of the working capital by 1675.20 crores. By
comparing to the year 2019 in the year 2020 current liabilities are decreased, provisions are
increased and current assets are increased except loans & advances.
Current Ratio:

The Current Ratio is used primarily to determine a company’s ability to pay back its short
term liabilities (debt and payables) with its short term assets (cash, inventory, accounts
receivable). A standard ratio of 2:1 is considered favorable.
TABLE – 1
Table showing Current Ratio of Maruti Suzuki India Ltd. From the year 2015- 16 to
2019-20
Formula:-
Current Assets
Current Ratio = --------------------
Current Liabilities
Amount (Rs.in crores)
Year Current assets Current liabilities Ratio
2015-16 6594.90 9666.60 0.68

2016-17 8490.90 11978.40 0.70
2017-18 8224.60 14335.90 0.57
2018-19 8595.00 17502.00 0.49
2019-20 9408.90 16640.70 0.56

GRAPH – 1
Graph showing Current Ratio of Maruti Suzuki India Ltd. from the year 2015-16 to 2019-20
CURRENT RATIO
0.8
0.7
0.68 0.7
0.6
0.57 0.56
0.5
0.49 CURRENT RATIO
0.4
0.3
0.2
0.1
0
2014-15 2015-16 2016-17 2017-18 2018-19
Interpretation:
The standard Current ratio of the firm is 2:1 the Current ratio of maruti Suzuki india ltd
was less than 2 in the entire period of study.
Quick Ratio (QR):

In finance, the quick ratio, also known as the acid-test ratio is a type of liquidity ratio,
which measures the ability of a company to use its near cash or quick assets to extinguish or
retire its current liabilities immediately. It is defined as the ratio between quickly available or
liquid assets and current liabilities. Quick assets are current assets that can presumably be
quickly converted to cash at close to their book values.
A normal liquid ratio is considered to be 1:1. A company with a quick ratio of less than 1
cannot currently fully pay back its current liabilities.
TABLE – 2
Table showing Quick Ratio of Maruti Suzuki India Ltd. From the year 2015– 16 to 2019-
20
Formula:-
Liquid Assets (Current Assets – Inventory – Prepaid expenses)
Quick Ratio = -------------------------------------------------------------------------------
Current Liabilities
Year Quick assets Current liabilities Ratio
2015-16 3979.9 9666.6 0.41
2016-17 5358.8 11978.4 0.45
2017-18 4962.4 14335.9 0.35
2018-19 5434.2 17502 0.31
2019-20 6083.2 16640.7 0.37
GRAPH – 2

Graph showing Current Ratio of Maruti Suzuki India Ltd. from the year 2015-16 to 2019-
20
Quick Ratio
0.5
0.45
0.45
0.4 0.41
0.35 0.37
0.35
0.3 0.31 Quick Ratio
0.25
0.2
0.15
0.1
0.05
0
2014-15 2015-16 2016-17 2017-18 2018-19
Interpretation:
The standard quick ratio of the firm is 1:1 the quick ratio of maruti Suzuki india ltd was
below 1 in the entire period of study.

Fixed Assets Turnover Ratio:
This ratio indicates the extent to which the investments in fixed assets contribute towards sales
compared with previous period. It indicates whether the investment in fixed assets has been
judicious or not.
TABLE – 3
Table showing Fixed Asset Turnover Ratio of Maruti Suzuki India Ltd. From the year
2015-16 to 2019-20
Formula
Net Sales
Fixed Asset Turnover Ratio = ------------------
Fixed Assets
Amount (Rs in crores)
Year Net Sales Fixed Assets Ratio

2015-16 49970.60 14142.10 3.53
2016-17 57538.10 13516.90 4.25
2017-18 68034.80 14545.00 4.67
2018-19 79762.70 15484.90 5.15
2019-20 86020.30 17007.90 5.05
GRAPH – 3

Graph showing Fixed Asset Turnover Ratio of Maruti Suzuki India Ltd. from the year
2015-16 to 2019-20
Fixed Assets Trunover Ratio

6
5 5.15 5.05
4.67
4 4.25
Fixed Assets Trunover Ratio
3.53
3
0
2014-15 2015-16 2016-17 2017-18 2018-19
INTERPRETATION
The above graph indicates that the fixed asset turnover ratio of the company was less in
the year 2015-16 and after that it has increased in the year 2016-17 to 2018-19 and was the
decreased in the year 2019-20. Hence, there is an fluctuation in the fixed asset turnover ratio.

Working Capital Turnover Ratio:
Working capital of a concern is directly related to sales. The current assets like debtors, bills
receivable, cash and stock changes with increase or decrease in sales. The ratio measures the
efficiency with which the working capital is being used by a firm.
TABLE – 4
Table showing Working Capital Turnover Ratio of Maruti Suzuki India Ltd. From the
year 2015-16 to 2019-20
Formula
Net Sales
Working Capital Turnover Ratio = ----------------------------------------------------------
Working Capital (Current Assets – Current Liabilities)
Year Net Sales Working Capital Ratio(in Times)

2015-16 49970.60 -3071.70 16.26
2016-17 57538.10 -3487.50 16.49
2017-18 68034.80 -6111.3 11.13
2018-19 79762.70 -8907.00 8.95
2019-20 86020.30 -7231.80 11.89
GRAPH – 4

Graph showing Working Capital Turnover Ratio of Suzuki India Ltd. from the year 2015-
16 to 2019-20
Working capital Ratio(in Times)

18 16.49
16.26
16
14
11.89
12 11.13
Working capital Ratio(in
10 8.95 Times)
8
6
4
2
0
2014-15 2015-16 2016-17 2017-18 2018-19
INTERPRETATION
The above graph indicated that the working capital turnover ratio of in the year 2015-16
was 16.26 and after that it has increased in the year 2016-17 and it has decreased in the year
2017-18 and then it has again decreased in the year 2018-19 and it increased to 11.89 in the year
2019-20. Hence, there is a fluctuation trend in the working capital turnover ratio.
FINDINGS

1. For the year ended 2016 there is an decrease of the working capital by 2205.1 crores. By
comparing to the year 2015,in the year 2016 all current liabilities are increased and all
current assets are decreased except inventories.
comparing to the year 2016 in the year 2017 current liabilities are increased, provisions
are decreased and current assets are increased.
comparing to the year 2017 in the year 2018 all current liabilities are increased and
current assets are decreased except inventories.
comparing to the year 2018 in the year 2019 all current liabilities are increased and
current assets are increased except inventories.
5. For the year ended 2020 there is an increase of the working capital by 1675.20 crores. By
comparing to the year 2019 in the year 2020 current liabilities are decreased, provisions
are increased and current assets are increased except loans & advances.
6. The Current ratio of maruti Suzuki india ltd was less than 2 in the entire period of study.
7. The quick ratio of maruti Suzuki india ltd was below 1 in the entire period of study.
SUGGESTIONS
A study of the working capital management is of prime importance for both internal and
external analysis. Hence the study is undertaken to analyze the working capital management of
Suzuki india Ltd. This chapter has been designed to recapitulate the key findings of the study as

well as to make suitable recommendation if any to improve the working capital performance of
the company.
 The firm needs to take measures to maintain sufficient cash for successful running of
day-to-day business activities.
 They need to concentrate on their debt collection method as and should device new
technique to accumulate it quickly in order to avoid bad debts.
 As per my study the current assets are very low and I would to suggest to maintain the
proper current assets in the company.
 Current ratio was found to be lower in 2015-16 to 2018-19. lower ratio can effects the
investors. So it is better to focus on improvement of current ratio.
 According to my study I like to suggest it’s better to increased current assets.
 According to my study I like to suggest it’s better to decreased current liabilities.
CONCLUSION
 The company has should maintain sufficient cash to maintain better liquidity position.
 Working capital of the company has decreased every year and it will affect the company
investments.

 They purchase their inventory mostly via cash which abstain them from
increasing liability and should try to keep it up
 They should try to maintain their cash holding position in accordance with current
assets and should try not to hold to many funds and should utilize them.
BIBLOGRAPHY
 Dr. Prasanna Chandra, “Financial Management – Theory & Practice”, Seventh Edition,
New Delhi, Tata MC Grow – Hill Publishing Company Limited, New Delhi – 110008;

 Dr. Kothari C.R, “Research Methodology – Methods & Techniques”, Second Edition,
New Delhi, Vikas Publishing House Pvt. Ltd;
 I M Pandey: “Financial Managemen”, Ninth Edition, 2004, Vikas Publishers, New Delhi
– 110104.
WEBSITE LINKS
https://en.wikipedia.org/wiki/History_of_the_automobile
https://en.wikipedia.org/wiki/Maruti_Suzuki
https://www.moneycontrol.com/stocks/company_info/print_main.php


WORKING CAPITAL MANAGEMENT: INDUSTRY PROFILE

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

WORKING CAPITAL MANAGEMENT: INDUSTRY PROFILE

Uploaded by

Copyright:

Available Formats

WORKING CAPITAL MANAGEMENT

 The study of money and other assets

 The management of those assets

 As a verb, “to finance” is to provide funds for business.

S.V.DEGREE COLLEGE::KADAPA Page 1

S.V.DEGREE COLLEGE::KADAPA Page 2

Various decisions regarding

2) Specific form of assets where money is to be invested and

3) The composition of its liabilities

Investment Decisions: Investment decisions are concerned with investment of financial

Some key issues of financing decisions making are :-

What mix of debt and equity to be used?

Can value of company be changed by changing the capital structure?

S.V.DEGREE COLLEGE::KADAPA Page 3

What is optimal debt equity mix?

Dividend Decisions: - Dividend decision of a company is crucial financial decisions. Dividend

1. Profitability is a barometer for measuring efficiency and economic prosperity of a

S.V.DEGREE COLLEGE::KADAPA Page 4

2) Wealth Maximization: - Wealth maximization is the appropriate objective of an enterprise.

1.2 INDUSTRY PROFILE

S.V.DEGREE COLLEGE::KADAPA Page 5

S.V.DEGREE COLLEGE::KADAPA Page 6

17th and 18th centuries

Cugnot's steam wagon, the second (1771) version

Ferdinand Verbiest, a member of a Jesuit mission in China, built a steam-powered vehicle

A replica of Richard Trevithick's 1801 road locomotive 'Puffing Devil'

S.V.DEGREE COLLEGE::KADAPA Page 7

S.V.DEGREE COLLEGE::KADAPA Page 8

1924 Doble Model E

1924 Doble Model E

S.V.DEGREE COLLEGE::KADAPA Page 9

See also: History of the electric vehicle

S.V.DEGREE COLLEGE::KADAPA Page 10

Internal combustion engines

The second Marcus car of 1888 at the Technical Museum in Vienna

S.V.DEGREE COLLEGE::KADAPA Page 11

It is generally acknowledged[according to whom?] that the first really practical

S.V.DEGREE COLLEGE::KADAPA Page 12

The first four-wheeled petrol-driven automobile in Britain was built in Walthamstow by

The first automobile in Japan, a French Panhard-Levassor, in 1898

S.V.DEGREE COLLEGE::KADAPA Page 13

The Selden Road-Engine

Main article: Antique car

S.V.DEGREE COLLEGE::KADAPA Page 14

S.V.DEGREE COLLEGE::KADAPA Page 15

Some examples of cars of the period included:

S.V.DEGREE COLLEGE::KADAPA Page 16

Examples of period vehicles:

S.V.DEGREE COLLEGE::KADAPA Page 17

S.V.DEGREE COLLEGE::KADAPA Page 18

SUZUKI MOTORCYCLES INDIA HISTORY

Suzuki Motor Corporation (SMC), a global giant of motorcycle manufacturing is

S.V.DEGREE COLLEGE::KADAPA Page 19

MARUTI SUZUKI INDIA LTD

AFFILIATION WITH SUZUKI

S.V.DEGREE COLLEGE::KADAPA Page 20

S.V.DEGREE COLLEGE::KADAPA Page 21

Model Production Category Image Outlet

Alto 2012–present hatchback Arena

S.V.DEGREE COLLEGE::KADAPA Page 22

Celerio 2014–present hatchback Arena

Swift 2005–present hatchback Arena