A STUDY ON COMPARATIVE ANALYSIS OF TOP

AUTOMOBILE SECTOR

Submitted in partial fulfillment for the award of the degree of

MASTERS OF MANAGEMENT STUDIES (MMS)

(Under University of Mumbai)

Submitted By:
Ms. FAIRINA MICHAEL D’SOUZA
Roll No. 38

Under the guidance of

PROF. Dr. MOHAN MATHEW

2018-20
SFIMAR

St Francis Institute of Management and Research, Mt. Poinsur,

S.V.P Road, Borivali (W) Mumbai
 CERTIFICATE

This is to certify that project titled “A STUDY ON COMPARATIVE ANALYSIS OF TOP

AUTOMOBILE SECTOR” is successfully completed by Ms. FAIRINA MICHAEL
D’SOUZA during the IV semester, in the partial fulfillment of the master’s Degree in
Management Studies recognized by University of Mumbai for the academic year 2018-2020
through St. Francis Institute of Management & Research.
The project work is original and not submitted earlier for the award of any degree or diploma or
associateship of any other University / Institution.

Name:

Date:
(Signature of guide)
 ACKNOWLEDGEMENT
In this project, I have made an honest and dedicated attempt to make the Project Report so easy
to understand for a person who is willing to get knowledge about the “A STUDY ON
COMPARATIVE ANALYSIS OF TOP AUTOMOBILE SECTOR”. I am deeply indebted to
my lecturers & my faculties who gave me opportunity of making project report. I am also
thankful to my Project supervisor (Guide) Prof. Dr. MOHAN MATHEW or his kind support &
suggestion for making project report.

SIGNATURE
 DECLARATION

I hereby declare that this project report submitted by me to the St. Francis Institute of
Management and Research is a bonafide work undertaken by me and it is not submitted to any
other University or Institution for the award of degree diploma / certificate or published any time
before.

Name: FAIRINA MICHAEL D’SOUZA

Roll No: 38

(Signature of Student)
 EXECUTIVE SUMMARY

Fundamental analysis attempts to measure a security's intrinsic value by examining related

economic and financial factors including the balance sheet, strategic initiatives, microeconomic
indicators, and consumer behavior. When an investor wishes to invest in a business for the long
term (say 10 – 15 years) it becomes extremely essential to understand the business from various
perspectives.

The study performed in this project is on automobile industry where 3 companies are taken in to
the consideration and the analysis are done from the year 2016-17 to 2018-2019. The fundamentals
of such companies are calculated with various tools. The study consists the factual data of the
companies from websites and annual reports.

This analysis helps to determine the company’s performance of how it perform its operations and
how its profitable for shareholders. This study helps to invest in the company looking on those
performances whether it is most preferable for investing or no.
 TABLE OF CONTENTS

Sr. No. PARTICULARS Page No.

1. INTRODUCTION ON INDIAN AUTOMOBILE INDUSTRY 1

2. NEED FOR STUDY 4

3. OBJECTIVES 4

4. RESEARCH METHODOLOGY 5

5. DATA ANALYSIS 6

6. FINDINGS 17

7. LIMITATION 18

8. CONCLUSION AND RECOMMENDATION 19

9. BIBLIOGRAPHY 20
 LIST OF TABLES

Sr. No. PARTICULARS Page No.

1. CURRENT RATIO 6

2. QUICK RATIO 7

3. RETURN ON EQUITY 8

4. RETURN ON ASSETS 9

5. RETURN ON CAPITAL EMPLOYED 10

6. INVENTORY TURNOVER RATIO 11

7. ASSET TURNOVER RATIO 12

8. NET PROFIT MARGIN 13

9. EARNING PER SHARE 14

10. DIVIDEND PAYOUT RATIO 15

11. CONCLUSION AND RECOMMENDATIONS 19

 LIST OF FIGURES

Sr. No. PARTICULARS Page No.

1. CURRENT RATIO 6

2. QUICK RATIO 7

3. RETURN ON EQUITY 8

4. RETURN ON ASSETS 9

5. RETURN ON CAPITAL EMPLOYED 10

6. INVENTORY TURNOVER RATIO 11

7. ASSET TURNOVER RATIO 12

8. NET PROFIT MARGIN 13

9. EARNING PER SHARE 14

10. DIVIDEND PAYOUT RATIO 15

11. DEBT TO EQUITY 16

 INTRODUCTION ON INDIAN AUTOMOBILE INDUSTRY

India was the world's sixth-largest producer of motor vehicles / cars in 2013. In 2011-12 (March-
April) Indian automakers produced a record 20.4 million motor vehicles. In 2011-12, 3.124 million
passenger vehicles were rolled out of Indian auto plants. India is the largest three-wheelers
producer (8,78,000 in 2011-12), and the eighth largest commercial vehicle (9,12,000 in 2011-12)
Whereas production of two-wheeler reached 15.45 million units. India is the largest producing
tractor country (around 1/3 of global production) with an estimated total production of 605,000
units in 2011-12. Size of construction vehicles was approx. In 2010-11 48 000. In 2013, 2.55
million passenger vehicles were sold in India.

India is the second-largest motorcycle (6.54 million produced in 2007-08) and the world's fourth-
largest producer of commercial vehicles. Car exports for the year 2005-06 amounted to
approximately USD 2.3 billion. More than 13 million workers work in the automotive industry,
directly or indirectly. In 2013-14 Indian car exports totaled 5,50,000 units. Hyundai India was the
largest exporter of 2,33,000 vehicles, followed by Nissan (116,000 vehicles), Maruti Suzuki
(1,00,000 vehicles) and Toyota Kirloskar (27,000 vehicles). Exports of motorcycles were 1.98
million units, along with 94,000 scooters. The Indian automotive component industry's total
turnover in 2013–14 was estimated at USD 35 billion.

Vehicle ancillary exports fetched USD 10.2 billion in the same year while India's vehicle tire
industry's overall turnover in 2013-14 was valued at Rs 450 billion. In 2012, the total number of
registered motor vehicles on Indian roads reached 160 million of which more than 21.5 million
were cars, taxis and jeeps.

Established automakers and new entrants on the Indian auto market are expanding their
manufacturing capacity on a large scale. The growing companies include Maruti-Suzuki, General
Motors (GM), Tata Motors, Volkswagens (VW) Alliance, Toyota, Honda, Hyundai and others.
The maiden auto plant of the Renault-Nissan Alliance near Chennai began its production in 2010.
A second installation is expected. New auto makers planning to enter the Indian market include
Isuzu, Jeep and possibly Mazda.

1
After the first automobile produced in Mumbai in 1898, the Indian automotive industry continues
to be a long way coming. Today's automotive industry is one of the country's main sectors largely
contributing to India's economy. Automotive industry is one of the most diverse and rising
industries in India. This industry represents 22 per cent of manufacturing (GDP) in the world. The
auto sector is one of the biggest job creators, both directly and indirectly. It is estimated that every
job created in an auto company leads to three to five indirect ancillary jobs.

India's domestic market and its potential for growth has been a major attraction for many global
automakers. India is currently the third-largest two-wheelers exporter in the world after China and
Japan. Two-wheeler sales are expected to grow to 34 million by FY 2020 from 15.9 million in FY
2013. The segment posted a 7.31 per cent growth in FY 2014. Furthermore, passenger vehicle
sales are expected to increase to 8.6 million in FY 2021 from 3.2 million in FY 2013.

According to a Standard Chartered Bank report, by the year 2020, India is expected to overtake
Thailand in global share of the auto-export market. Strong demand growth due to increasing
wages, growing middle class and a young population is likely to propel India among the top five
car manufacturers worldwide by 2015. Automotive export volumes grew at a 19.1 per cent
Compound Annual Growth Rate (CAGR) during the 2005-2013 fiscal year, of which two-wheelers
accounted for the largest share of exports at 67 per cent in the 2013 financial year.

Maruti Suzuki India Ltd.

Maruti Suzuki India Limited (MSIL) is engaged in the business of manufacture, purchase and sale
of motor vehicles, automobile components and spare parts (automobiles). The other activities of
the Company consist of facilitation of pre-owned car sales, fleet management and car financing.
The Companies portfolio includes the Maruti 800, Alto 800, Alto K10, A-star, Estilo, WagonR,
Ritz, Swift, Swift DZire, SX4, Omni, Eeco, Kizashi, Grand Vitara, Gypsy, Ertiga and Stingray.
The Companies services include Finance, Insurance, Maruti Genuine Accessories, Maruti Genuine
Parts, Maruti Driving School and Autocard.

Maruti Suzuki is in the Auto - Cars & Jeeps sector.

It is listed on the BSE with a BSE Code of 532500 and the NSE with an NSE Code of MARUTI.

2
Mahindra & Mahindra Ltd

Mahindra & Mahindra Ltd. is a mobility goods company in India, and a provider of farm solutions.
Segment of the Business is Automotive, Farm Equipment, Financial Services, Real Estate,
Hospitality and Others. Vehicle segment consists of vehicle sales, spare parts, mobility solutions
and construction equipment. The Section of Farm Equipment involves the selling of tractors,
machinery and spares.

The Segment of Financial Services includes providing financial products ranging from retail and
other loans, mortgage finance, mutual funds, and insurance broking. The Real Estate section
consists of ventures, project management and development, and commercial complex operations.
The Hospitality division covers the sale of timeshare and the management of holidays. Its section
Others includes aftermarket, security and steel trading. Taxi service is offered through its
subsidiary Meru Travel Solutions Pvt Ltd.

Eicher Motors Ltd

Eicher Motors Limited is a parent of Royal Enfield in India selling middle-weight motorcycles.
Royal Enfield operates in India, and in more than 40 countries worldwide. The Business deals with
the production of automotive products and associated parts. The Company operates in vertical
market, including motorcycles, commercial vehicles and utility vehicles for personal use.

The company designs, produces and markets 5-49-ton trucks and buses through its joint venture,
Volvo Eicher Commercial Vehicles Limited (VECV), and its manufacturing plant in Pithampur,
Madhya Pradesh is the hub for Volvo Group's medium-duty five- and eight-liter engines. VECV
comprises Eicher Trucks and Buses, Volvo Trucks India, Eicher Technology Parts, VE Powertrain
and Bus Body Plant. The company is offering Multix three in one car, designed for the independent
businessman, through Eicher Polaris Pvt Limited (EPPL).

3
 NEED FOR STUDY
Ratio analysis helps us to compare financial performance of the various firms in terms of risk,
profitability, liquidity, solvency and efficiency. Ratios will help to analyze which firms are
managed well as compared to their other competitors, and it also helps to compare these selected
companies’ current performance with its earlier performance.

OBJECTIVES
● To analyze the liquidity and profitability as well as solvency of the selected company’s

● To analyze all these companies’ current performance with its earlier performance

● To analyze cash conversion cycle of all these selected companies

4
 RESEARCH METHODOLOGY
● In this research Secondary data is used.

● Research design: descriptive

● Study is quantitative in nature as it deals with the main aim that is to find relevant
conclusions by analyzing all the financial statements.

● The data is taken from annual reports of the respective companies and also from their
websites, past papers and some business websites like money control are also used.

● Data analysis method: Ratio Analysis

1. Current ratio
2. Quick ratio
3. Return on Equity
4. Return on Assets
5. Return on Capital Employed
6. Inventory turnover ratio
7. Asset turnover ratio
8. Net profit margin
9. Earnings per share
10. Dividend payout ratio
11. Debt to equity

5
 DATA ANALYSIS

1. Current ratio

Current ratio

2.5 2.21

2
1.31 1.24 1.26
1.5 1.15
0.92 0.87
1 0.66
0.51
0.5

0
Jan-17 Jan-18 Jan-19

Maruti Suzuki India Ltd M&M Ltd Eicher Motors

Current ratio Mar-19 Mar-18 Mar-17

Maruti Suzuki India Ltd 0.87 0.51 0.66
M&M Ltd 1.26 1.24 1.31
Eicher Motors 2.21 1.15 0.92

Interpretation:

● Maruti Suzuki India Ltd current ratio is much lower below the standard which is 2 this
indicates that it may face difficulty in meeting its current obligation.

● Mahindra and Mahindra Ltd is near to the standard which is 2 which indicates they have
good working capital management.

● Eicher Motors current ratio is going up over the years. This was because there was an
increase in the investments in fixed deposits which resulted in an increase in current assets
leading to current ratio increasing from 1.1 in 2017-18 to 2.1 in 2018-19.

6
 2. Quick ratio

Quick Ratio
1.91
2

1.5
1.02 1.03 0.98 0.99
1 0.7 0.64
0.42
0.5 0.31

0
Jan-17 Jan-18 Jan-19

Maruti Suzuki India Ltd M&M Ltd Eicher Motors

Quick Ratio Mar-19 Mar-18 Mar-17

Maruti Suzuki India Ltd 0.64 0.31 0.42
M&M Ltd 0.99 1.03 1.02
Eicher Motors 1.91 0.98 0.7

Interpretation:

● For Maruti Suzuki India Ltd Quick ratio is lower than the standard which is one, which
means their acid assets are not sufficient to pay off their acid liabilities.

● For M&M Ltd Quick ratio is seen closer to the standard i.e. 1, which shows company is
well positioned in managing its cash requirements, indicates their instant debt paying
capability is highly good but the acid assets are remaining ideal.

● For Eicher Motors the Quick ratio is seen going close to the standard ratio over the years.

7
 3. Return on Equity

Return On Equity
39.77
40
31.88
35 28.82
30
25 20.17
18.49
20 16.25
13.6 14.37 14.01
15
10
5
0
Jan-17 Jan-18 Jan-19

Maruti Suzuki India Ltd M&M Ltd Eicher Motors

Return On Equity Mar-19 Mar-18 Mar-17

Maruti Suzuki India Ltd 16.25 18.49 20.17
M&M Ltd 14.01 14.37 13.6
Eicher Motors 28.82 31.88 39.77

Interpretation:

● Return on Equity has been more for Eicher Motors followed by Maruti Suzuki India Ltd.

● On an average Eicher Motors has given ROE of 33.49 which is much more than Maruti
Suzuki India Ltd which gave 18.3 and M&M Ltd which gave 13.99 over the three years.

8
 4. Return on Assets

Return on Assets
23.62
25 21.83

20 16.18
14.34
13
15 11.91
9.11 9.18 9.1
10

0
Jan-17 Jan-18 Jan-19

Maruti Suzuki India Ltd M&M Ltd Eicher Motors

Return on Assets Mar-19 Mar-18 Mar-17

Maruti Suzuki India Ltd 11.91 13 14.34
M&M Ltd 9.1 9.18 9.11
Eicher Motors 16.18 23.62 21.83

Interpretation:

• The best return on assets is given by Eicher motors followed by Maruti Suzuki India Ltd
which is seen reduced in year 2018-19 for both the companies. This shows the Return on
investments had gone down.

9
 5. Return on Capital Employed

Return on Capital Employed

56.17
60 52.91

50 42.05

40
25.83
30 21.6
16.95 16.86
26.42 14.28
20

10

0
Jan-17 Jan-18 Jan-19

Maruti Suzuki India Ltd M&M Ltd Eicher Motors

Return on Capital Employed Mar-19 Mar-18 Mar-17

Maruti Suzuki India Ltd 21.6 25.83 26.42
M&M Ltd 16.86 16.95 14.28
Eicher Motors 42.05 52.91 56.17

Interpretation:

● Eicher Motors has given the highest Return on capital employed over the years. This shows
its efficiency to generate profit from the capital employed.

● Followed by Maruti Suzuki India Ltd which has given an average of 24.62 ROCE over the
three years.

10
 6. Inventory turnover ratio

Inventory Turnover Ratio

30 25.87
25.23
23.62
25 20.86 21.83
18.02
20 15.97 16.18
13.96
15

10

0
Jan-17 Jan-18 Jan-19

Maruti Suzuki India Ltd M&M Ltd Eicher Motors

Inventory Turnover Ratio Mar-19 Mar-18 Mar-17

Maruti Suzuki India Ltd 25.87 25.23 20.86
M&M Ltd 13.96 18.02 15.97
Eicher Motors 16.18 23.62 21.83

Interpretation:

● It has observed that Maruti Suzuki India Ltd has highest inventory turnover ratio followed
by Eicher Motors. This is due to lowest level of inventory maintained.

● This indicates that Maruti Suzuki India Ltd was able to convert their existing inventories
into sales and leading to cash generation.

● M&M Ltd has maintained low inventory turnover among other companies over the last
three years, which indicates inefficient inventory management among the well-off
companies.

● Among these three companies Maruti Suzuki India Ltd is a leader in costing and inventory
management.

11
 7. Asset turnover ratio

Asset Turnover Ratio

132.74 134.34 136.68
140 127.03
110.22 114.91
120 102.67 101.74 103.34
100
80
60
40
20
0
Jan-17 Jan-18 Jan-19

Maruti Suzuki India Ltd M&M Ltd Eicher Motors

Asset Turnover Ratio Mar-19 Mar-18 Mar-17

Maruti Suzuki India Ltd 136.68 134.34 132.74
M&M Ltd 101.74 102.67 110.22
Eicher Motors 103.34 114.91 127.03

Interpretation:

● Maruti Suzuki India Ltd has the highest Asset turnover ratio followed by Eicher motors
over the three years.

● This shows that Maruti Suzuki India Ltd has been efficiently generating sales using its
assets.

12
 8. Net profit margin

Net Profit Ratio

25 22.16
20.97
19.12
20

15
10.8
9.68 8.94
8.… 8.71 8.94
10

0
Jan-17 Jan-18 Jan-19

Maruti Suzuki India Ltd M&M Ltd Eicher Motors

Net Profit Ratio Mar-19 Mar-18 Mar-17

Maruti Suzuki India Ltd 8.71 9.68 10.8
M&M Ltd 8.94 8.94 8.27
Eicher Motors 20.97 19.12 22.16

Interpretation:

● Net profit ratio is high for Eicher Motors over the years. Means their overall profitability
is good. And it is followed by Maruti Suzuki India Ltd

● But the overall profitability is seen reducing for Maruti Suzuki India Ltd. This is because

● There was a decrease in Eicher Motor’s net profit for the year 2017-18 as compared to
previous year. But it increased in year 2019-20 as the company continued to generate a
healthy cash flow with cash generated from operations being Rs. 1,573 crores in 2018-19.

13
 9. Earning per share

Earning per share

753.37
800
700 629.07
573.75
600
500
400
243.32 255.62 248.3
300
200
30.69 36.64 40.29
100
0
Jan-17 Jan-18 Jan-19

Maruti Suzuki India Ltd M&M Ltd Eicher Motors

Earning per share Mar-19 Mar-18 Mar-17

Maruti Suzuki India Ltd 248.3 255.62 243.32
M&M Ltd 40.29 36.64 30.69
Eicher Motors 753.37 629.07 573.75

Interpretation:

● Earnings per share for Eicher motors has been the highest followed by Maruti Suzuki India
Ltd.

● Eicher Motors has given the highest EPS of 753.37 in the year 2018-2019.

14
 10. Dividend payout ratio

Dividend payout ratio

32.21
35
29.34
30
23.08
25 21.24
18.51 19.43
20 14.59
14.38
15
10
5 0
0
Jan-17 Jan-18 Jan-19

Maruti Suzuki India Ltd M&M Ltd Eicher Motors

Dividend payout ratio Mar-19 Mar-18 Mar-17

Maruti Suzuki India Ltd 32.21 29.34 14.38
M&M Ltd 19.43 21.24 23.08
Eicher Motors 14.59 18.51 0

Interpretation:

● Maruti Suzuki India Ltd has the distributed better dividends to its owners as it has the
highest dividend payout ratio compared to Eicher Motors and M&M Ltd.

● This shows that Maruti Suzuki India Ltd earns a sufficient amount of Net income whose
portion it has been distributing to the owners.

● Followed by M & M Ltd giving good Dividends to its owners.

15
 11. Debt to equity

Debt to equity
0.1
0.1 0.09
0.09
0.08 0.07
0.07
0.06
0.05
0.04
0.03 0.02 0.02
0.02 0.01 0.01
0.01 0 0
0
Jan-17 Jan-18 Jan-19

Maruti Suzuki India Ltd M&M Ltd Eicher Motors

Debt to equity Mar-19 Mar-18 Mar-17

Maruti Suzuki India Ltd 0 0 0.01
M&M Ltd 0.07 0.09 0.1
Eicher Motors 0.01 0.02 0.02

Interpretation:

● Mahindra & Mahindra Ltd. has the highest debt equity ratio compared to Maruti Suzuki
India Ltd and Eicher Motors. This indicates that M & M Ltd is inefficient to generate
enough cash to satisfy its debt obligations.

● Maruti Suzuki India Ltd having the lowest debt equity ratio indicates that it is not taking
advantage of the increased profits that financial leverage may bring.

16
FINDINGS

● Mahindra and Mahindra Ltd have good liquidity ratio, which indicates they are able to
meet their short-term liability better than other companies. Their instant debt paying
capability is highly good but the acid assets are remaining ideal.

● With respect to efficiency, Maruti Suzuki India Ltd has been able to make best use of its
assets for production and to convert their existing inventories into sales leading to cash
generation.

● Maruti Suzuki India Ltd has efficiently used its assets to generate profit.

● Maruti Suzuki India Ltd has distributed high dividends to its owners.

● Eicher Motors has given the highest Return on capital employed which shows its efficiency
to generate profit from the capital employed.

● Net profit ratio is high for Eicher Motors, it means they are able to control expenses and
generate profit and sales continuously. This enables them to give good returns to the
shareholders.

● Maruti Suzuki India Ltd having the lowest debt equity ratio indicates that it has a good
leverage position.

17
LIMITATION

● Time is the main constraint. There are more than 30 ratios but all the ratios are not taken
into account due to time constraint.

● Only three companies are chosen for the study.

● The study is done for only three years.

18
 CONCLUSION AND RECOMMENDATIONS

Companies
Ratios
Maruti Suzuki India Ltd M&M Ltd Eicher Motors
Current ratio 3 1 2
Quick Ratio 3 1 2
Return on Equity 2 3 1
Return on Assets 2 3 1
Return on Capital Employed 2 3 1
Inventory Turnover Ratio 1 3 2
Asset Turnover Ratio 1 3 2
Net Profit Ratio 2 3 1
Earnings per share 2 3 1
Dividend payout ratio 1 2 3
Debt to equity 1 3 2

● In this Table, I have rated each company from 1-3 on each parameter. 1 being the highest.

● From the above table we see that Eicher motors ranks first for most of the ratios. This show
the better efficiency of the company as compared to Maruti Suzuki India Ltd and Mahindra
& Mahindra Ltd.

19
 BIBLIOGRAPHY

● www.investopedia.com

● www.valueresearchonline.com/stocks

● https://www.moneycontrol.com/

20
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