CHAPTER – I

INTRODUCTION AND DESIGN OF THE STUDY

INTRODUCTION:

Every business organization, whether manufacturing oriented or service oriented,

needs finance, i.e., money for caring on its activities. Though business organization gets
sufficient money for carrying its activities, success of the business depends on how well the
organization manages them. That is, it depends on how well a business organization funds its
capital and how efficiently it operates out of the invested capital to generate profit. While the
success of the of a business also a subjective measure how well a firm can finance its assets
and make use of the assets to generate revenues, the business can be stable and healthy if it is
financial performance consistently yields profit. These measures often determine whether or
not that level of performance is considered adequate. Further, a business organization is
considered to be inefficient, if the performance level is often found to be low, even if it is
making profit.

Financial performance analysis is the process of determining the operation and financial
characteristics of a firm from accounting and financial statements. The goal of such an
analysis is to determine the efficiency and performance of the firm’s management, as
reflected in the financial records and reports. The word ‘performance’ is derived from the
word ‘perfourmen’, which means ‘to do’, or ‘to carry out’ or ‘to tender’. It refers to the act of
performing: execution, accomplishment, fulfilment etc. In a broader sense, performance
refers to the accomplishment of a given task measured against present standards of accuracy,
completeness, cost and speed. Performance is used to indicate the firm’s success, conditions,
and complains. The goal of financial performance analysis is to determine the efficiency and
performance of the firm’s management, as reflected in the financial records and reports. The
analyst attempts to measure the firm’s solvency, liquidity, profitability and other indicators so
that the business is conducted in a rational and normal way. More specifically, any research
on financial performance of a business organization seeks to dwell upon mainly assessing
the short term and long-term solvency, assessing the liquidity and profitability, identifying
the efficiency of financial operations and analysing the factors determining the solvency level
liquidity and profitability.
STATEMENT OF THE PROBLEM:

Financial performance analysis is the process of determining the operation and

financial characteristics of affirm from accounting and financial statements. The goal of such
an analysis is to determine the efficiency and performance of the firm’s management, as
reflected in the financial records and reports. There is a lot of similar compare in present
scenario to measure the financial analysis of Maruti Suzuki India Limited Company to
understand how management of finance plays a crucial role in the growth.

OBJECTIVES OF STUDY:
 To study the growth and development of Maruti Suzuki India limited Company.
 To examine the stability and growth rate of selected financial parameters of the
particular Maruti Suzuki Company.
 To analyse profitability and liquidity status of the Maruti Suzuki Company Limited.

SCOPE OF STUDY:

 To evaluate the financial performance of Maruti Suzuki by analysing its financial

statements such as balance sheet.
 Ratio analysis can be used to evaluate profitability, liquidity ratios.

 This study is made mainly to know the profitability, liquidity of the company.

NEED OF STUDY:

 The interest of the various groups related to a firm is affected by the financial
performance of the firm.
 The study focus on overall financial position of particular Maruti Suzuki company
during the specific period based on the selected variables, which may interest not
only for the respective companies in the industry but also brings a process of
development operational aspects of the entire industry.
 The study is much important to the management from the point of decision-making
purpose, to identify the strength, weakness areas of the company and finally helps to
maximize the intrinsic value of the company.
LIMITATIONS OF STUDY:

 The study covers a period of five years from 2017-18 to 2021-22.

 Secondary data were collected for this study due to cost and time constrains.
 The present study is largely based on ratios, which have been its own limitations.

RESEARCH METHODOLOGY:

SOURCES OF DATA

 Secondary data are used in this study, which were collected from the various data
base, journal and websites. Variables pertaining to behaviour of liquidity, leverage
and profitability were collected from the balance sheet and profit and loss account of
the selected Maruti Suzuki India Limited Company for a period of 5 years i.e. from
2017-18 to 2021-22.

PERIOD OF STUDY

 The present study covers a period of five years from 2017-18 to 2021-22.

FRAME WORK OF ANALYSIS

 Analysing the performance of a company can be done through a carful and critical
analysis of financial statements. The two important financial statements are ‘Balance
sheet” and ‘Profit and loss account’. It indicates the operating results and financial
position of the concern, therefore by analysing and interoperating the statements,
performance can be appraised. In the light of the above in this study various financial
ratios and variables have been used to examine the objectives of the study.

STATISTICAL TOOL

 Financial ratio analysis method.

.
CHAPTER SCHEME:

The study has been presented in five chapters.

CHAPTER -I
This chapter deals with introduction , statement of the problem , need of the study,
objectives of the study , research methodology , scope of the study, limitations of the study ,
and chapter arrangements.

CHAPTER-II
This chapter deals with a review of the literature.

CHAPTER-III
This chapter deals with a company profile.

CHAPTER-IV
This chapter deals with a data analysis and interpretation.

CHAPTER-V
This chapter consists of finding and suggestions and conclusions.
 CHAPTER -II

REVIEW OF THE LITERATURE

This chapter is aimed to reviewing research work relevant to Car Industries as well as articles
in journals and earlier studies which focused on financial performance of companies under
various industries.

Dr (Smt) N Kamala and Smt Arumugha Selvi (2020) In their study they
concluded that “Maruti Suzuki” car manufacturers play a major role in the automobile
industry and there are more competitors like Hyundai, Honda and Ford etc., but Maruti
identify the factors that influence consumers to buy Maruti Suzuki car. They also focus on
after sale service at lower cost than other competitors.

Dhruv Mathur and Avdhesh Bharadwaj (2018) in their research paper they
conducted that buying behaviour of the customer about Maruti Suzuki cars is dependent on
the brand image of the car and manufacturer. Also, the engine type and efficiency with strong
advertising are the most dominant factors which influence the potential customers. So the
manufacturer needs to maintain the quality and positioning the brand image in the mind of
consumer with the use of advertising and marketing which is important factor.

Rumit Kumar Sahu (2017) in the research paper he concluded that consumer buying
behaviour comprises of all human demeanours. Only after studying and understanding the
compassionate and complex consumer behaviour it enables a marketer to take marketing
decisions which are appropriate with consumer needs, in case of Maruti Suzuki, after
analysing it is founded that “self-esteem” is a factor in respect to the consumer purchasing
preference is most bias factor and for capturing the market share this factor play a vital role.
Hem Latal and Amandeep Singh (2017) The finding in their research are Maruti
Suzuki is the No.1 automobile industry in India and has changed the overtime to suit the
needs of their customers. Maruti is the only company in India with lots of small car models.
There was positive correlation of age, education and income with service quality during
purchase, safety of car and cost of ownership. An association benefit was the most influential
services provided by the dealers. Most problems faced by consumers is to drive on the bumpy
road.

Kaur Harpeet (2016) The author tries to examine the qualities and quantities performer
of Maruti Suzuki Co. and how had both impact on its market share in India, for this study
secondary data has been collected from annual reports, journals, automobile sites. Result
shows that M.S.L has been leading automobile sector in India for last few years

Dr Vishal S Rana (2015) their study concludes that the proper customer care strategy plays
a vital role in satisfying and delighting to acquire new customers than retain existing
customers, the automobile companies if wants to retain their customers for long should focus
an appropriate marketing mix.

Dharma raj and Kathirvel (2013), the Indian Automobile Industry marked a new
journey in the 1991 with the financial revolutionary New Industrial Policy Act 1991, opening
automatic route which allowed the 100 per cent Foreign Direct Investment(FDI). Here, an
attempt is made to find out the effect of FDI on the financial performance of Indian
Automobile Industry. For this purpose, sixteen companies were selected and analysed
through various financial ratios. Descriptive statistical tools like Mean, Standard Deviation
and Student’s paired’ Test was used to test the hypothesis. The liquidity analysis showed
little changes and profitability analyses showed an increasing trend during post FDI when
compared to pre FDI. The efficiency analysis showed that the companies are efficiently
utilizing the available resources during post FDI as compared to pre FDI.
Ray (2012) ,this study tries to evaluate the performance of Indian automobile industry in
terms of various financial indicators, sales trend, production trend, export trend etc. for the
period of 2003-04 to2009- 10.The result suggests that the automobile industry has been
passing through turbulent phases characterized by enhanced debt burden, low utilization of
assets, and above all, huge liquidity crunch .The key to success in the industry is to improve
labour productivity, labour flexibility, and capital efficiency.

Kale (2011), in the last decade the Indian auto industry has shown increasing levels of
technological sophistication and significant growth. The Indian auto industry consists of local
firms with indigenous design and development capability, well established global brands and
has marketing presence in Indian as well as other emerging markets. This paper tracks
capability development in the Indian auto industry and seeks to understand the factors, both
internal and external to firms that have shaped innovative capabilities. It points out that the
Indian Government’s industrial policy secured development of basic capabilities but
restricted innovative capability development in auto manufacturing.

Pillai (2009) quoted that car sales are getting into a steady stage, in the month of December
2008. In spite of the general sink in the automobile market, the used car segment has not
taken much of a beating. Many of the dealers have said steady sales in December 2008,
contrary to the negative sales in the previous few months. This is attributed to the package
announced by the Government of India for the automobile industry in terms of reduction in
the excise duty of cars, and lucrative packages announced by the car manufacturer

Sharma (2008) in her study on ‘Indian Automotive Industry’ has analysed the sales and
capabilities of different firms in automobile industry. The study further indicates that the
growth in the automobile sector is expected to grow due to rising disposable income and
increasing consumerism. The global automakers will continue to allocate a rising proportion
of the foreign direct investment in India, growing auto-manufacturing first and latter auto
engineering R&D services. Many companies are aware of the fact that their labour cost
advantage is beginning to erode as both shop floor and managerial wage costs rise. However,
they are optimistic that productivity improvements through low cost automation and
improved management efficiency will compensate to rising direct wage cost.

CHAPTER -III

COMPANY PROFILE

MARUTI SUZUKI:

Maruti Suzuki India Limited, formerly known as Maruti Udyog Limited, is an Indian
automobile manufacturer headquartered in New Delhi. It is a subsidiary of the Japanese
automotive manufacturer Suzuki Motor Corporation.

This company has 3,598 sales outlets across 1,861 cities in India. The Brand Trust
Report published by Trust Research Advisory, a brand analytics company, has ranked Maruti
Suzuki in the thirty-seventh position in 2013 and ninth position in 2019 among the most
trusted brands of India.

This is a holding company. The Company is engaged in the manufacture, purchase and

sale of motor vehicles, components and spare parts (automobiles). The other activities of the
Company comprise facilitation of pre-owned car sales, fleet management and car financing.

Its geographical segments include the domestic segment, which includes sales to
customers located in India, and the overseas segment, which includes sales to customers
located outside India. The Company's product portfolio includes Alto 800, Alto K10, Wagon
R, Celerio, Ritz, Swift, DZire, Ertiga, Omni, Eeco, Gypsy, Ciaz, etc.

COMPANY HISTORY:
Maruti Suzuki India Ltd (formerly Maruti Udyog Ltd) is India's largest passenger car
company accounting for over 50% of the domestic car market. The company offers full range
of cars from entry level Maruti Alto to stylish hatchback Ritz A-star Swift Wagon R Estillo
and sedans DZire SX4 and Sports Utility vehicle Grand Vitara. The company is a subsidiary
of Suzuki Motor Corporation (SMC) of Japan which currently holds 56.37% of its equity
stake. The company is engaged in the business of manufacturing purchase and sale of motor
vehicles and spare parts (automobiles). The other activities of the company include
facilitation of pre-owned car sales fleet management and car financing. They have four plants
three located at Palam Gurgaon Road Gurgaon Haryana and one located at Manesar
Industrial Town Gurgaon Haryana.

The company has nine subsidiary companies namely Maruti Insurance Business Agency
Ltd Maruti Insurance Distribution Services Ltd Maruti Insurance Agency Solutions Ltd
Maruti Insurance Agency Network Ltd Maruti Insurance Agency Services Ltd Maruti
Insurance Agency Logistics Ltd True Value Solutions Ltd Maruti Insurance Broker Ltd and J
J Impex (Delhi) Pvt Ltd. Maruti Suzuki India Ltd was incorporated on February 24 1981 with
the name Maruti Udyog Ltd. The company was formed as a government company with
Suzuki as a minor partner to make a people's car for middle class India. Over the years the
company's product range has widened ownership has changed hands and the customer has
evolved. In October 2 1982 the company signed the license and joint venture agreement with
Suzuki Motor Corporation Japan. In the year 1983 the company started their productions and
launched Maruti 800.

In the year 1984 they introduced Maruti Omni and during the next year they launched
Maruti Gypsy in the market. In the year 1987 the company forayed into the foreign market by
exporting first lot of 500 cars to Hungary In the year 2000 the company launched Maruti Alto
in the market. In the year 2002 Suzuki Motor Corporation increased their stake in the
company to 54.2%. In January 2002 the company introduced 10 finance companies (8 +
2JVs) in Mumbai. Also they found one new business segment Maruti True Value for sales
purchase and trade of pre-owned cars in India the Company will invest approximately Rs 15
crore for setting up the driving test centres.

While Maruti Suzuki will set up the centres and maintain them for three years the Transport
Department will conduct the tests and issue driving licenses to eligible applicants.Maruti
Suzuki announced price increase ranging from Rs 1700 to Rs 17000 (Ex-Showroom - Delhi)
across models with effect from 10 January 2018 owing to increase in commodity and other
administrative and distribution costs.At the time of approval of Q3 December 2017 results on
25 January 2018 the Board of Directors of Maruti Suzuki discussed and approved a revision
in the method of calculating royalty payment to Japanese parent Suzuki Motor Corporation
that would result in lower royalty payments for Maruti Suzuki for new model agreements
starting the Ignis. This would be implemented after approval by the Board of Suzuki Motor
Corporation.

On 7 February 2018 Maruti Suzuki showcased new compact car ConceptFutureS at Delhi
Auto Expo 2018 in New Delhi. On 8 February 2018 Maruti Suzuki announced the launch of
an updated version of its premium hatchback Swift at Auto Expo 2018 in New Delhi. The all-
new Swift comes offers the acclaimed auto gear shift technology for the convenience of
customers. Built on Suzuki's innovative 5th generation HEARTECT platform the all-new
Swift has a superior power to weight ratio with an improved acceleration performance.
During 2017-18the Company posted a volume growth of 13.8% in passenger vehicles in the
domestic market including the LCV and the company's domestic sales growth stood at
14.5%.

During the year the company added 203 dealer workshops to the network which is the highest
ever in a single financial year. The company has 3403 service workshops covering 1659
cities across the country. During the FY 2018-19the Company posted a volume growth of
5.3% in passenger vehicles in the domestic market including the LCV segment. The
company's domestic sales growth stood at 6.1%. During the yearthe business partnership
between Suzuki Motor Corporation and Toyota Motor CorporationJapan started taking place.
The company is likely to benefit immensely from this partnership by gaining access to the
new-age technologies and from the mutual supply of vehicles. During the fiscal 2020the
company registered an overall volume decline of 16.1% due to weak demand environment in
both the domestic and export markets.

The company's operations were suspended in the latter part of March 2020 due to
unprecedented COVID-19 outbreak which leads to a nationwide shutdown of economic
activities. During the year250 service workshops were added to the networkwhich is the
highest ever in a single financial year taking the total number of workshops to 3864 covering
1914 cities across the country. Suzuki Motor Gujarat Private Limited (SMG) a subsidiary of
Suzuki Motor Corporation (SMC) was set up in Hansalpur Gujarat to cater to the increasing
market demand for the Company's products. In April 2021 the 3rd manufacturing plant with
an annual production capacity of 0.25 million units was made operational.During FY 2021-22
the Company sold around 234000 units of S-CNG vehicles. It launched petrol variant New
Celerio in year 2021-22. The new WagonR with the next-gen K-series engine was launched
with both petrol (1.0L and 1.2L) and S-CNG (1.0L) fuel options.

VISION:

To be the leader in the Indian Automobile industry, creating customer delight and
shareholders wealth; A pride of India. To provide products that meet or exceed customer
expectations. Maruti’s vision statement conveys a picture of what the future looks like, it has
a desirable appeal. “Creating customer delight and shareholders wealth”. It is also distinctive
being “Pride of India”. The statement is also focused and clear “to be a leader in automobile
industry

MISSION:

 Modernisation of Indian automobile industry.

 Developing cars faster and selling them for less.
 Production of fuel-efficient vehicles to conserve scarce resources
 Production of large number of motor vehicles which was necessary for economic
growth.

 Market penetration, market development and diversification.

COMPETITORS OF MARUTI SUZUKI CARS:

 Maruti Suzuki Alto - Hyundai Santro, Grand i10, Datson Redi GO.

 Maruti Suzuki Dzire - Honda Amaze, Hyundai Aura, Tata Tigor

 Maruti Suzuki Swift - Hyundai Grand i10 Nios, Tata Altroz.

 Baleno – Hyundai i20, Volkswagen Polo, Honda Jazz.

 Vitara Breeza – Mahindra XUV, Tata Nexon, Hyundai Venue.

 Eeco – Tata Venture, Renault Triber.

 Celerio – Renault Kwid, Tata Tiago.

STRENGTHS OF MARUTI SUZUKI:

 Maruti Suzuki is in a leadership position in the market with a market share of 48.74.

 Have largest network of dealers and after sale services.

 Good promotional strategies.

 Highest number of domestic sales.

 Strong brand value and loyal customers.

 1 st automobile company to start second hand vehicle sales through its true entity.

AWARDS AND ACHIEVEMENTS

 Company of the Year, 2018.

 Lifetime Achievement Award, 2016.

 Swift - Indian Car of the Year, 2019.

 Ertiga – Car of the Year and MPV of the Year, 2018.

 Platinum Safety Award, 2018.

 National Safety Award, 2018.

 4 good rating (by the Economic Times and 2 good CSR Rating Scheme 2019).

 Gold Trophy (in the category of Best ITI-Skill Development through PPP Model).

CHAPTER – IV
 DATA ANALYSIS AND INTERPRETATION

RATIO ANALYSIS:

Ratio analysis is an accounting method that uses financial statements, like balance sheets and
income statements, to gain insights into a company's financial health. Ratio analysis will help
determine various aspects of an organization including profitability, liquidity and market
value.

Ratio analysis is a helpful tool to determine from the outside what is going on inside of a
business because the financial statements required to perform ratio analysis are available to
the general public. 

MAJOR TYPES OF RATIO ANALYSIS

1. Gross profit ratio

2. Net profit ratio
3. Sales turnover ratio
4. Operating profit ratio
5. Return on investment
6. Inventory turnover ratio
7. Current ratio
8. Return on total assets
9. Debtors turnover ratio
10. Proprietary ratio

1. GROSS PROFIT RATIO: