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FINANCIAL ANALYSIS OF

MAHINDRA AND MAHINDRA


LIMITED

Team members:
Ayan Saha
Ankita Rai
Amrit Sidhu
T.V. Shankaran
Nikhil Thomas
Madhav Maheshwari
Anandamayee Agrawal

Company Formation
Steel trading company in 1945 as Mahindra &
Mohammed
Changed its name to Mahindra & Mahindra in
1948
Manufacturing and selling larger MUVs

Road to Success

1991 :Commander range of vehicles


1996 :Mahindra Ford India Limited was established
2002 : Scorpio, world-class Sports Utility Vehicle
2007 :Logan and Scorpio the highest selling Sedan and
SUV
2010 :Mahindra & Mahindra and Mitsubishi
Agricultural Machinery tie-up to deliver FarmTech
prosperity
2013 :Mahindra and Mahindra has inked partnership
with Snapdeal to sell its two-wheelers on the site

Shareholding of Promoter and


Promoter Group
CATEGORY
OFSHAREHOLDER
1) Indian
Individuals / Hindu
Undivided Family
Bodies Corporate

NO. OF SHAREHOLDERS

TOTAL NO.OF
SHARES

TOTAL SHAREHOLDING AS A % OF TOTAL NO.


OF SHARES(Total number of
shares=615,892,384)

22

3,998,552

0.65

71,128,386

11.55

Any Others (Specify)


M&M Benefit Trust

79,737,027

12.95

51,835,214

8.42

ESOP Trust

25,870,943

4.2

2,030,870

0.33

38

154,863,965

25.14

651,772

0.11

651,772

0.11

39

155,515,737

25.25

Employees Welfare
Fund
Sub Total
(2) Foreign
Individuals (NonResidents Individuals /
Foreign Individuals)
Sub Total
Total shareholding of
Promoter and
Promoter Group (A)

Financial Statement Analysis

Horizontal Analysis
Vertical Analysis
Trend Analysis
DuPont Analysis
Ratio Analysis

Horizontal Analysis Balance Sheet


Particulars
Liabilities
Share Capital
Reserves & Surplus
Net Worth
Secured Loan
Unsecured Loan
TOTAL LIABILITIES
Assets
Gross Block
(-) Acc. Depreciation
Net Block A
Capital Work in Progress B
Investments C
Inventories
Sundry Debtors
Cash and Bank
Loans and Advances
Total Current Assets
Current Liabilities
Provisions
Total Current Liabilities
NET CURRENT ASSETS D
Misc. Expenses
TOTAL ASSETS(A+B+C+D+E)

Mar'14 (Rs in crores)


Mar'13 (Rs in crores)
12 Months
12 Months
295.16
295.16
16496.03
14363.76
16791.19
14658.92
294.1
266.67
3451.06
2960.4
20536.35
17885.99
10242.58
4365.63
5876.95
1228.44
11379.85
2803.63
2509.84
2950.39
4539.55
12803.41
8678.28
2074.02
10752.3
2051.11
0
20536.35

8602.96
3645.1
4957.86
863.48
11833.46
2419.77
2208.35
1781.41
3389.26
9798.79
7662.13
1905.47
9567.6
231.19
0
17885.99

Change (%)
0.00
14.84
14.55
10.29
16.57
14.82
19.06
19.77
18.54
42.27
-3.83
15.86
13.65
65.62
33.94
30.66
13.26
8.85
12.38
787.20
0.00
14.82

Horizontal Analysis Profit & Loss


Year
INCOME:
Gross Sales
Excise Duty
Net Sales
Other Income
TOTAL INCOME
EXPENDITURE:
Manufacturing Expenses
Material Consumed
Personal Expenses
Administrative Expenses
TOTAL EXPENDITURE
Operating Profit
EBITDA
Depreciation
EBIT
Interest
EBT
Taxes
Profit and Loss for the Year
Non Recurring Items
REPORTED PAT
KEY ITEMS
Equity Dividend
Equity Dividend (%)
Shares in Issue (Lakhs)
EPS - Annualised (Rs)

Mar '14 (Rs in crores)

Mar '13 (Rs in crores)

Change (%)

43120.18
2611.51
40508.5
717.99
41226.49

43412.65
2971.49
40411.16
549.17
40990.33

-0.67
-12.11
0.24
30.74
0.58

221.35
29614.77
2163.72
3787.45
35787.29
4721.21
5439.2
863.34
4575.86
259.22
4316.64
611.08
3705.56
52.79
3758.35

206.39
30587.96
1866.45
3071.06
35731.86
4709.3
5258.47
710.81
4547.66
191.19
4356.47
1094.27
3262.2
90.62
3352.82

7.25
-3.18
15.93
23.33
0.16
0.25
3.44
21.46
0.62
35.58
-0.91
-44.16
13.59
-41.75
12.10

758.21
256.88
6158.92
61.02

798.17
270.41
6139.81
54.61

-5.01
-5.00
0.31
11.74

Vertical Analysis Balance Sheet


Particulars
Liabilities
Share Capital
Reserves & Surplus
Net Worth
Secured Loan
Unsecured Loan
TOTAL LIABILITIES

Mar'14

Mar'13

1.437256377
80.3260073
81.76326368
1.432094798
16.80464153
100

1.650230152
80.30732434
81.95755449
1.49094347
16.55150204
100

49.87536734
21.25806192
28.61730541
5.98178352
55.41320634
13.65203651
12.22145123
14.36667178
22.10495049
62.34511001
42.25814227
10.09926301
52.35740528
9.987704728
0
100

48.09887515
20.37963792
27.71923724
4.827689158
66.16049769
13.52885694
12.34681446
9.95980653
18.94924463
54.78472257
42.83872461
10.65342204
53.49214665
1.292575921
0
100

Assets
Gross Block
(-) Acc. Depreciation
Net Block
Capital Work in Progress
Investments
Inventories
Sundry Debtors
Cash and Bank
Loans and Advances
Total Current Assets
Current Liabilities
Provisions
Total Current Liabilities
NET CURRENT ASSETS
Misc. Expenses
TOTAL ASSETS(A+B+C+D+E)

Vertical Analysis Profit & Loss


Year
INCOME:
Gross Sales
Excise Duty
Net Sales
Other Income
TOTAL INCOME
EXPENDITURE:
Manufacturing Expenses
Material Consumed
Personal Expenses
Selling Expenses
Administrative Expenses
Expenses Capitalised
Provisions Made
TOTAL EXPENDITURE
Operating Profit
EBITDA
Depreciation
Other Write-offs
EBIT
Interest
EBT
Taxes
Profit and Loss for the Year
Non Recurring Items
Other Non Cash Adjustments
Other Adjustments
REPORTED PAT

Mar '14

Mar '13
104.59
6.33
98.26
1.74
100.00

105.90
7.24
98.58
1.33
100

-0.54
-71.83
-5.25
0.00
-9.19
0.00
0.00
-86.81
11.45
13.19
-2.09
0.00
11.10
0.63
10.47
-1.48
-8.99
0.13
0.00
0.00
9.12

-0.47
-69.58
-4.25
0
-6.99
0
0
-81.28
10.71
11.96
1.62
0.00
10.34
0.43
9.91
2.49
7.42
0.21
0.00
0.00
7.63

Trend Analysis
Balance Sheet of Mahindra and Mahindra

------------------- in Rs. Cr. ------------------Mar '14


Mar '13
Mar '12
Mar '11

Mar '10

Sources Of Funds
Total Share Capital
Equity Share Capital
Reserves
Networth
Secured Loans
Unsecured Loans
Total Debt
Total Liabilities

104.3
104.3
219.14
214.44
48.81
151.51
130.03
191.74

104.3
104.3
190.81
187.2
44.26
129.97
112.04
166.99

104.08
104.08
157.77
155.43
66.42
121.79
110.21
143.27

103.77
103.77
133.1
131.71
67.59
84.02
80.58
117.96

100
100
100
100
100
100
100
100

Application Of Funds
Gross Block
Less: Accum. Depreciation
Net Block
Capital Work in Progress
Investments
Inventories
Sundry Debtors
Cash and Bank Balance
Total Current Assets
Loans and Advances
Fixed Deposits
Total CA, Loans & Advances
Current Liabilities
Provisions
Total CL & Provisions
Net Current Assets
Miscellaneous Expenses
Total Assets

210.48
172.02
252.4
89.38
177.86
235.84
199.49
620.91
282.81
223.13
0
205.69
227.03
115.44
191.35
338.73
0
191.74

176.79
143.63
212.92
62.83
184.95
203.55
175.53
374.89
219.35
166.59
0
157.42
200.44
106.06
170.27
38.18
0
166.99

154.17
126.73
184.07
57.82
161.15
198.38
158.04
250.1
189.42
146.75
0
136.88
175.83
102.17
152.45
-7.5
0
143.27

120.38
107.39
134.55
56.29
139.5
142.51
100.17
129.35
122.14
154.26
0
107.75
136.65
93.59
122.89
-32.65
0
117.96

100
100
100
100
100
100
100
100
100
100
1268.06
100
100
100
100
100
4.12
100

Du Pont Analysis
Particulars

Mar'14

Mar'13

Net Profit
Net Sales

3705.56

3262.20

40508.50

40441.16

9.15

8.07

19211.70

16615.65

2.11

2.43

19.29

19.63

295.16

294.84

Leverage

65.09

56.35

Return on Equity

12.55

11.06

Profit Margin (%)


Total Assets
Asset Turnover
Return on Assets (%)
Equity

Particulars
Liquidity Measurement Ratios
Current Ratio
Quick Ratio
Receivable Turnover
Avg Collection Period
Inventory Turnover
Profitability Indicator Ratios
Operating Profit Margin (%)
Profit Margin Analysis (%)
Asset Turnover
Return On Assets (%)
Return On Equity
Debt Ratios
Debt-Equity Ratio
Liabilities-Equity Ratio
Interest Coverage Ratio
Operating Performance Ratios
Fixed-Asset Turnover
Investment Valuation Ratios
Earnings per Share
Book value per Share
Price/Book Value Ratio
Price/Earnings Ratio
Dividend Yield (%)
Dividend per Share

Ratio Analysis

Mar'14

Mar'13

1.19
0.93
16.14
22.31
14.45

1.02
0.77
18.31
19.66
16.71

11.45
9.15
2.11
19.29
12.55

11.488
8.067
2.43
19.63
11.06

0.22
0.22
17.65

0.22
0.22
23.79

4.03

4.76

61.02
272.63
3.60
16.07
1.26
12.31

54.61
238.75
3.59
15.69
1.52
13.00

Ratio Analysis
Liquidity Analysis

Current Ratio

1.4
1.2
1
0.8
0.6
0.4
0.2
0
2010

2011

2012

2013

2014

Industry
Avg.

2013

2014

Industry
Avg.

Quick Ratio
1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2010

2011

2012

The company has a current ratio


which is close to the industry
average ; whereas the quick ratio
is very high than the industry
average.
This indicates that the company
is in a good position to pay its
current liabilities hence ensuring
that
operations
are
not
disrupted.

Ratio Analysis
Inventory Turnover

20
18
16
14
12
10
8
6
4
2
0
2010

2011

2012

2013

Liquidity Analysis Contd.

2014

Industry
Avg.

The average inventory holding


period of the company is only
25.25 days as opposed to
industry average of 27.56 days.
This signifies better inventory
management as it results in
lesser storage costs.

Account Receivable Turnover


25
20

RTO of the company is very high


in comparison with the industry
indicating that receivables are
rapidly being converted in to
cash.

15
10
5

0
2010

2011

2012

2013

2014

Industry
Avg.

Ratio Analysis
Total Assets Turnover

2.5

Profitability Analysis

Total Asset Turnover is well above the


industry average due to Mahindras
effective management of inventories
and receivables among other factors

1.5
1
0.5
0
2010

2011

2012

2013

2014

Industry
Avg.

Profit Margin

14
12
10
8
6
4
2
0
2010

2011

2012

2013

2014 Industry Avg.

Profit margin is not on par with the


industry
margin.
There
is
a
considerable difference( roughly 3%).
There has not been much difference in
the net sales of 2013 and 2014. This
indicates that Mahindra must take an
aggressive approach towards sales.

Ratio Analysis
Solvency Analysis

Debt to Equity ratio

0.6
0.5
0.4
0.3
0.2
0.1
0
2010

2011

2012

2013

2014

Industry
Avg.

Interest Coverage

60

Debt ratio is well below the


industrial average, indicating
the company is not taking
too many risks and hence is
following a laid back
approach. This reflection can
be seen in the low profit
margin.

50
40
30
20
10
0
2010

2011

2012

2013

2014

Industry
Avg.

Interest cover is a little less


than industry average and
the reason can be attributed
to the unsecured loans taken
by the company.

Ratio Analysis
Price to Earnings ratio

18
17.5
17
16.5

16
15.5
15
14.5
2013

2014

Industry Avg.

Dividend Yield

1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2013

2014

Industry Avg.

Capital Market Standing


The ratio is a little below the
industry average indicating
that the growth prospects are
weak. The decreasing profit
margin trend over last 5 years
supports this value.
In spite of following a down
trend in profits, the company
has managed to give out
dividend yield that is greater
than industry value. This might
encourage the shareholders to
invest more money in the
companys stock.

Competitor Analysis

Four wheeler automobile industry:

o
M&M has witnessed a decline of 5.3 % in sales over the financial years 13 and 14
Small segment two wheeler automobile industry :

WAY TO GO ?

Recommendations
1.
2.
3.

4.
5.

Dividends given is well above the industry average. This can be compromised and
profits can be re-invested in to the business instead .
Bonds can be issued as they come at a much cheaper interest rate. Brand name
of Mahindra will convince buyers to settle for a low interest rate.
Mahindra must take an aggressive approach towards sales by increasing
advertising costs of its two-wheelers( which is very less currently) and promotion
of upcoming launches .
New two wheeler models can be launched targeting the Mid-segment .
Exports can be increased by leveraging the fact that economic recovery is gaining
strength across the globe and the value of Indian rupee has picked up.

Future Plans
Change from frugal engineering methods to quality initiative
Increasing competition market shares for Utility Vehicles fell from 47% to
41%
Launching soft-roaders to recoup market share to meet the emerging
challenge from rivals who base performance on quality and
standardization
Customer satisfaction and good service to customer is current sales
strategy
R&D is given prime importance with quality review each month
Tie-ups within Pininfarnia (Design and Engineering Firms) and setting up
international technical centers that support Indian product development
by providing world class technology
CRUSADE - First time right, Every time right and delightful customer
experience
Sales wars are not fought in show rooms, but in R&D.

References
http://csimarket.com/Industry/industry_Mana
gementEffectiveness.php?ind=405
http://www.moneycontrol.com/financials/ma
hindramahindra/ratios/MM#MM
http://pages.stern.nyu.edu/~adamodar/New_
Home_Page/datafile/pedata.html
http://pages.stern.nyu.edu/~adamodar/New_
Home_Page/datafile/divfund.htm