Analysis & Financial Report on Maruti Suzuki India Ltd







Analysis & Financial Report on Maruti Suzuki India Ltd


An acknowledgement is the expression of one’s thanks giving to the people who have extended their help in every possible way. Help is a voluntary fulfilment of duty, which, all the people mentioned below have performed it to their maximum possible, in a way giving us & our research the utmost important. As one cannot clap with one hand similarly one cannot prepare a project without a support.

At the onset, we wish to express our gratitude to Mr Mayank Jain and Mr Dipesh Mehta at Reliance Money for their keen interest, constant support & help in completing this report successfully.

We would also like to thanks to the authors, journals and websites for providing us the related information to our project’s subject.


This report provides analysis and interpretation of “Maruti Suzuki India Ltd”. It widens the broad aspect of the company with respect to financial aspect as well as company’s performance and progress with different joint ventures, new product launch, how successful has been a product launch.
This report provides an analysis and evaluation of the current and prospective profitability, liquidity and financial stability of “Maruti Suzuki India”. It also explains the company’s current position in the market and comparison with the peer groups,Share holding pattern, company’s sale and net profit.
The company’s financial aspect are explained with the help of Balance sheet,Profit & Loss statement, Cash Flow & Ratio analysis comparing with the industry ratio.
It also describes the company’s code of conduct & its social activities carried out in favour of society.
The findings indicate that the company has not performed as expected as compared to last year. This has led the investors in two minds regarding further investment. Due to recession period last year the company has fairly performed better than other company’s in auto sector making it a sunrise company when the economy booms up.


1. KEY DATA………………………………………………….07
2. INTRODUCTION…………………………………………..08
3. SHARE HOLDING PATTERN…………………………....11
4. MARKET SHARE………………………………………….12
5. SALES AND NET PROFIT………………………………..14
7. CODE OF CONDUCT……………………………………...21
8. SOCIAL ACTIVITIES……………………………………..24
10. BALANCE SHEET………………………………………...27
11. PROFIT & LOSS STATEMENT………………………....28
12. CASH FLOW………………………………………………30
13. RATIO ANALYSIS…………………………………..…….32
14. BIBLOGRAPHY……………………………………..….....57



1 1. Country: INDIA
3 2. BSE: 532500


5 4. Exchanges: BOM
7 5. Major Industry: Automotive
9 6. Sub Industry: Diversified Automotive Mfrs.
11 7. 2009 Sales: 206,638,000,000 (Year Ending Jan 2010)
13 8. Employees: 7,159
15 9. Currency: Indian Rupees
17 10. Market Cap: 399,028,129,369
19 11. Fiscal Yr Ends: March
21 12. Shares Outstanding: 288,910,060
23 13. Share Type: Ordinary
25 14. Closely Held Shares: 156,618,440

The leader in the India Automobile Industry, Creating Customer Delight and Shareholder’s Wealth; A pride of India”

To provide maximum value for money to their customers through continuous improvement of products and services

Maruti Udyog Limited (MUL) was established in February 1981, though the actual production commenced in 1983 with the Maruti 800, based on the Suzuki Alto key car which at the time was the only modern car available in India, its' only competitors- the Hindustan Ambassador and Premier Padmini were both around 25 years out of date at that point. Through 2004, Maruti Suzuki has produced over 5 Million vehicles. Maruti Suzuki’s are sold in India and various several other countries, depending upon export orders. Models similar to Maruti Suzuki’s (but not manufactured by Maruti Udyog) are sold by Suzuki Motor Corporation and manufactured in Pakistan and other South Asian countries.
Maruti Suzuki is one of India's leading automobile manufacturers and the market leader in the car segment, both in terms of volume of vehicles sold and revenue earned. Until recently, 18.28% of the company was owned by the Indian government, and 54.2% by Suzuki of Japan. The Indian government held an initial public offering of 25% of the company in June 2003. As of 10 May 2007, Govt. of India sold its complete share to Indian financial institutions. With this, Govt. of India no longer has stake in Maruti Udyog.
The company annually exports more than 50,000 cars and has an extremely large domestic market in India selling over 730,000 cars annually. Maruti 800, till 2004, was the India's largest selling compact car ever since it was launched in 1983. More than a million units of this car have been sold worldwide so far. Currently, Maruti Suzuki Alto tops the sales charts and Maruti Suzuki Swift is the largest selling in A2 segment.
Due to the large number of Maruti 800s sold in the Indian market, the term "Maruti" is commonly used to refer to this compact car model. Till recently the term "Maruti", in popular Indian culture, in India Hindu's lord Hanuman is known as "maruti", was associated to the Maruti 800 model.
Its manufacturing facilities are located at two facilities Gurgaon and Manesar south of Delhi. Maruti Suzuki’s Gurgaon facility has an installed capacity of 350,000 units per annum. The Manesar facilities, launched in February 2007 comprise a vehicle assembly plant with a capacity of 100,000 units per year and a Diesel Engine plant with an annual capacity of 100,000 engines and transmissions. Manesar and Gurgaon facilities have a combined capability to produce over 700,000 units annually.
More than half the cars sold in India are Maruti Suzuki cars. The company is a subsidiary of Suzuki Motor Corporation, Japan, which owns 54.2 per cent of Maruti Suzuki. The rest is owned by the public and financial institutions. It is listed on the Bombay Stock Exchange and National Stock Exchange in India.
During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024 were exported. In all, over six million Maruti Suzuki cars are on Indian roads since the first car was rolled out on 14 December 1983.

The old logo of Maruti Suzuki India Limited.

Later the logo of Suzuki Motor Corp. was also added to it.

Maruti Suzuki models:-
Maruti 800
Swift DZire,

Suzuki Motor Corporation, the parent company, is a global leader in mini and compact cars for three decades. Suzuki’s technical superiority lies in its ability to pack power and performance into a compact, lightweight engine that is clean and fuel efficient.
Nearly 75,000 people are employed directly by Maruti Suzuki and its partners. It has been rated first in customer satisfaction among all car makers in India from 1999 to 2009 by J D Power Asia Pacific

Suzuki Motor (SZKMF) owns 38.61% of Maruti Suzuki India. FIIs and Banks financial institutions and Insurance companies own another 20.73% and 15.83% of the company. Reliance Vision Fund , Reliance Growth Fund, Reliance Equity Fund are the mutual funds invested in the firm, with 0.31%, 0.30% and 0.28% ownership respectively.
Entity | Percentage |
Suzuki Motor Corporation | 54.21% |
FII's | 20.73% |
Banks Fin. Inst. and Insurance | 15.83% |
Private Corporate Bodies | 4.41% |
General public | 1.98% |
Others | 0.05% |
NRI's/OCB's/Foreign Others | 0.04% |


Passenger Cars

The Passenger car segment has been the sole focus of Maruti Suzuki India. This segment contributed to more than 98.96% of the sales in FY2008-09. Through timely launch of new models and focused strategy the company has been able to maintain a market share of more than 52% in this segment. In 2nd quarter of 2009, the sales of this segment grew by over 9.7% as compared to the sales in the 2nd quarter of 2008. The company competes in the small car sub segment through the brands Maruti 800, Alto, Wagon R, Zen, Swift, A-star and Ritz. Whereas it has its presence in the sedan sub segment through the brands SX4 and D-zire. Omni and Versa are the brands in the van segment. This segment accounts for all the exports of Maruti Suzuki. By quarter to quarter comparison, the export market for the company grew from 12,491 units to 29,314 units by over 134% in the 2nd quarter of the last two years.

Utility Vehicles

This segment contributes only about 1.04% of the sales of the company. The company has a presence in this segment through the brands Gypsy and Grand Vitara. The market share of Maruti Suzuki in this segment is less than 2%. By quarter to quarter comparison, the sales in this segment grew from 1,316 units to 1,383 units by 5.1% in the 2nd quarter of the last two years.
The small car market in India accounts for more than 57% of the automobile sales. Further it has been growing at a rate of 13% per annum. The government is also extending incentives to the small car segment in the form of lower excise duty of 12% as against 24% on bigger cars. This has attracted global players to foray in to the compact car segment in the country. General motors and Ford have announced plans to launch its small car in India by 2010. Honda, Nissan Renault and Toyota have also announced plans to manufacture and market their small cars in India by 2011. The entry of global players in the market would increase the competition and shrink Maruti Suzuki's market share and sales. This was seen in the over 57% drop in Maruti 800 car sales in June 2009 as compared to June 2008, due to the launch of Tata Nano in March 2009.

From FY2004 to FY 2009, sales revenues have grown from Rs 9,081 crore to Rs 20,358 crore, at average annual rate of over 20%. In the same period, net profit grew from Rs 542 crore to Rs 1,218 crore by over 20% average annual growth rate..Inspite of the general economic slowdown, the sales of Maruti Suzuki increased from Rs 17,860 Crore to Rs 20358 Crore. This was mainly due to the strong presence of the company in the small car segment, which was not affected by the downturn. But due to the increase in the material cost on account of increased commodity prices and adverse foreign exchange fluctuations, the EBITDA fell from 17.5% to 12% and net profit margin fell from 9.7% to 8.2%.
The company plans to continue with its Rs. 9,000 Crore expansion plan which is to be completed by Dec 2010. Under the same expansion plans the company increased the capacity of its Manesar plant by 70% in Jan 2009.
With 70,023 units exported, exports comprise of around 10% of Maruti suzuki's annual sales. The export volume for the company grew by over 32% in FY2008-09. The company through a joint venture with Suzuki Powertrain India has begun manufacture diesel engines, petrol engines and transmission assemblies for four-wheelers with an investment of Rs 175 crore. The diesel engine manufacturing unit has an annual capacity of 1,00,000 units (1 lakhs units = 0.1million). Further it is planned to scale up the capacity to 300,000 engines/annum by 2010.
The company has two fully integrated manufacturing plants in Gurgaon and Manesar in Haryana. Maruti’s Gurgaon facility has an installed capacity of 7,00,000 units per annum. The Manesar facilities, launched in February 2007 comprise a vehicle assembly plant with a capacity of 3,00,000 units per year.
Grand Vitara. Swift, Swift DZire, A-star and SX4 are manufactured in Manesar, Grand Vitara is imported from Japan as a completely built unit (CBU), remaining all models are manufactured in Maruti Suzuki's Gurgaon Plant.
The success of the joint venture led Suzuki to increase its equity from 26% to 40% in 1987, and further to 50% in 1992. In 1982 both the venture partners had entered into an agreement to nominate their candidate for the post of Managing Director and every Managing Director will have tenure of five years.
Initially R.C.Bhargava, was the managing director of the company since the inception of the joint venture. Till today he is regarded as instrumental for the success of Maruti Udyog. Joining in 1982 he held several key positions in the company before heading the company as Managing Director. Currently he is on the Board of Directors. After completing his five year tenure, Mr. Bhargava later assumed the office of Part-Time Chairman. The Government nominated Mr. S.S.L.N. Bhaskarudu as the Managing Director on August 27, 1997. Mr. Bhaskarudu had joined Maruti in 1983 after spending 21 years in the Public sector undertaking Bharat Heavy Electricals Limited as General Manager. Later in 1987 he was promoted as Chief General Manager, 1998 as Director, Productions and Projects, 1989 Director, Materials and in 1993 as Joint Managing Director.


The aspiration to give more for less to the customers has given the company a competitive edge in competitive times. The VA-VE initiatives (Value Analysis & Value Engineering) pursued aggressively by the company in partnership with suppliers have helped the company reduce cost of making a car without compromising on quality.
A wide and deep service network spread across the country has helped the company reach customers not only in metro cities but also in semi-urban, tier-2 and tier-3 cities.
In addition, the company introduced many new initiatives such as car pick & drop facility by service workshops for women car owners, Maruti Mobile Support to offer door step car servicing, Express service bays, special bays that can offer maintenance service in less than 2 hours, and so on. The company has a stringent customer complaint monitoring system.

In these competitive times the challenge is to keep inventing newer ways of doing things to keep the customers in your fold. Over the last few years, the company strengthened the existing practices and experimented with many new initiatives by way of kaizens (continuous improvements) to delight its customers.

These initiatives ranged from product design and quality to network expansion, and included new service programs to meet unsaid needs of customers. They are:-
* Servicing customers 24X7..... 365 days....
The company takes great pride in sharing that customers have rated Maruti Suzuki first once again in Customer Satisfaction Survey conducted by independent body, J.D.Power Asia Pacific. It is 8th time in a row. The award mirrors the company's commitment towards "Customer Obsession".
* Key Initiatives:
Car pickup & delivery facility for women car owners
* Service at your Door Step through Maruti Mobile Support:
Another unique initiative is the door step service facility through Maruti Mobile Support.Maruti Mobile Support is a first of its kind initiative and is expected not only to help the company reach out customers in metro cities but also as a mean to reach semi urban /rural areas where setting up of new workshop may not be viable.

In manufacturing where a sizeable percentage of inputs are bought from vendors and suppliers, the ability to continuously improve quality and reduce costs is directly dependent on vendors doing the same.
In light of this statement, the company guides suppliers in adopting latest technologies, and transfers its best practices in the areas of productivity improvement, quality enhancement and cost reduction. The company has set up Maruti Centre for Excellence (MACE) in collaboration with some of its suppliers to achieve these objectives. With the help of MACE, now the company is assisting its direct suppliers in upgrading their sub-suppliers or (Tier-2 suppliers).

The company has been passionately building its sales and service network since its inception. The company has set up 16 Regional Training Centres across the country to continuously upgrade skills of dealer employees as per new technologies and customers ‘requirements.

In recent years, the company has conducted a comprehensive national survey of its dealer employees to gauge their level of satisfaction. By many accounts, this is a rare initiative by any principal company. Based on the results of the survey, the company formed a cross functional team of senior management from sales, network development and HR to identify an action plan to improve satisfaction levels of dealer employees. One of the initiatives, for instance, was providing car loans at low rates of interest for good performers with repayment guarantee provided by the dealer.

The company has put in place a strong mechanism for Corporate Governance to enhance confidence of its large number of shareholders and investors in the company. The company complies with all guidelines of SEBI, including new guidelines of Clause 49. With an objective to ensure timely compliance of all applicable laws and regulations, the company has hired an agency called 'Chess Management' to assist in further strengthening systems of Corporate Governance including installation of new software 'eLCM', which tracks compliance using sophisticated IT systems and generates compliance reports.

The company has enforced highly conducive working environment for its employees. MSIL does not support favouritism in recruitment, promotion, providing compensation, or termination based on caste, religion, gender or age. The company offers equal opportunity for growth to all employees.

During the year, the company finalised its policy on affirmative action as per the guidelines laid down by Confederation of Indian Industries.

Growth opportunities:
Maruti Suzuki offers one of the best environments to learn and grow and to be associated with some of the best processes and methods in the business of automotive manufacturing. Apart from this, the company offers many services like Finance, Insurance, and Driving School.
As with any progressive world class company, Maruti Suzuki 'listens' to employees and acts on the feedback. Many innovative schemes and practices through the years are results of having a good communication system across the organization.

Maruti culture:
Open office culture, easy accessibility and innovative HR practices comprise the Maruti culture. Our Human Resources team views an employee as an "internal customer" and strives to deliver maximum satisfaction to him through transparent, sensitive and innovative HR practices. Participative management, team work and kaizen, communication and information sharing are the pillars of employee-management relationship.
Following our open office culture we have a flat organizational structure with only three levels of responsibilities via Board of Directors, Division Heads and Department Heads. Carrying the philosophy forward, we have an open office, common uniforms and a common canteen for all to create an environment of trust, transparency and a sense of belonging amongst employees.


As a responsible corporate citizen, Maruti Suzuki India Limited (‘Maruti’ or “the Company”) has always believed in following highest standards of Corporate Governance. Being a listed Company, every act of the Company, its Board Members and its employees is the focus of public attention and accordingly, there is a need to reinforce Maruti’s commitment towards maintaining highest standards of Corporate Governance.
This Code of Business Conduct and Ethics (“Code of Conduct” or “Code”) helps ensure compliance with our standards of business conduct & ethics and also with regulatory requirements. All Senior Management Personnel are expected to read and understand this Code of Business Conduct and Ethics, uphold these standards in day-to-day activities and also comply with all applicable standards, policies and procedures of the company.
This policy should be read in conjunction with applicable regulations & existing policies & procedures of the Company.

This Code of Conduct is applicable to all Senior Management Personnel which would include the:-
Directors of the Company, the top management personnel (i.e., executive directors & advisors at executive director level) & all functional heads (including management personnel with direct functional reporting to directors & top management personnel).
All Senior Management Personnel are expected to comply with the letter and spirit of this Code. The Senior Management Personnel should continue to comply with other applicable laws & regulations and the relevant policies, rules and procedures of the Company.

In this Code the term “Relative” shall have the same meaning as defined in Section 6 of the Companies Act, 1956. In this Code, words importing the masculine shall include feminine and words importing singular shall include the plural or vice versa. Any question or interpretation under this Code of Business Conduct and Ethics will be considered and dealt with by the Board or any person authorized by the Board on their behalf.

Senior Management Personnel shall act in accordance with the highest standards of integrity, honesty, fairness and ethical conduct while working for the Company as well when representing the Company. Honest conduct means conduct that is free from fraud or deception. Integrity & ethical conduct includes ethical handling of actual or apparent conflicts of interest between personal and professional relationships.
Senior Management Personnel should promote ethical behavior and take steps to ensure that the Company promotes ethical behavior and also encourages employees to freely report violations of laws, rules, regulations or the Company's Code of Conduct to the appropriate personnel.

Senior Management Personnel should not exploit for their own benefit, opportunities that are discovered through the use of corporate property, information or position unless the opportunity is disclosed fully in writing to the Company’s Board of Directors and the Board of Directors authorizes the said Senior Management Personnel to pursue such opportunity. Further, the Senior Management Personnel must refrain from using the Company's property or information for personal gain.

Maruti is committed to a policy of equal employment opportunity so as to assure that there shall be no discrimination or harassment against an employee or applicant on the grounds of race, color, religion, sex,age, marital status, disability, national origin, or any other factor made unlawful by applicable laws and regulations. This policy relates to all phases of employment including recruitment, hiring, placement, promotion, transfer, compensation, benefits, training, educational, social and recreational programs and the use of Company facilities. Sexual harassment or exploitation is specifically prohibited.

The matters covered in this Code of Business Conduct and Ethics are of the utmost importance to the Company, its stockholders and its business partners, and are essential to the Company's ability to conduct its business in accordance with its stated values. They expect all of their Senior Management Personnel to adhere to these rules in carrying out their duties for the Company.
The Company will take appropriate action against any Senior Management Personnel whose actions are found to violate these policies or any other policy of the Company. Disciplinary actions may include immediate termination of directorship, employment or business relationship at the Company's sole.


Community Initiatives:
The company works closely with local communities around its manufacturing facilities to improve their quality of life. The company has adopted four villages surrounding its Manesar plant, i.e. Kasan, Dhana, Alihar and Baas Kusla and launched sustainable livelihood programmes for unprivileged communities. The initiatives are focused on four key areas: Health, Education, and Employment Generation through Vocational Trainings & Basic Infrastructure Development.

Environment initiatives:
The Company has remained ahead of regulatory requirements in pursuit of environment protection and energy conservation at its manufacturing facilities, and in development of products that use fewer natural resources and are environment friendly.

Total energy consumption at the facilities has come down by 26 percent compared to the beginning of the decade.

Adopting energy saving technologies:
While the company continuous to improve energy saving initiatives through numerous Kaizens (continuous improvements) on the shop floor, thrust on adopting energy saving technologies has increased phenomenally.

Three-coat-one-bake painting system: The Company introduced the three-coat one-bake system at its Manesar facilities. In this state of the art painting system, three wet-on-wet coats are applied and baked together. Conventional painting systems use two baking steps before the final finish. This helps is lower energy consumption and yet improving the productivity levels.

Practicing 3R (Reduce, Reuse and Recycle):
The company has been promoting 3R since its inception. As a result the company has not only been able to recycle 100% of treated waste water but also reduced fresh water consumption by 28%. The company has implemented rain water harvesting to recharge the aquifers. Also, recyclable packing for bought out components is being actively promoted.

Greening of Supply Chain:
The company has been facilitating implementation of Environment Management System (EMS) at its suppliers' end. Regular training programs are conducted for all the suppliers on EMS. Surveys are conducted to assess the vendors who need more guidance. The systems and the environmental performance of suppliers are audited.

Be it a motorsport enthusiast, an amateur or a professional, Maruti Suzuki offers the thrill and joy of motorsport to all of them.
The Maruti Suzuki motorsport calendar is packed with exciting motoring events. For families, there are events like Women's Fun Drive and Treasure Hunt throughout the year, across cities. The Maruti Suzuki Autocross brings action for amateurs and professionals, together.
But what makes the Maruti Suzuki motorsport calendar an attraction in India (and internationally too) are Maruti-Suzuki Raid-de-Himalaya, Maruti Suzuki Rally Desert Storm and Maruti Suzuki Monsoon Car Rally of Kerala.
Maruti Suzuki Raid-de-Himalaya
Maruti Suzuki Raid-de-Himalaya is India's longest and most demanding motorsport rally.It is open to both, car and bike enthusiasts. Maruti Suzuki provides opportunity to professional as well as amateur motorsport lovers to participate in the Maruti Suzuki Raid Raid-de-Himalaya.
Every year, more and more people are coming for the Maruti Suzuki Raid-de-Himalaya, many of them from abroad. In 2007, as many as 145 teams participated in car and bike categories.
It has been rated first in customer satisfaction among all car makers in India from 1999 to 2009 by J D Power Asia Pacific

| | | | |
| | | | |
| | (Rs. in Millions) | |
| | As at | | As at |
| | 31.03.08 | | 31.03.09 |
Capital | 1,445 | | 1,445 | |
Reserves and Surplus | 82,709 | 84,154 | 92,004 | 93,449 |
LOAN FUNDS | | | | |
Secured Loans | 1 | | 1 | |
Unsecured Loans | 9,001 | 9,002 | 6,988 | 6,989 |
Deferred Tax Liabilities | 2,697 | | 2,340 | |
Deferred Tax Assets | (996) | 1,701 | (789) | 1,551 |
Total | | 94,857 | | 1,01,989 |
FIXED ASSETS | | | | |
Gross Block | 72,853 | | 87,206 | |
Less: Depreciation | (39,888) | | (46,498) | |
| 32,965 | | 40,708 | |
Capital Work-In-Progress | 7,363 | 40,328 | 8,613 | 49,321 |
INVESTMENTS | | 51,807 | | 31,733 |
C.A,LOANS & ADVANCES | | | | |
Inventories | 10,380 | | 9,023 | |
Sundry Debtors | 6,555 | | 9,189 | |
Cash and Bank Balances | 3,305 | | 19,390 | |
Other Current Assets | 331 | | 981 | |
Loans and Advances | 10,408 | | 16,328 | |
| 30,979 | | 54,911 | |
LESS: C.L & PROVISIONS | | | | |
Current Liabilities | 24,562 | | 30,169 | |
Provisions | 3,695 | | 3,807 | |
| 28,257 | | 33,976 | |
Net Current Assets | | 2,722 | | 20,935 |
Total | | 94,857 | | 1,01,989 |

| | |
| | |
| | |
| Rs(in millions) | |
| For the | For the |
| year ended | year ended |
| 31.03.08 | 31.03.09 |
INCOME | | |
Gross Sales | 2,09,493 | 2,30,852 |
less: Excise Duty | 30,890 | 27,269 |
Net Sales | 1,78,603 | 2,03,583 |
Income from Services [Net of expenses Rs 153 million | 759 | 970 |
(Previous year Rs 208 million)] | | |
Other Income | 8,371 | 9,985 |
Total | 1,87,733 | 2,14,538 |
Consumption of Raw Materials and Components | 1,30,342 | 1,50,598 |
| | |
Purchase of Traded Goods | 7,771 | 7,256 |
Consumption of Stores | 1,470 | 1,978 |
| | |
Employees Remuneration and Benefits | 3,562 | 4,711 |
Manufacturing, Administrative and Other Expenses | 10,793 | 15,685 |
Selling and Distribution Expenses | 5,602 | 7,382 |
Total | 1,59,540 | 1,87,610 |
Less: Vehicles/ Dies for Own Use | 198 | 223 |
Add : (Increase) /Decrease in Work-in-Progress and | | |
Finished Goods and Spare Parts | (2,917) | 2,818 |
Total | 1,56,425 | 1,90,205 |
Earnings before Interest, Depreciation, | | |
Tax and Amortizations (EBIDTA) | 31,308 | 24,333 |
Interest | 596 | 510 |
Depreciation | 5,682 | 7,065 |
| 6,278 | 7,575 |
Profit before Tax | 25,030 | 16,758 |
Less : Tax Expense - Current Tax | 7,509 | 4,592 |
Deferred Tax | 26 | (118) |
Fringe Benefit Tax | 98 | 97 |
Previous Years | 89 | - |
Profit after Tax | 17,308 | 12,187 |
Add: Brought forward from previous year's account | 56,373 | 70,257 |
Profit available for appropriation | 73,681 | 82,444 |
Less: Appropriation : | | |
General Reserve | 1,731 | 1,219 |
Proposed Dividend | 1,445 | 1,011 |
Corporate Dividend Tax | 248 | 172 |
Balance carried forward to Balance Sheet | 70,257 | 80,042 |
Basic/Diluted Earnings Per Share (in Rupees) | 59.91 | 42.18 |
| | |

Cash flow means inflows that is, sources of cash which are at the disposable at the firm and outflows of the fire that is the use of the firm.
The difference between inflows and outflows is either net inflow or net outflow. A cash outflow statement deals with the cash fund flow, which excludes working capital movements. The Accounting standard (A53) classifies cash flows as under:
1) Cash from operating activities
2) Cash from investing activities
3) Cash from financing activities
| Rs (In Millions) |
PARTICULARS | 31.12.2008 | 31.12.2009 |
A]Cash flow from operating activities | | |
N.P.B.T | 25030 | 16758 |
Depreciation | 5682 | 7065 |
Interest Expense | 596 | 510 |
Interest Income | -1408 | -2436 |
Dividend Income | -1668 | -1440 |
Net loss on sale/discarding of F.A | 24 | 125 |
Profit on sale of Investments | -898 | -2137 |
Provisions no longer reqd returned back | -855 | -379 |
Unrealised foreign exchange (gain)/loss | 443 | -610 |
Operating profit before W.C changes | 26946 | 17456 |
| | |
Changes in W.C | | |
(Increase )/Decrease in Debtors | 920 | -2650 |
(Increase)/Decrease in other C.A,Loans & Advances | -1191 | -6161 |
(Increase)/Decrease in Inventories | -3366 | 1357 |
(Increase)/Decrease in C.L & provisions | 3566 | 6455 |
| | |
Cash generated from operating activities | 26875 | 16457 |
Tax paid | -8647 | -4524 |
Net cash from operating activities | 18228 | 11933 |
| | |
B]Cash flow from investing activities | | |
Purchase of fixed assets | -16858 | -16207 |
Sale of fixed assets | 69 | 71 |
Sale of investments | 170123 | 192372 |
Purchase of investments | -186966 | -170191 |
Interest Recd | 1490 | 2029 |
Dividend Recd | 1668 | 1440 |
| | |
Net cash from investing activities | -30474 | 9514 |
| | |
C]Cash from financing activities | | |
Proceeds from Short term borrowings | 3999 | 4548 |
Repayment of Short term borrowings | -634 | -7887 |
Interest Paid | -743 | -579 |
Dividend Paid | -1299 | -1444 |
| | |
Net cash from financing activities | 1323 | -5362 |
| | |
Net Increase/Decrease in cash & cash equivalent | -10923 | 16085 |
| | |
Opening cash & cash equivalent | 14228 | 3305 |
Closing cash & cash equivalent | 3305 | 19390 |
| | |
Cash & cash equivalent comprise | 3305 | 19390 |
Cash & cheques in hand | 1339 | 2124 |
Balance with Scheduled Banks in Current Accounts | 1966 | 266 |
Balance with Scheduled Banks in Deposit Accounts | | 17000 |


An idea the financial position can be had from the balance sheet. The director’s report and chairman’s speech would assist him in foresting the future prospects of the company. However, accurate conclusions cannot be drawn from the mass of figures included in these financial statements. Hence, they are to be analyzed and interpreted with the help of a number of devices. So let us at this stage, clarify the meaning of important terms useful in our study of analysis of accounts.
Ratio is a figure showing, logical relationship between any two items taken from financial statement as prepared and presented annually are of little use for guidance of prospective investors, creditors and even management. If relationships between various related items in these financial statements are established, they can provide useful dues to garage accurately the financial health and ability of business to make profit. The relation between in two related items of financial statements is known ratio.

It is very important to find the ratio of liquidity, profitability etc. Because the ratio analysis provides useful data to the management, important uses of it are given as below:


Useful information about the trend of profitability is from profitability ratio. The gross profit ratio, net profit ratio and ratio of return on investment give a good idea of the profitability of the business. On the basic of this ratio, investors get an idea about overall efficiency of managers and bank as well as other creditors draw useful conclusion about repaying capacity of the borrowers.


In fact the use of ratio was made initially to ascertain the Liquidity of business. The current ratio, acid test ratio will tell whether the firm will be able to meet its current liabilities and when they nature. Banks and other leaders will be able to conclude from these ratios whether the firm will be able to pay regularly the interest and loan installments.


The turnover ratios are excellent guide to measure the efficiency of managers. All such ratio related to sales present a good picture of the success on the business.


The absolute ratios of a firm are not of much use, unless they are compared with similar ratios of other firms belonging to the same industry. This is a inter firm compared to other firms comparison, which shows the strength and weakness of the firm as compared to other firms and will indicate corrective measures.


The ratio of the last 3 to 5 years will indicate the trend in the respective fields. A particular ratio of a company, for one year may compare favorably with industry average, but its trend shows a deteriorating position, it is not desirable only ratio analysis will provide this information.


Regular budgetary reports are prepared in a business where the system of budgetary control is in use. If various ratios are presented these reports, it will give a fairly good idea about various aspects of financial position.


Ratio guide the management in making some of the important decision, suppose, the liquidity ratios shows an unsatisfactory position, the management may decide to get additional liquid funds. Even for capital expenditure decision, the ratio of investment. The efficiency of each department a thus be deter minded. Thus, the ratio are the most useful I financial statement.


1) Profitability Ratios:
These ratios indicate the profit generating capacity of Business. This category includes:
* Gross Profit Ratio
* Net Profit Ratio
* Operating ratio
* Return on Capital Employed
* Return on Shareholder’s Funds
* Debt Service Coverage Ratio

2) Liquidity Ratios:
These ratios indicate whether short – term assets are enough to meet short – term obligations from short assets. These categories include:
* Current Ratio
* Liquid Ratio
* Acid Test Ratio

3) Leverage Ratios:
These ratios indicate compensation of company’s capital and its distribution into debt and equity. These categories include:
* Proprietary Ratio
* Debt Equity Ratio
* Capital Gaining Ratio
* Fixed Capital to Fixed Assets Ratio

4) Activity Ratios:
These ratios indicate the efficiency of investment in the organization. These categories include:
* Creditor’s Turnover Ratio
* Debtors Turnover Ratio
* Fixed Assets Turnover Ratio
* Total Assets Turnover Ratio

Profitability Ratios:
Gross Profit Ratio:
It is a ratio expressing relationship between Gross Profit earned to sales. It is a useful indication of the profitability of business.

* Gross profit is result of the relation between price, sales volume and costs. A change in the gross margin can be brought about by changes in any of these factors.
* The gross profit ratio can also be used in determining the extent of loss caused by theft, spoilage, damage and so on in the case of those firms which follow the policy of fixed gross profit margin in pricing their product.
* The gross margin represents the limit beyond which fall in sales price are outside the tolerance limit.

= Gross profit X 100

Calculation: [Rs. In million]
PARTICULAR | 2007 – 2008 | 2008 – 2009 |
Gross Profit Ratio (%) | 10.97 | 5.77 |

This ratio indicates relation between G/P and Sales. For the year 2007-08 it was 10.97% and 2008-09 was 5.77% which shows the gross profit has declined by 5.2%

Net Profit Ratio:
Net profit ratio is valuable for the purpose of ascertaining the over-all profitability of business and shows the efficiency of operating the business.

* The net profit ratio is indicative of management’s ability to operate the business with sufficient success not only to recover from revenue of the period the cost of merchandise or services, the expenses of operating the business and the cost of the borrowed funds, but also to leave a margin of reasonable compensation to the owners for providing their capital at risk.
* The ratio of net profit ratio to sales essentially expresses the cost price effectiveness of the operation.
* A high net profit margin would ensure adequate return to the owners as well as enable a firm to withstand adverse economic conditions when selling price is declaiming, cost of production raising and a low net profit margin has the opposite implication.

= Net Profit X 100

Calculation: [Rs. In million]
PARTICULAR | 2007 -2008 | 2008 – 2009 |
Net Profit (%) | 9.34 | 5.72 |

This ratio determines the returns for the company. Higher the ratio, higher the returns. In 2007-08 the net profit has declined from 9.34% to 5.72% which reduces the returns of the company.

Expenses Ratio:
Dividing expenses compute expenses ratio by sales. The term ‘expenses’ includes (1) COGS (2) administrative expenses (3) selling expenses and (4) financial expenses but excludes taxes, dividends and extraordinary losses due to theft of goods, good destroyed by fire and so on.

* Some accountants calculate expenses ratio in respected of raw – material consumed, direct wages and factory expenses.
* It is closely related to the profit margin, gross as well as net.

= Expenses X 100

CALCULATION: [Rs. In million]
PARTICULAR | 2007 – 2008 | 2008 – 2009 |
Expenses | 4.10 | 7.24 |

This ratio shows relationship between expenses to sales. In 2007-08 it was 4.10% and increased to 7.24% in 2008-09 which indicates there is increase in operating expenses for the year 2008-09 and higher the expenses it reduces the profit.

Operating Ratio:
Operating Ratio is computed by dividing expenses by sales. The term ‘operating ratio’ includes (1) COGS (2) administrative expenses (3) selling expenses and (4) financial expenses but excludes taxes, dividends and extraordinary losses due to theft of goods, good destroyed by fire and so on.

* Some accountants calculate expenses ratio in respected of raw – material consumed, direct wages and factory expenses.
* It is closely related to the profit margin, gross as well as net.
= C O G S + Operating expenses X 100
Net sales

Calculation: [Rs. In million]
PARTICULAR | 2007 - 2008 | 2008 – 2009 |
Operating Ratio | 14.12 | 9.18 |

This ratio shows relationship between COGS plus operating expenses to sales. In 2007-08 it was 14.12 and reduced to 9.18 in year 2008-09,which indicates the operating expense have reduced from last year to sales

Return on investment / Capital employed:
The profitability ratio can be computed by relating the profits of a firm to its investment. It determines the company’s return on investments made throughout the year.

* Return on investment indicates the profitability of business and is very much in use among financial analysis.
* The ratio is an indicator of the measure of the success of a business from the owners’ point of view. The ultimate interest of any business is the rate of return on invested capital. It may be measured by the ratio of income to equality capital.
* It determines whether a certain goal has been achieved or whether an alternative use of capital is justified.

= E B I T X 100
Capital employed

PARTICULAR | 2007 - 2008 | 2008 – 2009 |
Return On Investments | 10.70 | 5.62 |

This ratio shows relationship between EBIT to CAPITAL EMPLOYED. The ROI has decreased from 10.70 in year 2007-08 to 5.62 in year 2008-09 which indicates the returns of the company has decreased largely. Higher the ratio, it is better for the company.

Return on shareholder’s fund:
It is carries the relationship of return to the sources of funds yet another step further. It is also known as Proprietors fund

* It expresses the profitability of a firm in relation to the funds supplied by the creditors and owners taken to gather, the return on shareholders’ equity measures exclusively the return on the owners’ funds.
* The effect of such a high ratio will be reflected in market price of the shares in the company and frequent trading in such shares on the floors of the stock exchanges will be a regular feature.
* Shareholders can expect the company to capitalize its reserves and issue bonus shares when the ratio has been high for a reasonable period of time.

= Net profit X 100
Share holders fund

PARTICULAR | 2007 – 2008 | 2008 – 2009 |
Return on Shareholders fund | 18.19 | 13.67 |

Return on Shareholders fund have decreased from 18.19% in year 207-08 to 13.67%in year 2008-09 which indicates that the funds are not used effectively.

Return on Equity share capital:
It is obtained by dividing net profit after tax deduction of performance dividing by his amount of ordinary share capital plus free reserve. It is expressed as a % or in absolute monetary terms

* This is probably the single most important ratio to judge whether the firm has earned a satisfactory return for its equity – holders or not.
* Its adequacy can be judge by: (1) comparing it with the past record of the same form, (2) comparisons with the overall industry average.
* It reflects the character of management in general and trends in this ratio provide valuable guidance to investors. It controls the market value of company’s equity shares.
= Net profit after tax -- Preference dividend X 100
Equity capital

PARTICULAR | 2007 - 2008 | 2008 – 2009 |
Return on Equity Share Capital | 11.98 | 8.43 |

The company’s return has decreased from 11.98% in year 2007-08 to 8.43% in year 2008-09 which indicates there is lesser scope available for attraction of fresh funds from the equity shareholders

Earning per share:
EPS measures the profit available to the equity shareholders on a per share basis, that is, the amount that they can get on every share head.

* Earnings per share are a widely used ratio. EPS is a measure of profitability.
* Higher ratio signifies that the company may pay dividend at higher rate in future, indicates possibility of issue of bonus shares.

= Profit after tax – preference dividend X 100
No. of equity shareholders fund

PARTICULAR | 2007 - 2008 | 2008 – 2009 |
Earnings Per Share | 59.91 | 42.18 |

This ratio determines earnings per share. It has decreased from 59.91% in year 2007-08 to 42.18% in year 2008-09, indicating a downturn in earnings per share to shareholders.

Dividend per Share Ratio:
DPS is the dividend paid to shareholders on a per share basis. In the other words, DPS is the Net distributed profit belonging to the shareholders divided by the No. of ordinary shares outstanding.

* The DPS would be a better indicator than EPS as the former shows what exactly is received by the owners.
* Like the EPS, the DPS is also should not be taken at its face value as the increase DPS may not be a reliable measure of profitability as the equality base may have increase due to increase relation without any change in the number of outstanding shares.

= Total dividend declared
No. of equity shares

PARTICULAR | 2007 - 2008 | 2008 – 2009 |
Dividend Per Share | 5.00 | 3.50 |

The DPS has decreased from Rs 5 in year 2007-08 to Rs 3.50 in year 2008-09 which shows majority of earnings are retained by the company.

Price earnings ratio:
It is closely related to the earning yield leanings price ratio. It is actually the reciprocal of the latter. Thus ratio is computed by dividing the market price of the shares by the EPS.

* The price earnings ratio reflects the price currently being paid by the market for each Rupee of currently reported EPS. In other words, the P/E ratio measures investors’ expectations and the market appraisal of the earnings. Therefore, only normally sustainable earning associated with the assets are taken into account.
* The purpose of this ratio is to find out how much an investor is prepared to pay per rupee of earnings.

= Market value per share
Earnings per share

PARTICULAR | 2007 - 2008 | 2008 – 2009 |
P/E Ratio | 13.85 | 18.37 |

The ratio has increased from 13.85 in year 2007-08 to 18.37 in year 2008-09which a good sign for the company.It also shows that investors are willing to pay higher price for each rupee earned per share.

Dividend yield ratio:
Dividend yield ratio is closely related to the EPS and DPS. While the EPS and DPS are based on the book value per share, the yield is expressed in terms of the market value per share. The earnings yield may be defined as the ratio of earnings per share to the market value per ordinary share.

* The dividend yield ratio is calculated by dividing the cash dividends per share by the market value per share.
* Higher ratio signifies that the company has utilized large portion of its earnings for payment of dividend to equity share holders.

= Dividend per share
Market value share
PARTICULAR | 2007 - 2008 | 2008 – 2009 |
Dividend Yield Ratio | 9.78 | 9.70 |

The dividend yield ratio has slightly decreased from 9.78 in year 2007-08 to 9.70 in year 2008-09 which signifies no major issues.

Interest Coverage Ratio:
It is also known as ‘time interest – earned ratio’. This ratio measures the debt servicing capacity of a firm in so far as fixed interest on long term loan is concerned. It is determined by dividing the operating profit or earnings before interest and taxes (EBIT) by the fixed interest charges on loans.

* This ratio uses the concept of net profits before taxes because tax is calculated after paying interest on long term loan.
* This ratio as the name suggests, show how many times the interest changes are covered by EBIT out of which they will be paid.


PARTICULAR | 2007 - 2008 | 2008 – 2009 |
Interest Coverage Ratio | 40.93 | 34.21 |

The Debt Service Ratio has decreased from 40.93 in year 2007-08 to 34.21 in year 2008-09 which shows that the company has higher debts and more equity in financing the assets. Higher ratio is favourable as it shows that the company will be able to pay interest regularly on time.

Fixed assets turnover ratio:
It is based on the relationship between the sales and assets of the firm. A reference to this was made while working out the overall profitability of a form as reflected in its earning power.

* To ascertain efficiency and profitability of the business.
* The higher the turnover ratio, the more efficiency is the management and utilization of the assets while low turnover ratios are indicative of underutilization of available resources.

= Sales
Fixed assets

PARTICULAR | 2007 - 2008 | 2008 – 2009 |
Fixed Assets Turnover Ratio | 2.48 | 2.38 |

Fixed turnover ratio indicates the turnover of the company in one year. In the year 2007-08 ratio has decreased from 2.48 to 2.38 in year 2008-09, which shows reduction in turnover of the company. Therefore, it is bad for company.

Debtor turnover ratio:
It is allied and closely related to this is the average collection period. It is the test of the liquidity of the debtors of a firm.

* This figure should be measured, as in the case of average inventory, on the basis of the monthly average. It suggests that number of times the amount of credit sale is collected during the year.
* It attempts to measure the collectability of debtors and other account receivables. It shows the rate at which trade debts are being collected.

= Credit sales
Avg. Debtors

PARTICULAR | 2007 - 2008 | 2008 – 2009 |
Debtors Turnover Ratio | 25.76 | 26.33 |

The ratio has increased from 25.76 in year 2007-08 to 26.33 in year 2008-09. As compare to previous year the no. of day’s collection period increase which indicate inefficiency of collection department. Lower the collection period and higher debtor turnover ratio is advisable.

Creditors Turnover ratio:
It is the no. of days within which we make payment to our creditors for credit purchases it obtained from creditor ratio.

* The generally the longer credit period achieved means the operation of the payment being financial interest feels by super funds.

= creditor + B / P X 365
Credit Purchases

PARTICULAR | 2007 - 2008 | 2008 – 2009 |
Creditors Turnover Ratio | 42.00 | 28.00 |

Creditor ratio indicates creditor to credit purchase. The ratio has decreased from 42 in year 2007-08 to 28 in year 2008-09 which indicates that the company has not taken the full benefit of the credit period.

Stock turnover ratio:
It is the no. of times the average stock is turned over during the year is known as stock turnover ratio. It measures the relationship between COGS and inventory level.

* This approach has the advantage of being free from bias as it smoothens out the fluctuations in the inventory level at different period.
* It is measures how quickly inventory is sold. It is a test of efficient inventory management.
* It provides vital information as to whether capital is being blocked up in slow moving stocks or otherwise and indicates the possibilities of reducing the selling price to boost the sales and profit
* It helps in determining the liquidity of the firm, indicates the rate at which the inventories are sold and replaced.

= Cost of goods sold
Average stock
PARTICULAR | 2007 - 2008 | 2008 – 2009 |
Stock Turnover Ratio | 22.93 | 30.46 |

The ratio has increased from 22.93 times in year 2007-08 to 30.46 in year 2008-09 which indicates less amount of working capital is blocked in stocks Therefore, it is good for company. Higher the ratio, better position of the company as well as efficiency.

Current Ratio:
The current ratio is the ratio of total current assets to total current liability. It is calculated by dividing current assets by current liability.

* The current ratio of a firm measures its short term solvency. That is a measure of margin of safety to the creditors. The fact that a firm can rarely count on such an even flow requires that the size of the C.A. should be sufficiently larger than C.L. so that the firm would be assured of being able to pay its current maturing debts as and when it becomes due.
* The ratio discloses possible tendencies of the business to over-trade or under capitalize or over invest in stocks.
* The standard ratio is 2:1
= Current Assets
Current liability

PARTICULAR | 2007 - 2008 | 2008 – 2009 |
Current Ratio | 0.91 | 1.51 |

The current ratio has increased from 0.91 in year 2007-08 to 1.51 in year 2008-09 which is a good indicator for the company, which indicates the company has increased its capacity to meet current obligations.

Quick / acid test ratio:
The measure of absolute liquidity may be obtain by comparing only cash and bank balance as well as readily marketable securities with liquid liabilities.

* This ratio is the most rigorous and conservative test of a firm’s liquidity position. Further, it is suggested that it would be useful for the management.
* It indicates the immediate solvency of the business enterprise. Short term creditors study liquid ratio along with current ratio of a firm to understand its solvency position very well.
* The standard ratio is 1:1

= Quick assets
Current liability

PARTICULAR | 2007 - 2008 | 2008 – 2009 |
Quick Assets Ratio | 0.66 | 1.26 |

The ratio has increased from 0.66 in year 2007-08 to 1.26 in year 2008-09, which indicates higher amount of liquid assets due to large balance resulting good liquidity position of the company.

Debt equity ratio:
The relationship between borrowed funds and owner’s capital is a popular measure of the long term financial solvency of a firm. This relationship is shown by the debt – equity ratio.

* This ratio reflects the relative claims of creditors and shareholders against the assets of the firm. Alternatively this ratio indicates the relative proportions of debts and equity in financing the assets of a firm.
* The D/E ratio is an important tool of financial analysis to appraise the financial structure of a firm. It has important implication from view point of the creditors, owners and the firm itself
* Higher the ratio greater will be the risk involved in respect of creditors.

= Long term liabilities
Shareholders fund

PARTICULAR | 2007 - 2008 | 2008 – 2009 |
Debt-Equity Ratio | 0.11 | 0.07 |

The ratio has decreased from 0.11 in year 2007-08 to 0.07 in year 2008-09 which indicates that company depends on equity to a large extent.

Capital gearing ratio:
This ratio expresses the proportion of preference capital and ordinary capital the higher ratio, the greater propos ion of preference capital and debenture to ordinary capital.

* Capital gearing ratio is helps to preference share and dividend to equity share and helps to know about company’ s capital and overall growth.
* It is the mechanism to ascertain whether a company is practicing “trading on equity” and if so to what extent.

= Fixed investment bearing capital
Ordinary capital

PARTICULAR | 2007 - 2008 | 2008 – 2009 |
Capital Gearing Ratio | 0.11 | 0.07 |

The capital gearing ratio has decreased from 0.11 in year 2007-08 to 0.07 in year 2008-09 which is bad for the company as results in retention of control in hands of equity shareholders and affects the dividend policy.



Maruti 9.6 of 10 on the basis of 2699 Review.