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Maruti suzuki-balansheet-analysis Maruti suzuki-balansheet-analysis Document Transcript

  • 4/15/2010BLACK BALANCE SHEET ANALYSIS OFEDITION- TUM0R MARUTI SUZUKI Prepared By: Dipa Shah Krishna Rajput Submitted to: Nikita Saghvi Mitesh Shah Dr. Himani Joshi Bharat Maheshvari Keyur Savalia
  • ACKNOWLEDGEMENTAn acknowledgement is the expression of one’s thanks giving to the people who have extended their help inevery possible way. Help is a voluntary fulfillment of duty, which, all the people mentioned below haveperformed it to their maximum possible, in a way giving us & our research the utmost important.At the onset, we wish to express our gratitude to Dr. Himani Joshi, Academic Coordinator, and CA Ms. NehaSaxena, faculty at Stevens Business School for their keen interest, constant support & help in completing thisreport successfully.We would also like to thanks to the authors, journals and websites for providing us the related information toour project’s subject. 2
  • TABLE OF CONTENTSSr. No. Particular Page No.1 Acknowledgement 022 Executive Summary 053 Company profile 06 3.1 Introduction 06 3.2 Key Data 07 3.3 Vision 07 3.4 Mission 07 3.5 Market Scenario 08 3.6 Sales Analysis 09 3.7 Market Share 104 Financial Highlight 115 Meaning of Analysis and Objective of Study 15 5.1 Importance of Cash Profit Theory 15 5.2 Meaning and Importance Of Ratio 16 5.3 Utility Of Ratio Analysis 166 Classification Of Ratio 18 6.1 Profitability Ratio 18 6.1.1 Gross Profit Ratio 18 6.1.2 Net Profit Ratio 20 6.1.3 Expenses Ratio 22 6.1.4 Operating Ratio 23 6.1.5 Return on Investment 24 6.1.6 Return on Share Holders’ Fund 25 6.1.7 Return on Equity Share Capital 26 6.1.8 Return on Equity Share holders’ Fund 27 6.1.9 Earning per Share 28 3
  • 6.1.10 Dividend Per Share 29 6.1.11 Price Earning Ratio 30 6.1.12 Dividend Yield Ratio 31 6.1.13 Interest coverage Ratio 327 Activity/Turnover Ratio 33 7.1 Overall turnover Ratio 33 7.2 Fixed Assets Turnover Ratio 34 7.3 Debtor Turnover Ratio 35 7.4 Creditor Ratio 36 7.5 Creditor Turnover Ratio 37 7.6 Stock Turnover Ratio 388 Liquidity Ratio 39 8.1 Current Ratio 39 8.2 Liquid Ratio 40 8.3 Quick / Acid Test Ratio 419 Leverage Ratio 42 9.1 Proprietary Ratio 42 9.2 Debt Equity Ratio 4310 Accounting Policy 2009 4411 Notes To Account 4812 Auditor’s Report 5013 Conclusion 5514 Appendix 1 56 Appendix 2 57 Appendix 3 58 Appendix 4 60 4
  • Executive summaryIn this report, we have tried to explain how one can find out financial result with the help of ratio analysis andsome more in portent graphs with the help of Ratio Analysis. We can easily understand the profitability of thebusiness, efficiency of business, useful in inter comparison. It is also useful for budgeting control and decision-making. Ratio analysis helps interested parties like share holders, investors, creditors, government also andanalysis to make an evaluation of a certain aspect of a firm’s performances.Financial analysis is essential for any business entity. It is the tool to communicate with creditors, debtors,suppliers and all those who are directly or indirectly associated with an organization.Here in this project report we have discussed about various components of balance sheet and their significance.We have done in depth analysis of ratios. Detailed analysis of creditors, debtors, equity share holders, debentureholders of Maruti Suzuki are also described. The growth trend of Maruti Suzuki is also mentioned here. Wehave also mentioned profit trends, dividend trends, revenue analysis, profit analysis, and analysis of company’sliquidity are discussed here.In a nut shell this report gives the complete financial analysis of Maruti Suzuki for five years. 5
  • COMPANY PROFILE  INTRODUCTION First Indian automobile company to join the million clubs Invests Rs 1,700 Crore in new facility to expand capacity by 2.5 lakh units Maruti Udyog Limited (MUL) was established in Feb 1981 through an Act of Parliament, to meet thegrowing demand of a personal mode of transport caused by the lack of an efficient public transport system. Itwas established with the objectives of - modernizing the Indian automobile industry, producing fuel efficientvehicles to conserve scarce resources and producing indigenous utility cars for the growing needs of the Indianpopulation. A license and a Joint Venture agreement were signed with the Suzuki Motor Company of Japan inOct 1983, by which Suzuki acquired 26% of the equity and agreed to provide the latest technology as well asJapanese management practices. Suzuki was preferred for the joint venture because of its track record inmanufacturing and selling small cars all over the world. There was an option in the agreement to raise Suzuki’sequity to 40%, which it exercised in 1987. Five years later, in 1992, Suzuki further increased its equity to 50% turning Maruti into a non-government organization managed on the lines of Japanese management practices. Maruti created history by going into production in a record 13 months. Maruti is the highest volume carmanufacturer in Asia, outside Japan and Korea, having produced over 5 million vehicles by May 2005. Marutiis one of the most successful automobile joint ventures, and has made profits every year since inception till2000- 01. In 2000-01, although Maruti generated operating profits on an income of Rs 92.5 billion, highdepreciation on new model launches resulted in a book loss.  REGISTERED AND CORPORATE OFFICE: 11th Floor, Jeevan Prakash Building, 25, Kasturba Ganghi Marg, New Delhi – 110001 6
  •  KEY DATA 1. Country: INDIA 2. BSE: 532500 3. NSE: MARUTI 4. Exchanges: BOM 5. Major Industry: Automotive 6. Sub Industry: Diversified Automotive Mfrs. 7. 2009 Sales: 206,638,000,000 (Year Ending Jan 2010) 8. Employees: 7,159 9. Currency: Indian Rupees 10. Market Cap: 399,028,129,369 11. Fiscal Yr Ends: March 12. Shares Outstanding: 288,910,060 13. Share Type: Ordinary 14. Closely Held Shares: 156,618,440  VISIONThe leader in the India Automobile Industry, Creating Customer Delight and Shareholder’s Wealth; A pride ofIndia”  MISSIONTo provide maximum value for money to their customers through continuous improvement of products andservices 7
  •  MARKET SCENERIO (2008 -09)Maruti has a network of 681 sales outlets across 454 cities all over India. The service network covers 1,314towns and cities, bolstered by 2,767 authorized service outlets. The companys change in strategy and emphasison developing effective marketing communications was their highlights. 8
  •  SALES ANALYSIS The company vouches for customer satisfaction. For its sincere efforts it has been rated (by customers)first in customer satisfaction among all car makers in India for ten years in a row in annual survey. MarutiSuzuki India Limited, a subsidiary of Suzuki Motor Corporation of Japan, has been the leader of the Indian carmarket for over two decades. During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024 were exported. In all, over sixmillion Maruti cars are on Indian roads since the first car was rolled out on 14 December 1983.And finally in 2009-10, the nations number one car manufacturer joined a select club of global automobilemakers, when it became the first automobile company in India to produce one million (10 lakh) cars in a year. 9
  •  MARKET SHARE 10
  • MARUTI SUZUKI FINANCIALS FOR 2008-09Total Income up 14.28 per cent; Premium compacts and sedan segment drive top line growthFiscal 2008-09The companys Total Income (Net of Excise) (Income from Operations plus Other Income) for the financialyear 2008-09 climbed to Rs 21,453.8 Crore. This is the highest Total Income (Net of Excise) ever in thecompanys history, and marks a growth of 14.28 per cent over 2007-08. The growth in Total Income (Net ofExcise) included higher realizations, largely contributed by the companys popular hatch-back Swift andpremium sedan Swift Dzire (Diesel and Petrol variants).Net Profit during the year stood at Rs 1,218.7 Crore, down 29.6 per cent over 2007-08. The companys EBDITAfor the year stood at Rs 2,433.4 Crore, a fall of about 22 per cent over the previous year.During the year, commodity prices went up sharply and remained high for most part of the year. Forexfluctuations were also adverse and impacted the bottom-line significantly.In recent months, commodity prices have eased.With regard to foreign currency exposure, the companys exports in 2009-10 are expected to be higher andcover its imports.DividendThe Board of Directors recommended a dividend of 70 per cent for 2008-09. (Fiscal 2007-08: 100 per cent).Quarter 4The company registered Total Income (Net of Excise) (Income from Operations plus Other Income) of Rs6,538.3 Crore during January-March 2009, a growth of 30.26 per cent compared to January-March 2008.Net profit during January-March 2009 was Rs 243.1 Crore vis-à-vis Rs 297.7 Crore during January-March2008.While there was a 17 per cent growth in unit sales during the quarter, the adverse foreign exchange movementsduring the year, impacted the bottom-line in Q4 as well. 11
  • Highlights of 2008-09FINANCIAL HIGHLIGHT: FINANCIAL HIGHLIGHTS Particulars 2009 2008 2007 2006 2005 2004 2003 Net Sales (In 20530.1 17891.6 14696.3 12015.9 10923.8 9104.4 7180.1 x10M Rs) Profit Before Tax 1675.8 2503 2279.8 1750 1304.9 769.8 282.1 (In x10M Rs) Reported Net Profit (In x10M 1218.7 1730.8 1562 1189.1 853.6 542.1 146.4 Rs) Earnings Per Share-Unit Curr 41.57 59.03 53.29 40.65 29.25 18.56 4.88 ( In Rs)In the fiscal 2008-09 Maruti Suzuki sold a total of 792,167 vehicles. The annual sales in 2008-09 is the highestever by the company in its 25 year history. The previous highest annual sales were 764,842 units in 2007-08.During the fiscal, Maruti Suzuki Swift crossed the 3 lakh-sales mark cumulative domestic sales since launchand became the quickest vehicle model to do so. During the fiscal, Maruti Suzukis Alto continued to be thepreferred vehicle for the great Indian middle class crossing the 1 million-mark in cumulative sales in domesticmarket.The companys sales included exports of 70,023 units in 2008-09, up by 32.1 per cent over sales of 53,024recorded in 2007-08. The 2008-09 export numbers, the highest ever by the company, was led by A-star, the fuelefficient compact car launched in Europe during the year as Suzuki Alto. The export tally includes around19,000 units of A-star exported to Europe including United Kingdom, France, Germany, Italy, Netherlands,Denmark and Switzerland.Fiscal 2008-09 marked Maruti Suzukis Silver Jubilee year in India. Over these 25 years the company has soldover 7 million (70 lakh) cars in the domestic market. Additionally, over half a million cars made by MarutiSuzuki have been exported world-over.During the year, the company continued its focus on long term initiatives, despite the challenging marketsituation. These include: • Focus on R&D: Manpower strength to 730 engineers from 460 in end March 2008. Company plans 1,000 engineers in R&D by 2010. • New technology engine: Brand new facility for K-series engine launched on schedule. • Launching new models: A-star launched. Introduced Maruti 800 Duo - an alternate fuel option that runs on LPG and petrol. 12
  • • Annual capacity to manufacture expanded from 800,000 to one million units (Gurgaon plus Manesar plants). • Reached out to new segments of customers - government employees and rural customers - through innovative programs. • Export of A star (as Suzuki Alto) to Europe commenced as per schedule. • Dedicated export port facilities for cars at Mundra completed, used for A-star shipment. • Network expansion:o Sales : From 600 sales outlets (in 393 cities) last year to 681 outlets (in 454 cities)o Service : From 2,628 service outlets (1220 cities) last year to 2,767 (in 1314 cities);o True Value : From 265 outlets (in 166 cities) last year to 315 outlets (181 cities) • Increased Pre-owned car sales from 1.01 lakh units in 2007-08 to 1.23 lakh units in 2008-09 • National Road Safety Mission launched - a nation-wide Corporate Social Responsibility (CSR) initiative to train 500,000 people in safe driving in three years. The network of Maruti Driving Schools further expanded and crossed 50 schools.AccoladesDuring the year, the company, its products and services received many awards and accolades instituted byindependent expert groups, media houses and research agencies.These include: • A star as the "Car of the year" • A star as the "Best small car of the year" • K10B Engine as the "Automotive technology of the year" • Maruti Suzuki as the "Manufacturer of the year"The company was rated No. 1 for a record 9th consecutive year in the JD Power Customer Satisfaction IndexStudy.Maruti Suzuki India Ltd has informed BSE that a meeting of the Board of Directors of the Company will beheld on April 26, 2010, inter alia, to consider and approve the audited financial results for the year ended onMarch 31, 2010 and to recommend dividend if any, on equity shares of the Company for the financial year2009-10. 13
  •  MEANING OF ANALYSIS AND OBJECTIVE OF STUDY :Financial statement namely the statement of the profit & loss account and the balance sheet are indication oftwo signify-cant factors profitability and financial soundness analysis of statements means such a treatment ofthe information contained to afford a diagnosis of the profitability and financial statements analysis as theprocess of methodical classification comparison with other co-rising question and then seeking answer for them.Finance is the very typical aspect in course of management. The main objective behind the study is to getprecisely. It also helps us to study the present finance scenario. The objective is such that company’sprofitability, liquidity and capacity by such analysis we can interpret the position of the company. So it is veryimportant to study.Profit Trend for 7 years: PROFIT COMPARISION (IN x10M Rs) Particulars 2009 2008 2007 2006 2005 2004 2003 Operating Profit 2433.3 3130.8 2588.8 2055.8 1797.7 1308.1 656.9 (EBDIT) Gross Profit 2382.3 3071.2 2551.2 2035.4 1761.7 1264.7 604.2 (EBDT) Profit Before Tax 1675.8 2503 2279.8 1750 1304.9 769.8 282.1 (EBT) Adjusted Net 1072.63 1669.71 1535.29 1197.07 860.1 621.82 129.72 Profit (EAT)IMPORTANCE OF CASH PROFIT THEORY:MEANINGCash flow means inflows that is, sources of cash which are at the disposable at the firm and outflows of the firethat is the use of the firm.The difference between inflows and outflows is either net inflow or net outflow. A cash outflow statement dealswith the cash fund flow, which excludes working capital movements. The Accounting standard (A53) classifiescash flows as under: 1) Cash from operating activities 2) Cash from investing activities 3) Cash from financing activities The operating activities include receipts from sale of goods or Rendering of services receipts from royalty,fees, commission etc. Outflow is the resulting from payment to creditors for goods and services, payment forexpenses such as lighting, power, rent, wages salaries etc.Only cash from operating activities is included in this report. 14
  • IMPORTANCE OF CASH PROFIT:The cash profit is an important measure of profitability as well as liquidity. When the cash profit differs fromthe profit is shown in the profit and loss account or profit and loss statement. Adjusting depreciation arrives atthe cash profit; amortize action of capital expenses etc. The cash profit is much less or negative compared to theprofit declared in the profit and loss account. It indicates liquidity and signals for appropriate cash management.The net cash from operations can be calculated through adjustment of non-cash items like depreciation, changesin inventory and receivable and payables, and or other items for which cash offers the investing and financingactivities.  MEANING & IMPORTANCE OF RATIO:The Balance Sheet and the Statement of Income are essential, but they are only the starting point for successfulfinancial management. Apply Ratio Analysis to Financial Statements to analyze the success, failure, andprogress of your business.Ratio Analysis enables the business owner/manager to spot trends in a business and to compare its performanceand condition with the average performance of similar businesses in the same industry. To do this compare yourratios with the average of businesses similar to yours and compare your own ratios for several successive years,watching especially for any unfavorable trends that may be starting. Ratio analysis may provide the all-important early warning indications that allow you to solve your business problems before your business isdestroyed by them.Ratio is a figure showing, logical relationship between any two items taken from financial statement as preparedand presented annually are of little use for guidance of prospective investors, creditors and even management. Ifrelationships between various related items in these financial statements are established, they can provide usefuldues to garage accurately the financial health and ability of business to make profit. The relation between in tworelated items of financial statements is known ratio.  UTILITY OF RATIO ANALYSIS:It is very important to find the ratio of liquidity, profitability etc. Because the ratio analysis provides useful datato the management, important uses of it are given as below:  PROFITABLITY :Useful information about the trend of profitability is from profitability ratio. The gross profit ratio, net profitratio and ratio of return on investment give a good idea of the profitability of the business. On the basic of thisratio, investors get an idea about overall efficiency of managers and bank as well as other creditors draw usefulconclusion about repaying capacity of the borrowers. 15
  •  LIQUIDITY :In fact the use of ratio was made initially to ascertain the Liquidity of business. The current ratio, acid test ratiowill tell whether the firm will be able to meet its current liabilities and when they nature. Banks and otherleaders will be able to conclude from these ratios whether the firm will be able to pay regularly the interest andloan installments.  EFFCIENCY :The turnover ratios are excellent guide to measure the efficiency of managers. All such ratio related to salespresent a good picture of the success on the business.  INTER FIRM COMPARION :The absolute ratios of a firm are not of much use, unless they are compared with similar ratios of other firmsbelonging to the same industry. This is a inter firm compared to other firms comparison, which shows thestrength and weakness of the firm as compared to other firms and will indicate corrective measures.  INDICATE TREND :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 notdesirable only ratio analysis will provide this information.  USEFUL FOR BUDGETARY CONTROL :Regular budgetary reports are prepared in a business where the system of budgetary control is in use. If variousratios are presented these reports, it will give a fairly good idea about various aspects of financial position.  USEFUL FOR DECISION MAKING :Ratio guide the management in making some of the important decision, suppose, the liquidity ratios shows anunsatisfactory position, the management may decide to get additional liquid funds. Even for capitalexpenditure 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. 16
  • 6. Classification of ratio6.1Profitability ratio[6.1.1] Gross Profit Ratio:Meaning:  It is expresses relationship between Gross Profit earned to net sales. It is a significant indicator of the profitability of business.  It expresses in percent. For example, a ratio shows that for a sale of every Rs. 1000 a margin of 250 rupees is available from which operating expenses of business are recovered.  The ratio shows whether the mark up obtained on cost of production is sufficient or not. There is no calibration against reasonability of gross profit ratio. However it must be enough to cover its operating expenses. In many industries, there are more or less recognized gross profit ratios and the business should strive to maintain this standard.  If this ratio is low, it indicates that the cost of sales is high or that the purchasing is inefficient.  Alternatively, it may also mean that due to depression, the selling price is reduced but there are may be no corresponding reduction, the selling price is reduced but there may be no corresponding reduction in cost of sales. In such a case, the management must investigate the causes and try to bring up this ratio.Implementation:  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.Formula: Gross profit X 100 Sales 17
  • FOR GROSS PROFIT RATIO Particulars 2009 2008 2007 2006 2005 2004 2003 Gross Profit (EBDT) (In x10M 2382.3 3071.2 2551.2 1761.7 1264.7 604.2 Rs) Net Sales (In x10M 20530.1 17891.6 14696.3 12015.9 10923.8 9104.4 7180.1 Rs) 16.1271 13.891 8.4149 Gross Profit Ratio 11.603937 17.165597 17.359471 16.939222 719 0856 2458INTERPRETATION:As mentioned above the gross profit ratio indicates the relationship between gross profit and net sales. Herefrom the table we can judge the financial position of Maruti Suzuki year wise.Here 6 consecutive years from 2004 to 2009 are taken into consideration. The changes in the gross profit ratioin percent are as follows.Here, negative sign indicates that the percent is decreased compare to immediate previous year, while positivesign indicates that the percent is decreased in the gross profit compare to immediate previous year.For consecutive four years the gross profit ratio is positive. It indicates better financial position of the company. 18
  • [6.1.2] Net Profit Ratio:Meaning:Net profit ratio is valuable for the purpose of ascertaining the over-all profitability of business and shows theefficiency of operating the business.Implementation:  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.  It indicates the portion of sales revenue is left to the proprietors after all operating expenses are paid.  The higher the ratio, the better will be the profitability. In order to have a better idea of profitability, the gross profit ratio and net profit ratio may be simultaneously considered. If the gross profitability increases over the five years but net profit is declining, it indicates that administrative expenses are slowly rising.Formula: Net Profit X 100 Sales FOR NET PROFIT RATIO Particulars 2009 2008 2007 2006 2005 2004 2003 Net Profit (In x10M 1072.63 1669.71 1535.29 1197.07 860.1 621.82 129.72 Rs) Net Sales (In x10M 20530.1 17891.6 14696.3 12015.9 10923.8 9104.4 7180.1 Rs) 7.87363 6.8298 1.8066 Net Profit Ratio 5.2246701 9.3323682 10.446779 9.9623831 372 8445 6007 19
  • Interpretation:  Here 6 consecutive years from 2004 to 2009 are taken into consideration. The changes in the net profit ratio in percent are as follows.  Higher the net profit ratio shows better financial position of the company.  Due to various reasons this ratio goes down. If the administration department is not sufficient then net profit ratio goes down or the control mechanism is not efficient at all check points then also it affects net profit of the company.  Net profit is the profit that is available to the proprietors of the firm after clearing all outstanding and expenses. Thus, higher the ratio yields higher profit. 20
  • [6.1.3] Expenses Ratio:Meaning:  This ratio shows relationship between expanses to sales.  Above table shows that for the year 2004 – 05 it was 88.64 % the increase in 2005 – 06 up to 89.23% that indicates there is increase in operating expenses for the year 2006 – 07 it is 92.03% and it is higher than previous year which shows increase in operating expenses.  For the year 2008-09 there is 2.43 increases in the net profit ratio which gives signal of better financial position of the company.  This operating expense may be due to growth in the organization or it may reflect inefficacy of administrative control on expenses.  Here negative sign shows decrease in operating expenses.Implementation:  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.Formula: Expenses X 100 Sales FOR EXPENSES RATIO Particulars 2009 2008 2007 2006 2005 2004 2003 Total Expenditure 18738.7 15934.2 12462.8 10625.3 9671 8177.1 6704.8 (In x10M Rs) Net Sales (In x10M 20530.1 17891.6 14696.3 12015.9 10923.8 9104.4 7180.1 Rs) 88.5314 89.814 93.380 Net Profit Ratio 91.274275 89.059670 84.802297 88.427000 634 8148 315INTERPRETATION:  This ratio shows relationship between expanses to sales.  Above table shows that for the year 2004 – 05 it was 88.64 % the increase in 2005 – 06 up to 89.23% that indicates there is increase in operating expenses for the year 2006 – 07 it is 92.03% and it is higher than previous year which shows increase in operating expenses.  This operating expense may be due to growth in the organization or it may reflect inefficacy of administrative control on expenses.  Here negative sign shows decrease in operating expenses. 21
  • [6.1.4] OPERATING RATIO:Meaning:  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.Implementation:  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.Formula: C O G S + Operating expenses X 100 Net sales OPERATION RATIO Particulars 2009 2008 2007 2006 2005 2004 2003 Operating Expense 2114.8 1510.4 1244.21 900.15 801.54 786.54 840.88 COGS 3498.6 3744.5 3197.01 2506.35 2160.04 1673.64 1168.58 Net Sales 20530.1 17891.6 14696.3 12015.9 10923.8 9104.4 7180.1 Operating Ratio 27.3423 29.3708 30.22 28.3499 27.1113 27.0219 27.9865INTERPRETATION:  This ratio shows relationship between COGS + operating expanses to sales.  Above table shows that for the year 2004 – 05 it was 87.33 % the increase in 2005 – 06 up to 86.90 % that indicates there is increase in operating expenses for the year 2006 – 07 it is 83.89 % and it is lower than previous year which shows increase in operating expenses.  In the year 2008-09 there is 28% increase in the operating expenses. This is may be due to inefficient operation management and also there may be some other expenses for sales or promotion may incur during this year. 22
  • [6.1.5] Return on investment / Capital employed:Meaning:  The profitability ratio can be computed by relating the profits of a firm to its investment.Implementation:  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.  It is an index of profitability of business and is obtained by comparing net profit with capital employed. Capital includes share capital, reserves and long term loans such as debentures.Formula: EBIT X 100 Capital employed FOR RETURN ON INVESTMENT / CAPITAL EMPLOYED Particulars 2009 2008 2007 2006 2005 2004 2003 Gross Profit (EBIT) (In 2382.3 3071.2 2551.2 2035.4 1761.7 1264.7 604.2 x10M Rs) Capital Employed ( Share capital + Reserves 9344.9 8415.4 6853.9 5452.6 4378.8 3591.2 3098 and surplus) (In x10M Rs) 36.49499 37.222 37.3289 40.232 35.216 19.502 Return on Investment 25.4930497 73 6032 807 4838 6407 9051INTERPRETATION:  This ratio shows relationship between E B I T to CAPITAL EMPLOYED.  Higher the ratio, it is better for the company.  In the year 2008- 09 there is decrease of 43.15 percent in the gross profit of the company. This show slow- down in company’s sale. It is due to recession during that period where an overall sale was affected. 23
  • [6.1.6] Return on shareholder’s fund:Meaning:  It is carries the relationship of return to the sources of funds yet another step further.  In order to judge the efficiency with which the proprietors’ funds are employed in business, this ratio is ascertained. Proprietor’s equity or Proprietors’ funds include share capital and reserves.  It is of great practical importance to the perspective of investors, as it enables the profitability of a company to be compared with that of other.  It also indicates whether the return on proprietor’s fund is enough in relation to the risk that they undertake.  This ratio shows what amount of dividend is likely to be received on shares.Implementation:  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.Formula: Net profit X 100 Share holders fund FOR RETURN ON SHAREHOLDERS FUND Particulars 2009 2008 2007 2006 2005 2004 2003 Net Profit (In x10M Rs) 1072.63 1669.71 1535.29 1197.07 860.1 621.82 129.72 Capital Employed ( Share capital + Reserves and 9344.9 8415.4 6853.9 5452.6 4378.8 3591.2 3098 surplus) (In x10M Rs) 11.4782 19.84112 22.4002 21.9541 19.642 17.315 4.18721 Return on Investment 395 46 393 136 3678 1036 756INTERPRETATION:  The ratio indicates relationship between Net profits to share holders fund therefore higher the returns to shareholders.  For the year 2004 05 it is 21.90 % that increase in the year 2005 – 06 up to 23.70.  This ratio shows downward trend in the ratio in return on shareholders fund for this company.  During the year 2008-09 there is 72.97% decrease in the ROI. This ratio shows upward trend for that financial year for the company. 24
  • [6.1.7] Return on Equity share capital:Meaning:  It is obtained by dividing net profit after tax deduction of performance dividing by his amount of ordinary share capital plus free reserve.Implementation:  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.Formula: Net profit after tax  Preference dividend X 100 Equity capital FOR RETURN ON EQUITY SHARE CAPITAL Particulars 2009 2008 2007 2006 2005 2004 2003 Net Profit (In x10M Rs) 1072.63 1669.71 1535.29 1197.07 860.1 621.82 129.72 Preference Dividend (In 0 0 0 0 0 0 0 Rs) Share Capital (In x10M 144.5 144.5 144.5 144.5 144.5 144.5 144.5 Rs) Return on Equity Share 55.73 8.13 22.03 28.14 27.73 79.12 11.46 Capital (In Rs)INTERPRETATION:  The ratio indicates relationship between Net profits to share holders fund therefore higher the returns to shareholders.  For the year 2004 – 05 it is 19.49 % that increase in the year 2005 – 06 up to 21.81 %.  This ratio shows downward trend in the ratio in return on shareholders fund for this company.  For the financial year 2008-09 there is 85% increase in the ratio in return on shareholders fund. Here, year 2008-09 shows marked improvement that is why it is taken into consideration. 25
  • [6.1.8] Return on Equity share holders fund:Meaning:  It is obtained by dividing net profit after tax deduction of performance dividing by his amount of ordinary share capital plus free reserve.Implementation:  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.Formula: Net profit after tax  Preference dividend X 100 Equity share holders’ funds FOR RETURN ON EQUITY SHARE HOLDERS FUND Particulars 2009 2008 2007 2006 2005 2004 2003 Net Profit (In x10M Rs) 1072.63 1669.71 1535.29 1197.07 860.1 621.82 129.72 Capital Employed ( Share capital + Reserves and 9344.9 8415.4 6853.9 5452.6 4378.8 3591.2 3098 surplus) (In x10M Rs) Preference Dividend (In 0 0 0 0 0 0 0 Rs) Return on Investment (In 11.4782 19.8411 22.4002 21.9541 19.6423 17.315 4.18721 Rs) 395 246 393 136 678 1036 756INTERPRETATION:  For the year 2004 – 05 it is 19.64 % that increase in the year 2005 – 06 up to 21.95%.  These ratios shows downward trend in the ratio in return on shareholders fund for this company.  Here in the year 2008-09 there is decrease of 69% compared to previous year in the ROI which shows upward trend in the company. 26
  • [6.1.9] Earning per share:Meaning:  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.  This ratio shows the profitability of the firm from the owner’s point of view. By comparing EPS of the current year with past years the path of the trend of profitability can be ascertained.  It is essential that EPS of the company should be compared with the other companies and also average of the company before giving final opinion.  The limitation of EPS is that it does not show how much dividend is actually paid to shareholders and how much profit is retained in business.Implementation:  Earning per share is a widely used ratio. EPS s a measure of profitabilityFormula: Profit after tax – preference dividend X 100 No. of equity shareholders fund FOR RETURN ON EARNING PER SHARE Particulars 2009 2008 2007 2006 2005 2004 2003 Net Profit (In x10M Rs) 1072.63 1669.71 1535.29 1197.07 860.1 621.82 129.72 2889100 2889100 2889100 2889100 2889100 288910 2889100 No. of Equity Shares 60 60 60 60 60 060 60 Preference Dividend (In 0 0 0 0 0 0 0 Rs) Return on Investment ( In 37.1267 57.7934 53.1407 41.4340 29.7705 21.522 44.8997 Rs) 792 185 594 02 106 9612 865INTERPRETATION:This ratio indicates the earning per share for shareholders of company.In the year 2004 – 05 ratio is 29.77 % and 2005 – 06 it is 41.43 % and its increase on 2006-07 is 53.14%.therefore it is good for company as well as shareholders. 27
  • [6.1.10] Dividend per share:Meaning:  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.Implementation:  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.Formula: Total dividend declared No. of equity shares FOR DIVIDEND PER SHARE Particulars 2009 2008 2007 2006 2005 2004 2003 2889100 2889100 2889100 2889100 2889100 288910 2889100 No. of Equity Shares 60 60 60 60 60 060 60 Total Dividend (In x10M 101.1 144.5 130 101.1 57.8 43.3 42.7 Rs) Dividend per Share ( In 3.49935 5.00155 4.49967 3.49935 2.00062 1.4987 1.47796 Rs) 894 654 024 894 262 3632 861INTERPRETATION:  This ratio indicates the total dividend declared to no. of shares. For the year 2004 – 05 it is 2 % and 2005 – 06 is3.50 % and increase on 4.50 % in the year 2006 – 07.  For the year 2007-08 is 96% increased compared to previous year while for the year 2008-09 it is decreased to 26.84%. Thus for the current year it is decreased. It indicates slow-down in the financial position of the company. 28
  • [6.1.11] Price earning ratio:Meaning:  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.Implementation:  The price earning ratio reflects the price currently being paid by the market for each Rupee of currently reported EPS. In other words, the PIE ratio measures investors’ expectations and the market appraisal of the earnings. Therefore, only normally sustainable earning associated with the assets are taken into account.Formula: Market value per share Earning per share FOR PRICE EARNING RATIO Particulars 2009 2008 2007 2006 2005 2004 2003 Market Value of Share (In 1559.65 520.1 990.05 927.35 636.5 461.25 376.3 Rs) Earning Per Share (In Rs) 41.57 59.03 53.29 40.65 29.25 18.56 4.88 37.5186 8.81077 18.5785 22.8130 21.7606 24.851 77.1106 Price Earning Ration 433 418 326 381 838 8319 557INTERPRETATION:  This ratio indicates the earning per share for shareholders of company.  In the year 2004 – 05 ratio is 17.58% and 2005 – 06 it is 21.95% and its increase on 29.55%.  Therefore it is good for company as well as shareholders. 29
  • [6.1.12] Dividend yield ratio:Meaning:  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.Implementation:  The dividend yield ratio is calculated by dividing the cash dividends per share by the market value per share.Formula: Dividend per share Market value share FOR DIVIDEND YIELD RATIO Particulars 2009 2008 2007 2006 2005 2004 2003 Market Value of Share (In 1559.65 520.1 990.05 927.35 636.5 461.25 376.3 Rs) 3.4993589 5.001555 4.49967 3.499358 2.00062 1.4987 1.4779 Dividend Per Share (In Rs) 4 65 024 94 262 3632 6861 0.0022436 0.009616 0.00454 0.003773 0.00314 0.0032 0.0039 Dividend Yield Ratio 8 53 489 5 316 4929 2763INTERPRETATION:  This ratio indicates the earning per share for shareholders of company.  In the year 2004 – 05 ratio is 17.58% and 2005 – 06 it is 21.95%.  For the year 2007-08 the ratio is decreased by 109.9% and for 2008-09 it is increased by 76.51%. So for current situation is good for company as well as shareholders. 30
  • [6.1.13] Interest coverage ratio:Meaning:  It is also known as ‘time interest – earned ratio’.  This ratio measures the debt servicing capacity of a firm insofar as fixed interest on long term loan is concerned. It is determined by dividing the operating profit or earning before interest and taxes (EBIT) by the fixed interest changes on loans.Implementation:  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.Formula: EBITD Interest FOR INTEREST COVERING RATIO Particulars 2009 2008 2007 2006 2005 2004 2003 Operating Profit (EBDIT) 2433. 3130.8 2588.8 2055.8 1797.7 1308.1 656.9 (In x10M Rs) 3 Interest (In x10M Rs) 51 59.6 37.6 20.4 36 43.4 52.7 47.71 52.53020 68.85106 100.774 49.9361 30.1405 12.464 Interest Covering Ratio 1764 13 38 51 111 53 8956 7INTERPRETATION:  This ratio indicates the EBDIT to interest. In the year 2004 – 05 ratio is 49.93 and 2005 – 06 it is 100.8 and its decrease on 68.85.therefore it is good for company as well as shareholders.  For the year 2008-09 the interest covering ratio is 47.71 while for the year 2007-08 it is 52.53.It is decreasing for the last 2 financial years due to the fluctuation in for-ex. 31
  • 7. Activity / Turn over Ratio:[7.1] Overall turnover ratio:Meaning:  The amount invested in business is invested in all capital employed and sales are affected through them to earn profits so in order to find relation between net sales to capital employed.Implementation:  The usefulness of the Du Pont analysis lies in the fact that it presents the overall picture of the performance of a firm as also enables the management to identify the factors which have a bearing on profitability.Formula: Net sales Capital employed FOR OVERALL TURNOVER RATIO Particulars 2009 2008 2007 2006 2005 2004 2003 Net Sales (In x10M 20530.1 17891.6 14696.3 12015.9 10923.8 9104.4 7180.1 Rs) Capital Employed ( Share capital + 9344.9 8415.4 6853.9 5452.6 4378.8 3591.2 3098 Reserves and surplus) (In x10M Rs) OVERALL 2.19693 2.126054 2.1442244 2.203700 2.49470 2.5351 2.31765 TURNOVER RATIO 0946 614 56 987 174 97149 6553INTERPRETATION:  This ratio indicates net sales to capital employed. In the year 2004 – 05 ratio is 2.49 and 2005 – 06 it is 2.20 and its decrease on 2.14 in the year 2006 – 07. Therefore it is bad for company.  In the year 2008-09 the ratio is 2.19 while in the year 2007-08 the ratio is decreased to 2.12 which shows slow down in the company. 32
  • [7.2] fixed assets turn over ratio:Meaning:  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.Implementation:  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.Formula: Sales Fixed assets FOR FIXED ASSETS TURNOVER RATIO Particulars 2009 2008 2007 2006 2005 2004 2003 Net Sales (In x10M 20530.1 17891.6 14696.3 12015.9 10923.8 9104.4 7180.1 Rs) Total Fixed Asset (In 7079.34 5716.166 4740.7419 4073.186 3943.61 3746.6 3554.50 x10M Rs) 4828 134 35 441 011 6667 495 Fixed Asset Turnover 2.4299 2.9 3.13 3.1 2.95 2.77 2.02 Ratio 99998INTERPRETATION:  Fixed turn over ratio indicates the turnover of the company in one year.  In the year 2004 – 05 ratio is 2.77 and 2005 – 06 it is 2.95 and it increase on 3.1 in the year 2006 - 07. Therefore, it is good for company.  In the year 2008-09 there is decrease of 7% in the fixed turnover ratio compare to last year while during year 2007-08 there is very minor change in the ratio. Year 2007-08 and 2006-07 shows almost similar financial position of the company while year 2008-09 shows slight slow down in the financial position of the company 33
  • [7.3] Debtor turn over ratio:Meaning:  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.Implementation:  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.Formula: Credit sales Avg. Debtors FOR DEBTOR TURN OVER RATIO Particulars 2009 2008 2007 2006 2005 2004 2003 Net Sales (In x10M 20530.1 17891.6 14696.3 12015.9 10923.8 9104.4 7180.1 Rs) Sundry Debtors (In 697.117 596.9836 595.23288 507.2140 527.974 560.61 603.877 x10M Rs) 1477 503 78 144 867 57635 2077 Debtor Turnover 29.45 29.97 24.69 23.69 20.69 16.24 11.89 RatioINTERPRETATION:  Debtor turnover ratio indicates credit sales to avg. debtors.  In the year 2004 – 05 ratio is 20.69 and 2005 – 06 it is 23.69 and its increase on 24.69 in the year 2006 – 07. Therefore, it is good position for company.  In the year 2008-09 there is 1% decrease in the Debtor’s turnover ratio compare to previous year and 2007-08 there is 17.91% increase in the debtor’s turn over ratio.  How efficiently the amount is collected from the customers from the credit sales.  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. 34
  • [7.4] Creditor ratio:Meaning:  It is the no. of days within which we make payment to our creditors for credit purchases it obtained from creditor ratio.Implementation:  The generally the longer credit period achieved means the operation of the payment being financial interest feels by supper funds.Formula: Creditor + B / P X 365 Credit Purchases FOR CREDITOR RATIO Particulars 2008 2007 2006 2005 Creditor (In x10M Rs) 854.9 909.6 555.1 463.7 Bills Payable (In x10M Rs) 0 0 0 0 Credit Purchase (In x10M 13938.8 10836.4 9392.8 8621.3 Rs) Creditor Ratio 22.3863245 30.63785021 21.57093731 19.6316681INTERPRETATION:Creditor ratio indicates creditor to credit purchase.In the year 2004 – 05 ratio is 19.63 and 2005 – 06 it is 21.57 and its increase on 30.63 in the year 2006 – 07.In the year 2007-08 there is decrease on 22.38 times i.e. decrease of 36.36% in the creditor ratio compare toprevious year.Thus it indicates slight slow down in the financial condition of the company. 35
  • [7.5] creditor turns over ratio:Meaning:  It is the no. of days within which we make payment to our creditors for credit purchases it obtained from creditor ratio.Implementation:  The generally the longer credit period achieved means the operation of the payment being financial interest feels by supper funds.Formula: No. of days in a year Creditor’s ratio FOR CREDITOR TURN OVER RATIO Particulars 2008 2007 2006 2005 NO. Of Days 365 365 365 365 in Year Creditors 22.3863245 30.63785021 21.57093731 19.6316681 Ratio Creditors Turnover 16.30459703 11.91336851 16.92091515 18.5924089 RatioINTERPRETATION:  Creditor ratio indicates creditor to credit purchase. In the year 2004 – 05 ratio is 18.59 and 2005 – 06 it is 16.92 and its increase on 11.91 in the year 2006 – 07. Therefore, it is good position for company.  During the year 2007-08 ratio is 16.30. It increases in compare to previous financial year thus it indicates good position of the company. 36
  • [7.6] Stock Turnover Ratio:Meaning:  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.  Higher the turnover ratio, the more profitable business would be. Such firms will be able to trade on a smaller margin of a gross profit.  Lower stock turn over ratio indicates accumulation of slow moving, obsolete and low quality goods, which is a danger signal for management.Implementation:  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.  To judge whether the ratio of a firm is satisfactory or not.Formula: Cost of good sold Average stock FOR STOCK TURN OVER RATIO Particulars 2009 2008 2007 2006 2005 2004 2003 Sales Turnover (In 23182.2 21025.2 17205.9 14753.1 13335.7 11047.4 8981.5 x10M Rs) Gross Profit (EBDT) 2382.3 3071.2 2551.2 2035.4 1761.7 1264.7 604.2 (In x10M Rs) Cost Of Good Sold 20799.9 17954 14654.7 12717.7 11574 9782.7 8377.3(COGS) (In x10M Rs) Inventories (In x10M 902.3 1038 701.4 881.2 666.6 439.8 487 Rs) 23.052089 17.29672 20.893498 14.4322514 17.362736 22.243519 17.201848Stock Turn over Ratio 11 447 72 8 3 78 05INTERPRETATION:  Stock turnover ratio indicates cost of goods sold to average stock.  In the year 2004 – 05 ratio is 17.36 times and 2005 – 06 it is 14.43 times and it’s increase on 20.80 times in the year 2006 – 07.  For the year 2008-09 and 2007-08 the ratio are 23.05 times and 17.3 times respectively. It is more in 2008-09 compare to 2007-08. It indicates better position of the company.  Therefore, it is good for company. How efficiently stock rate in the year Higher the ratio, better position of the company as well as efficiency. 37
  • 8. Liquidity Ratio:[8.1] Current Ratio:Meaning:  The current ratio is the ratio of total current assets to total current liability. It is calculated by dividing current assets by current liability.  It is also known as a working capital ratio, as it is measure of working capital available at a particular time. It is a measure of short term financial strength of the business and shows whether the business will be able to meet its current liabilities, as and when they mature.Implementation:  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.Formula: Current Assets Current liability FOR CURRENT RATIO Particulars 2009 2008 2007 2006 2005 2004 2003 Total Current Assets (In x10M 5491.1 3097.9 4405 3740.9 2972 2018.9 2782.8 Rs) Total Current Liabilities (In 3397.6 2825.7 3072.4 1977.1 1608 1531.8 1478.6 x10M Rs) Current Ratio 1.6162 1.096330 1.433732 1.892114 1.848258 1.31799 1.882050INTERPRETATION:  Current ratio indicates current assets to current liability. In the year 2004 – 05 ratio is 1.84: 1 and 2005 – 06 it is 1.89: 1 and its decrease on 1.43: 1 in the year 2006 – 07.  Therefore, it is good for company.  For the year 2008-09 the ratio is 1.61:1 and for the year 2007-08 it is 1.61:1. So for the year 2008-09 it is good as ideal is 2:1 and 1.61:1 closer to ideal one.  Mainly 2: 1 is good. It indicates, repaying condition of the company to the current liabilities. The standard current ratio must be 2:1. 38
  • [8.2] Liquid Ratio:Meaning:  It is obtained by dividing the liquid assets by liquid liabilities.  It liquid ratio is designed to show the amount of cash available to meet immediate payments.  If the liquid assets are equal to or more than liquid liabilities, the condition may be considered as satisfactory.Implementation:  The importance of adequate liquidity in the sense of the ability of a firm to meet short term obligations when they become due for payment can hardly be overstressed.  In fact liquidity is a prerequisite for the very survival of a firm. It measures ability of a firm to meet its short term obligations and reflect the short term finance strength of a firm.Formula: Liquid assets Liquid liability FOR LIQUIDITY RATIO Particulars 2009 2008 2007 2006 2005 2004 2003 Total Current Assets (In 5491.1 3097.9 4405 3740.9 2972 2018.9 2782.8 x10M Rs) Inventories 902.3 1038 701.4 881.2 666.6 439.8 487 (In x10M Rs) Prepaid Expenses (In 0 0 0 0 0 0 0 x10M Rs) Quick Asset 4588.8 2059.9 3703.6 2859.7 2305.4 1579.1 2295.8 (In x10M Rs) Total Current Liabilities (In 3397.6 2825.7 3072.4 1977.1 1608 1531.8 1478.6 x10M Rs) Bank Over Draff (In 0 0 0 0 0 0 0 x10M Rs) Liquidity 1.35060042 0.72898751 1.205442 1.44641141 1.43370647 1.0308787 1.55268497 Ratio 39
  • INTERPRETATION:Liquid ratio indicates liquid assets to liquid liability. In the year 2004 – 05 ratio is 1.43: 1 and 2005 – 06 it is1.44: 1 and its decrease on 1.21: 1 in the year 2006 – 07. Therefore, it is good for company. How effectively theliability paid off.For the year 2008-09 the ratio is 1.35:1 which shows slight better condition compare to FY 2004-05.The standard liquidation must be 1:1. 40
  • [8.3] Quick / acid test ratio:Meaning:  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 is exacting standard of liquidity and it is satisfactory if the ratio is 0.5:1.  Quick assets here do not include both stock and debtors, because payment from debtors would not generally be received immediately when liquid liabilities are to be paid.Implementation:  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.Formula: Quick assets Liquid liability FOR QUICK ACID TEST RATIO Particulars 2009 2008 2007 2006 2005 2004 2003 Quick Assets 5491.1 3097.9 4405 3740.9 2972 2018.9 2782.8 (In x10M Rs) Current Liability (In 3397.6 2825.7 3072.4 1977.1 1608 1531.8 1478.6 x10M Rs) Quick Acid 1.61617024 1.09633011 1.43373259 1.89211471 1.84825871 1.3179919 1.88205059 Test RatioINTERPRETATION:  Quick acid test ratio is indicates quick assets and liquid liability. In the year 2004 – 05 ratio is 1.84: 1 and 2005 – 06 it is 1.89: 1 and its decrease on 1.4: 1 in the year 2006 – 07. Therefore, it is good for company. 41
  • 9. Leverage Ratio:[9.1] Proprietary ratio:Meaning:The ratio shows the proportion of proprietors’ funds to the total assets employed in known in the proprietaryratio.Implementation:  Proprietary ratio helps to known how many proprietary funds to total assets.  The higher the ratio, the stronger the financial position of the enterprise, as it signifies that the proprietors have provided larger funds to purchase assets. This ratio can not exceed 100%; it means that the business does not use any outside funds. There are no outside liabilities. Purchases are made for cash only and firm carries business entirely from own funs only. A very high ratio therefore is not desired as it shows insufficient use of out side fund is made.  Generally it is said that proprietor’s fund should be enough to cover fixed assets. And also reasonable proportion must be maintained between owned funds and borrowed funds, so the benefit of trading on equity is obtained. Which inture increase the rate of equity dividend.Formula: Proprietary fund Net asset FOR PROPEIETARY RATIO Particulars 2009 2008 2007 2006 2005 2004 2003 Total Proprietary 9344.9 8415.4 6853.9 5452.6 4378.8 3591.2 3098 Funds (In x10M Rs) Total Assets (In 10043.8 9315.6 7484.7 5524.3 4686.4 3903.1 3554 x10M Rs) 93.041478 90.3366 91.57214 93.43632 92.0089 87.169 Proprietary Ratio 98.702098 32 3962 05 639 1599 38661INTERPRETATION:This ratio indicates the proprietary funds to total assets. For the year 2006 – 07 it is 91.57 % and 2007– 08 is90.33 % and increase in 2008 – 09 it is 93.04 %. This is a good for company. 42
  • [9.2] Debt equity ratio:Meaning:  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.Implementation:  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.  A higher ratio means that outside creditors have a larger claim than the owners of business. The pressure from creditors would increase and their interference will also increase. The company with high debt position will have to accept strict conditions from the lenders, while borrowing money.  A lower ratio is not profitable from the view point of equity share holders, as benefit of trading on equity is not availed of and the rate of equity dividend will be comparatively lower. FOR DEBT EQUITY RATIO Particulars 2009 2008 2007 2006 2005 2004 2003 Long term 841.041 841.54 411.234 218.104 350.304 395.032 588.62 Liabilities (In x10M Rs) Total Shareholders 9344.9 8415.4 6853.9 5452.6 4378.8 3591.2 3098 Funds (In x10M Rs) Debt-Equity Ratio 9% 10% 6% 4% 8% 11% 19%INTERPRETATION:  This ratio indicates the debt to equity ratio. For the year 2004 – 05 it is 8 %and 2005– 06 is 4 % and increase in 2006 – 07 it is 6%.  This is a bad for company as compare to 2005-06 year is more debt ratio which indicate the more realize on debt fund rather owned fund. The good impact is interest burden will be more indirectly.  For the year 2008-09 and 2007-08 the debt equity ratio is 9% and 10% respectively. As the higher debt equity ratio it shows the weaker financial condition of the company. But, still it again varies for company to company. 43
  • Accounting Policy 20091) BASIS FOR PREPARATION OF ACCOUNTSThese financial statements have been prepared to comply in all material respects with all the applicableaccounting principles in India, the applicable accounting standards notified under section 211(3C) of theCompanies Act, 1956 and the relevant provisions of the Companies Act, 1956.2) REVENUE RECOGNITIONDomestic and export sales are recognized on transfer of significant risks and rewards to the customer whichtakes place on dispatch of goods from the factory / stockyard / storage area and port respectively.3) FIXED ASSETSFixed assets (except freehold land which is carried at cost) are carried at cost of acquisition or construction or atmanufacturing cost (in case of own manufactured assets) in the year of capitalization less accumulateddepreciation.Assets acquired under finance lease are capitalized at the lower of their fair value and the present value ofminimum lease payments.4) BORROWING COSTSBorrowing costs that are directly attributable to the acquisition, construction or production of qualifying assetsare capitalized till the month in which each asset is put to use as part of the cost of that asset.5) DEPRECIATIONa) Fixed assets except leasehold assets viz land and vehicles are depreciated on the straight line method on apro-rata basis from the month in which each asset is put to use.Depreciation has been provided at the rates prescribed in Schedule XIV to the Companies Act, 1956 except forcertain fixed assets where, based on the managements estimate of the useful life of the assets, higherdepreciation has been provided on the straight line method over the following useful lives:Plant and Machinery 8 - 11 Years Dies and Jigs 4 Years Electronic Data Processing Equipments 3 YearsIn respect of assets whose useful life has been revised, the unamortized depreciable amount is charged over therevised remaining useful life of the assets.b) Leasehold assets viz land & vehicles are amortized over the period of lease. 44
  • c) All assets, the individual written down value of which at the beginning of the year is Rs. 5,000 or less, aredepreciated at the rate of 100%. Assets purchased during the year costing Rs 5,000 or less are depreciated at therate of 100%.6) INVENTORIESa) Inventories are valued at the lower of cost, determined on the weighted average basis, and net realizablevalue.b) Tools are written off over a period of three years except for tools valued at Rs. 5,000 or less individuallywhich are charged off to revenue in the year of purchase.c) Machinery spares (other than those supplied along with main plant and machinery, which are capitalized anddepreciated accordingly) are charged to revenue on consumption except those valued at Rs. 5,000 or lessindividually, which are charged off to revenue in the year of purchase.7) INVESTMENTSCurrent investments are valued at the lower of cost and fair value. Long-term investments are valued at costexcept in the case of a permanent diminution in their value, in which case the necessary provision is made.8) RESEARCH AND DEVELOPMENTRevenue expenditure on research and development is charged off against the profit of the year in which it isincurred. Capital expenditure on research and development is shown as an addition to fixed assets anddepreciated accordingly.9) EMPLOYEE BENEFIT COSTSThe Company has Defined Contribution Plans for post employment benefits namely Provident Fund andSuperannuation Fund which are recognized by the income tax authorities. These Funds are administeredthrough Trusts and the Companies contributions thereto are charged to revenue every year. The Company alsomaintains an insurance policy to fund a post-employment medical assistance scheme, which is a DefinedContribution plan administered by The New India Insurance Company Limited.The Companies contribution to State Plans namely Employees State Insurance Fund and Employees PensionScheme are charged to revenue every year.The Company has Defined Benefit Plans namely leave encashment/ compensated absence, Gratuity, Interest onProvident Fund and Retirement Allowance for employees, the liability for which is determined on the basis ofan actuarial valuation at the end of the year. TheGratuity Fund is recognized by the income tax authorities and is administered through a Trust. 45
  • Termination benefits are recognized as an expense immediately.Gains and losses arising out of actuarial valuations are recognized immediately in the Profit and Loss Accountas income or expense.10) CUSTOMS DUTYCustom duty available as drawback is initially recognized as purchase cost and is credited to consumption onexport of vehicles.11) GOVERNMENT GRANTSGovernment grants are recognized in the profit and loss account in accordance with the related scheme and inthe period in which these are accrued.12) TAXESTax expense for the period, comprising current tax, fringe benefit tax and deferred tax, is included indetermining the net profit/ (loss) for the year.Current tax is recognized based on assessable profit computed in accordance with the Income Tax Act and atthe prevailing tax rate.Deferred tax is recognized for all timing differences. Deferred tax assets are carried forward to the extent it isreasonably / virtually certain that future taxable profit will be available against which such deferred tax assetscan be realized. Deferred tax assets are reviewed at each balance sheet date and written down/ written up toreflect the Amount that is reasonably/ virtually certain (as the case may be) to be realized.Deferred tax assets and liabilities are measured at the tax rates that have been enacted or substantively enactedat the balance sheet date.13) DIVIDEND INCOMEDividend from investments is recognized when the right to receive the payment is established and when nosignificant uncertainty as to measurability or collectability exits.14) INTEREST INCOMEInterest income is recognized on the time basis determined by the amount outstanding and the rate applicableand where no significant uncertainty as to measurability or collectability exists.15) IMPAIRMENT OF ASSETS 46
  • At each balance sheet date, the Company assesses whether there is any indication that an asset may be impaired.If any such indication exists, the Company estimates the recoverable amount. If the carrying amount of the assetexceeds its recoverable amount, an impairment loss is recognized in the profit and loss account to the extent thecarrying amount exceeds the recoverable amount.16) PROVISIONS AND CONTINGENCIESThe Company creates a provision when there is a present obligation as a result of a past event that probablyrequires an outflow of resources and a reliable estimate can be made of the amount of the obligation. Adisclosure of contingent liability is made when there is a possible obligation or a present obligation that willprobably not requireOutflow of resources or where a reliable estimate of the obligation cannot be made. 47
  • Notes to Accounts Year End: Mar 091) Contingent Liabilities:a) Claims against the Company disputed and not acknowledged as debts:i. Sales-tax demands of Rs.50 million (Previous year Rs.50 million). Against this, the Company has deposited asum of Rs. 2 million (Previous year Rs. 2 million) under protest.ii. Excise duty demands/show-cause notices of Rs. 4,799 million (Previous year Rs. 3,130 million). Againstthis, the Company has deposited a sum of Rs. 23 million (Previous year Rs. 27 million) under protest.iii. Customs duty demands of Rs. 118 million (Previous year Rs. 118 million). Against this, the Company hasdeposited a sum of Rs. 22 million (Previous year Rs. 22 million) under protest.iv. Income-tax demands of Rs. 4,466 million (Previous year Rs. 9,905 million). Against this, the Company hasdeposited a sum of Rs. 3,802 million under protest (Previous year Rs. 4,745 million).v. Service-tax demands of Rs. 1234 million (Previous year Rs. 253 million).vi. Claims against the Company for recovery of Rs 606 million (Previous year Rs. 639 million) lodged byvarious parties.b) As co-lessee in agreements entered into between various vendors of the Company, as lessee, and banks aslessors for leasing of dies and moulds of certain models aggregating Rs.2 million (Previous year Rs. 2 million).c) A guarantee given to HDFC Bank Limited against Non-Fund based facilities granted by the bank to a groupcompany Suzuki Powertrain India Limited of Rs. Nil (Previous year Rs. 2,000 million). Against this, thebalance outstanding as at the year-end is Rs. Nil (Previous year Rs. 194 million).d) A guarantee given to HSBC Limited against Non-Fund based facilitiesgranted by the bank to a groupcompany Suzuki Powertrain India Limited of Rs. Nil (Previous year Rs. 3,000 million). Against this, thebalance outstanding as at the year-end is Rs. Nil (Previous year Rs. 1,543 Million).e) The amounts shown in the item (a) represent the best possible estimates arrived at on the basis of availableinformation. The uncertainties and possible reimbursements are dependent on the outcome of the different legalprocesses which have been invoked by the Company or the claimants as the case may be and therefore cannotbe predicted accurately. The Company engages reputed professional advisors to protect its interests and hasbeen advised that it has strong legal positions against such disputes. 48
  • The amount shown in items (b) to (d) represent guarantees given in the normal course of the Companiesoperations and are not expected to result in any loss to the Company on the basis of the beneficiaries fulfillingtheir ordinary commercial obligations.2) Outstanding commitments under Letters of Credit established by the Company aggregate to Rs 2,255 million(Previous year Rs. 2,764 million).3) Estimated value of contracts on capital account, excluding capital advances, remaining to be executed andnot provided for, amount to Rs.11,593 million (Previous year Rs. 12,692 million).4) a) Consumption of raw materials and components has been computed by adding purchases to the openingstock and deducting closing stock verified physically by the management. b) Consumption of raw material andcomponents includes a provision of Rs. 9 million (Previous year Rs. 26 million) on account of estimatedreversal of tax benefit on quantity differences on inputs.2) The Company was granted sales tax benefit in accordance with the provisions of Rule 28C of HaryanaGeneral Sales Tax Rules, 1975 for the period from 1st August, 2001 to 31st July, 2015. The ceiling amount ofconcession to be availed of during entitlement period is Rs.5, 644 million. Till 31st March 2009, the Companyhas availed of sales tax benefit amounting to Rs. 1,675 million (Previous year Rs. 1,605 million).3) With effect from April 1, 2008, the company has adopted Accounting Standard 30 - Financial Instruments -Recognition and Measurement issued by The Institute of Chartered Accountants of India to the extent it doesnot contradict with any other Accounting Standard notified u/s211(3C) of the Companies Act. Accordingly, during the current year, in respect of derivative instruments whichqualify for hedge accounting, the net unrealized loss aggregating Rs. 1,709 million has been accounted for as aHedging Reserve to be ultimately recognized in the profit and loss account when the underlying transactionarises, as against the earlier practice of recognizing the same in the profit and loss account, on valuation at theend of each period. Other derivative instruments that do not qualify for hedge accounting have been recorded atfair value at the reporting date and the resultant loss/ gain has been accounted in the profit and loss account.4) Previous Years figures have been recast regrouped where considered necessary to make them comparablewith the current year’s figures. 49
  • Auditors Report Year End: Mar 091. We have audited the attached Balance Sheet of Maruti Suzuki India Limited, as at 31st March, 2009, and therelated Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto,which we have signed under reference to this report. TheseFinancial statements are the responsibility of the Companies management. Our responsibility is to express anopinion on these financial statements based on our audit.2. We conducted our audit in accordance with the auditing standards generally accepted in India. ThoseStandards require that we plan and perform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financialstatementPresentation. We believe that our audit provides a reasonable basis for our opinion.3. As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (AuditorsReport) (Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) ofSection 227 of The Companies Act, 1956 of India (the Act) and onThe basis of such checks of the books and records of the Company as we considered appropriate and accordingto the information and explanations given to us, we further report that:i) (a) The Company is maintaining proper records showing full particulars including quantitative details andsituation of fixed assets.(b) The fixed assets are physically verified by the management according to a phased programmed designed tocover all the items, except furniture and fixtures, office appliances and certain other assets having an aggregatenet book value of Rs. 367 million, over a period ofThree years, which in our opinion, is reasonable having regard to the size of the Company and the nature of itsassets? Pursuant to the programmed, a portion of the fixed assets have been physically verified by themanagement during the year and no material discrepancies between the book records and the physical inventoryhave been noticed.(c) In our opinion and according to the information and explanations given to us, a substantial part of fixedassets has not been disposed off by the Company during the year. ii) (A) the inventory (excluding materials lying with vendors) has been physically verified by the managementduring the year. In respect of inventory lying with the vendors, these have substantially been confirmed bythem. In our opinion, the frequency of verification is reasonable.(b) In our opinion, the procedures of physical verification of inventory followed by the management arereasonable and adequate in relation to the size of the Company and the nature of its business. 50
  • (c) On the basis of our examination of the inventory records, in our opinion, the Company is maintaining properrecords of inventory. The discrepancies noticed on physical verification of inventory as compared to bookrecords were not material.iii) The Company has not taken or granted any loans, secured or unsecured, from / to companies, firms or otherparties covered in the register maintained under Section 301 of the Act.iv) In our opinion and according to the information and explanations given to us, having regard to theexplanation that certain items purchased are of special nature for which suitable alternative sources do not existfor obtaining comparative quotations, there is an adequate internal control system commensurate with the sizeof the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale ofgoods and services. Further, on the basis of our examination of the books and records of the Company, andaccording to the information and explanations given to us, we have neither come across nor have been informedof any continuing failure to correct major weaknesses in the aforesaid internal control system.v) (a) In our opinion and according to the information and explanations given to us, the particulars of contractsor arrangements referred to in Section 301 of the Act have been entered in the register required to be maintainedunder that section.(b) In our opinion and according to the information and explanations given to us, there are no transactions madein pursuance of such contracts or arrangements and exceeding the value of Rupees Five Lakhs in respect of anyparty during the year, which have been made at pricesWhich are not reasonable having regard to the prevailing market prices at the relevant time. In respect ofpurchase of goods and materials including components from the holding company, the prices paid for theseitems are not comparable as these are of special nature.vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AAor any other relevant provisions of the Act and the rules framed there under.vii) In our opinion, the Company has an internal audit system commensurate with its size and nature of itsbusiness.viii) We have broadly reviewed the books of account maintained by the Company in respect of products where,pursuant to the Rules made by the Central Government of India, the maintenance of cost records has beenprescribed under clause (d) of sub-section (1) of Section 209 of the Act and are of the opinion that prima facie,the prescribed accounts and records have been made and maintained. We have not, however, made a detailedexamination of the records with a view to determine whether they are accurate or complete.ix) (a) According to the information and explanations given to us and the records of the Company examined byus, in our opinion, the Company is regular in depositing undisputed statutory dues in respect of provident fund,investor education and protection fund, employeesState insurance, income tax, sales-tax, wealth tax, service tax, customs duty, excise duty, cess and other materialstatutory dues as applicable with the appropriate authorities. 51
  • (b) According to the information and explanations given to us and the records of the Company examined by us,the particulars of dues of income-tax, sales-tax, wealth tax, service tax, customs duty, excise duty and cuss as atMarch 31, 2009 which have not been deposited on Account of any dispute are as follows:(Rs. in Million) Name of the Amount Amount deposited Period to which the Forum where the statute (Nature under protest amount amount is pending dispute is pending of Dues) Income Tax Act, 5,271 3,799 1992 to 2006 Income Tax 1961 (Tax & Interest) Tribunal/ High Court Appellate Commissioner Income Tax (Appeals) 1 1 1998 to 1999 High Court Wealth Tax Act, 1957 (Tax) Haryana General 3 1984 to 1989 Assessing Authority Sales Tax Act (Tax & Interest) Dlhi Sales Tax 47 2 1988 to 1992 Additional Act (Tax) Commissioner The Central 1774 51 April 1986 to January Customs Excise &Excise Act, 1944 2008 Service(Duty, Interest & Penalty) Tax Appellate Tribunal/ High Court/ Supreme Court/ Commissioner AppealsThe Finance Act, 370 July 1997 to Tax Appellate Tribunal1994 (Service September 2004Tax, Interest &Service Penalty) Customs Excise & Service 52
  • Customs Act, 27 22 February 2003 to Customs Excise & 1962 (Duty & August 2003 Service Interest) Tax Appellate TribunalOr detailed listing refer Note 30 on Schedule 23 x) The Company has no accumulated losses as at March 31, 2009 and it has not incurred any cash losses in thefinancial year ended on that date or in the immediately preceding financial year. xi) According to the records of the Company examined by us and the information and explanations given to us,the Company has not defaulted in repayment of dues to any bank or debenture holders as at the balance sheetdate. xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares,debentures and other securities. xiii) The provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund/societies are notapplicable to the Company. xiv) In our opinion, the Company is not a dealer or trader in shares, securities, debentures and otherinvestments. xv) In our opinion and according to the information and explanations given to us, the terms and conditions ofthe guarantees given by the Company, for loans taken by others from banks or financial institutions during theyear, are not prejudicial to the interest of the Company. xvi) In our opinion, and according to the information and explanations given to us, on an overall basis, the termloans have been applied for the purposes for which they were obtained. xvii) On the basis of an overall examination of the balance sheet of the Company, in our opinion and accordingto the information and explanations given to us, there are no funds raised on a short-term basis which have beenused for long-term investment. xviii) The Company has not made any preferential allotment of shares to parties and companies covered in theregister maintained under Section 301 of the Act during the year.xix) The Company has no outstanding debentures as at the year end.xx) The Company has not raised any money by public issue during the year. 53
  • xxi) During the course of our examination of the books and records of the Company, carried out in accordancewith the generally accepted auditing practices in India, and according to the information and explanations givento us, we have neither come across any instance of fraud on or by the Company, noticed or reported during theyear, nor have we been informed of such case by the management.4. Further to our comments in paragraph 3 above, we report that:(a) We have obtained all the information and explanations, which to the best of our knowledge and belief werenecessary for the purposes of our audit;(b) In our opinion, proper books of account as required by law have been kept by the Company so far as appearsfrom our examination of those books;(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are inagreement with the books of account;(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by thisreport have been prepared in compliance with the applicable accounting standards referred to in sub-section(3C)of Section 211 of the Act and Accounting Standard 30, Financial Instruments: Recognition and Measurementissued by the Institute of Chartered Accountants of India to the extent it does not contradict any otheraccounting standard referred to in sub-section (3C) of Section 211 of the Act;(e) On the basis of written representations received from the directors as on March 31st 2009 and taken onrecord by the Board of Directors, none of the directors is disqualified as on 31st March 2009 from beingappointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act;(f) In our opinion and to the best of our information and according to the explanations given to us, the saidfinancial statements together with the notes thereon and attached thereto give in the prescribed manner theinformation required by the Act and give a true and fair view in conformity with the accounting principlesgenerally accepted inIndia:(i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2009;(ii) In the case of the Profit and Loss Account, of the profit for the year ended on that date; and(iii) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date. Anupam Dhawan, Membership Number- F084451, Partner, For and on behalf ofPlace: New Delhi Price WaterhouseDate: April 24, 2009 Chartered Accountants. 54
  • ConclusionMaruti was listed in 2003, and has been a consistent and strong performer on the stock exchange, givinghandsome returns to investors.They are practically debt free and have a healthy cash balance. They have financed all growth from internalresources.Their continuous efforts at cost cutting and improving productivity, even in good times, have helped them inmaking reasonable profits despite the impact of higher commodity prices and weaker rupee.Maruti Suzuki India LTD. company has a trend of growth from 2003 to 2007.During the financial year 2008-09the there is downfall in the growth of the company. The main reason behind this downfall is because of theglobal recession and the price of commodities of Maruti was quite high in the commodity market. The downfallof net profit during the financial year 2008-09 is 29.6% over the financial year 2007-2008.The total salesnumbers in 2009-10 mark a growth of 29% over last financial year. The export sales of 147,575 units in theyear2009-10 are the highest ever annual export by the company.Maruti has crossed sale of 1million cars and by achieving this now it has become landmark for Maruti whereother companies will take time to reach and of course they have raise their bar for themselves also.From above facts and figures we reach to the conclusion that the future is exciting and full of promise. 55
  • Appendix 1Balance Sheet of Maruti Suzuki Balance Sheet(2009-2000) of Maruti Suzuki *All numbers are in INR and in x10M 200903 200803 200703 200603 200503 200403 200303 200203 200103 200003 SOURCES OF FUNDS : Share Capital 144.5 144.5 144.5 144.5 144.5 144.5 144.5 132.3 132.3 132.3 Reserves Total 9200.4 8270.9 6709.4 5308.1 4234.3 3446.7 2953.5 2575 2510.2 2779.8 Equity Share Warrants 0 0 0 0 0 0 0 0 0 0 Equity Application Money 0 0 0 0 0 0 0 0 0 0 Total Shareholders Funds 9344.9 8415.4 6853.9 5452.6 4378.8 3591.2 3098 2707.3 2642.5 2912.1 Secured Loans 0.1 0.1 63.5 71.7 307.6 311.9 300 395.1 561.5 86.4 Unsecured Loans 698.8 900.1 567.3 0 0 0 156 260.9 550.6 459.7 Total Debt 698.9 900.2 630.8 71.7 307.6 311.9 456 656 1112.1 546.1 Total Liabilities 10043.8 9315.6 7484.7 5524.3 4686.4 3903.1 3554 3363.3 3754.6 3458.2 APPLICATION OF FUNDS : Gross Block 8720.6 7285.3 6146.8 4954.6 5053.1 4566.7 4513.8 4384.7 3866.7 3499.9 Less : Accumulated Depreciation 4649.8 3988.8 3487.1 3259.4 3179.4 2735.9 2258.1 1954.6 1619.6 1324.2 Less:Impairment of Assets 0 0 0 0 0 0 0 0 0 0 Net Block 4070.8 3296.5 2659.7 1695.2 1873.7 1830.8 2255.7 2430.1 2247.1 2175.7 Lease Adjustment 0 0 0 0 0 0 0 0 0 0 Capital Work in Progress 861.3 736.3 250.7 92 42.1 74.9 9.3 72.4 368.4 234.2 Investments 3173.3 5180.7 3409.2 2051.2 1516.6 1677.3 103.2 96.8 95.5 397.4 Current Assets, Loans & Advances Inventories 902.3 1038 701.4 881.2 666.6 439.8 487 681.1 865.5 990.2 Sundry Debtors 918.9 655.5 747.4 646.1 599.5 689.4 671.1 839.3 675.5 466.3 Cash and Bank 1939 330.5 1422.8 1401.6 1029.4 240.2 989.4 71.9 87.6 31.7 Loans and Advances 1730.9 1073.9 1533.4 812 676.5 649.5 635.3 517.7 622.4 526.4 Total Current Assets 5491.1 3097.9 4405 3740.9 2972 2018.9 2782.8 2110 2251 2014.6 Less : Current Liabilities and Provisions Current Liabilities 3016.9 2456.2 2011 1505.8 1218.8 1211.4 1135.9 1201.7 1026.7 1090.2 Provisions 380.7 369.5 1061.4 471.3 389.2 320.4 342.7 263.5 239.4 325.8 Total Current Liabilities 3397.6 2825.7 3072.4 1977.1 1608 1531.8 1478.6 1465.2 1266.1 1416 Net Current Assets 2093.5 272.2 1332.6 1763.8 1364 487.1 1304.2 644.8 984.9 598.6 Miscellaneous Expenses not written off 0 0 0 0 0 16.3 88.7 119.2 58.7 52.3 Deferred Tax Assets 78.9 99.6 110.1 121.1 125.4 125.5 231.7 0 0 0 Deferred Tax Liability 234 269.7 277.6 199 235.4 308.8 438.8 0 0 0 Net Deferred Tax -155.1 -170.1 -167.5 -77.9 -110 -183.3 -207.1 0 0 0 Total Assets 10043.8 9315.6 7484.7 5524.3 4686.4 3903.1 3554 3363.3 3754.6 3458.2 Contingent Liabilities 1353 2186.1 1684.4 881.4 1051.4 1297.3 1754.1 2018.2 1314.2 793.2 56
  • Appendix 2Income Statement Income Statement (2009-2003) of Maruti Suzuki *All numbers are in INR and in x10M 200903 (12) 200803 (12) 200703 (12) 200603 (12) 200503 (12) 200403 (12) 200303 (12) 200203 (12) 200103 (12) 200003 (12) INCOME : Sales Turnover 23182.2 21025.2 17205.9 14753.1 13335.7 11047.4 8981.5 9087.8 8928.7 9315.1 Excise Duty 2652.1 3133.6 2509.6 2737.2 2411.9 1943 1801.4 2013.2 2211.8 2325.6 Net Sales 20530.1 17891.6 14696.3 12015.9 10923.8 9104.4 7180.1 7074.6 6716.9 6989.5 Other Income 998.5 837.1 598.4 429.2 403.2 377.6 276.5 318 324.6 357.5 Stock Adjustments -356.6 336.3 -243.1 236 141.7 3.2 -94.9 141.9 -20.3 51.3 Total Income 21172 19065 15051.6 12681.1 11468.7 9485.2 7361.7 7534.5 7021.2 7398.3 EXPENDITURE : Raw Materials 15763.1 13791.5 10739 9335.6 8563.2 6973.3 5563.4 5839.6 5889.8 5616.1 Power & Fuel Cost 193.6 147.3 97.4 57.2 58.1 95.8 78.1 49.4 51.4 37.5 Employee Cost 463.5 346.8 266.29 211.45 191.46 293.76 217.82 227.25 199.22 185.71 Other Manufacturing Expenses 254.7 197.8 153.5 141.3 92.7 71.1 57.3 60.2 82.1 94.9 Selling and Administration Expenses 1486.96 1110.4 941.67 668.56 580.01 536.44 621.29 635.02 551.8 588.15 Miscellaneous Expenses 576.84 340.4 264.94 211.19 185.53 206.7 166.89 184.83 117.88 167.54 Less: Pre-operative Expenses Capitalised 0 0 0 0 0 0 0 0 0 0 Total Expenditure 18738.7 15934.2 12462.8 10625.3 9671 8177.1 6704.8 6996.3 6892.2 6689.9 Operating Profit 2433.3 3130.8 2588.8 2055.8 1797.7 1308.1 656.9 538.2 129 708.4 Interest 51 59.6 37.6 20.4 36 43.4 52.7 77 75.9 60.2 Gross Profit 2382.3 3071.2 2551.2 2035.4 1761.7 1264.7 604.2 461.2 53.1 648.2 Depreciation 706.5 568.2 271.4 285.4 456.8 494.9 322.1 342.9 322.3 263.1 Profit Before Tax 1675.8 2503 2279.8 1750 1304.9 769.8 282.1 118.3 -269.2 385.1 Tax 459.2 759.8 621.4 587.3 524.6 251.5 35.1 13.8 0.2 55 Fringe Benefit tax 9.7 9.8 6.7 5.7 0 0 0 0 0 0 Deferred Tax -11.8 2.6 89.7 -32.1 -73.3 -23.8 100.6 0 0 0 Reported Net Profit 1218.7 1730.8 1562 1189.1 853.6 542.1 146.4 104.5 -269.4 330.1 Extraordinary Items 146.07 61.09 26.71 -7.97 -6.5 -79.72 16.68 -0.71 18.29 5.83 Adjusted Net Profit 1072.63 1669.71 1535.29 1197.07 860.1 621.82 129.72 105.21 -287.69 324.27 Adjst. below Net Profit 0 0 -8.8 0 0 0 0 0 0 0 P & L Balance brought forward 7025.7 5637.3 4393.9 3442.1 2757.4 2335.9 2269.9 2233.2 2502.8 2245 Statutory Appropriations 0 0 0 0 0 0 0 0 0 0 Appropriations 240.2 342.4 309.8 237.3 168.9 120.6 80.4 67.8 0.2 72.3 P & L Balance carried down 8004.2 7025.7 5637.3 4393.9 3442.1 2757.4 2335.9 2269.9 2233.2 2502.8 Dividend 101.1 144.5 130 101.1 57.8 43.3 42.7 39.7 0 33.1 Preference Dividend 0 0 0 0 0 0 0 0 0 0 Equity Dividend % 70 100 90 70 40 30 30 30 0 25 Earnings Per Share(Adj)-Unit Curr 41.57 59.03 53.29 40.65 29.25 18.56 Earnings Per Share-Unit Curr 41.57 59.03 53.29 40.65 29.25 18.56 4.88 78.99 0 243.99 Earnings Per Share(Adj)-Unit Curr 41.57 59.03 53.29 40.65 29.25 18.56 Book Value-Unit Curr 323.35 291.19 237.16 188.67 151.52 124.26 107.2 2046.33 1997.35 2201.13 57
  • Appendix 3Cash Flow Statement Cash Flow Statement (2009-2001) - Maruti Suzuki *All numbers are in INR and in x10M 200903 200803 200703 200603 200503 200403 200303 200203 200103 Cash Flow Summary Cash and Cash Equivalents at Beginning of the year 330.5 1422.8 1401.6 1029.4 240.2 989.4 71.9 87.6 31.7 Net Cash from Operating Activities 1193.3 1822.8 2028 1222.6 1074.7 1035.9 770.5 653.9 -244.8 Cash Flow From Operating Activities Net Profit before Tax & Extraordinary Items 1675.8 2503 2279.8 1750 1304.9 769.8 282.1 118.3 -269.2 Adjustment For Depreciation 706.5 568.2 271.4 285.4 456.8 494.9 322.1 342.9 322.3 Interest (Net) -192.6 -81.2 -73.3 -86.5 -29.4 -30.4 -48.9 -18.6 4.6 Dividend Received -144 -166.8 -152.8 -72 -79.2 -72.3 -3 -3.9 -3.7 P/L on Sales of Assets 12.5 2.4 0.4 22 11.9 2.2 5.4 0.8 0.7 P/L on Sales of Invest -213.7 -89.8 -38.9 -10 -1.1 -3.4 -35 0 -19 Prov. & W/O (Net) -37.9 -85.5 -43.7 -4.4 -36.7 -8.1 43.6 -42.3 19.2 P/L in Forex -61 44.3 0 0 0 0 0 -0.2 0 Fin. Lease & Rental Chrgs 0 0 0 0 0 0 0 0 0 Others 0 0 -8.9 0 0 0 0 0.3 -26.1 Total Adjustments (PBT & Extraordinary Items) 69.8 191.6 -45.8 134.5 322.3 382.9 284.2 279 298 Op. Profit before Working Capital Changes 1745.6 2694.6 2234 1884.5 1627.2 1152.7 566.3 397.3 28.8 Adjustment For Trade & 0th receivables -265 92 -103.5 -55.3 89.9 -20.4 167.3 -184.1 -333.8 Inventories 135.7 -336.6 168 -214.6 -226.7 47.3 194.1 175 124.7 Trade Payables 645.5 356.6 517 318.5 105.2 113 -20.3 172.7 -74 Loans & Advances -616.1 -119.1 -152.3 -130.1 -21.5 -23.2 -124.6 105.6 0 Investments 0 0 0 0 0 0 0 0 0 Net Stock on Hire 0 0 0 0 0 0 0 0 0 Leased Assets Net of Sale 0 0 0 0 0 0 0 0 0 Trade Bill(s) Purchased 0 0 0 0 0 0 0 0 0 Change in Borrowing 0 0 0 0 0 0 0 0 0 Change in Deposits 0 0 0 0 0 0 0 0 0 Others 0 0 0 0 0 0 0 0 0 Total (OP before Working Capital Changes) -99.9 -7.1 429.2 -81.5 -53.1 116.7 216.5 269.2 -283.1 Cash Generated from/(used in) Operations 1645.7 2687.5 2663.2 1803 1574.1 1269.4 782.8 666.5 -254.3 Interest Paid(Net) 0 0 0 0 0 0 0 0 0 Direct Taxes Paid -452.4 -864.7 -635.2 -580.4 -499.4 -233.5 -12.3 -12.3 9.5 Advance Tax Paid 0 0 0 0 0 0 0 0 0 Others 0 0 0 0 0 0 0 -0.3 0 Total-others -452.4 -864.7 -635.2 -580.4 -499.4 -233.5 -12.3 -12.6 9.5 Cash Flow before Extraordinary Items 1193.3 1822.8 2028 1222.6 1074.7 1035.9 770.5 653.9 -244.8 Extraordinary Items Excess Depreciation W/b 0 0 0 0 0 0 0 0 0 58
  • Premium on Lease of land 0 0 0 0 0 0 0 0 0Payment Towards VRS 0 0 0 0 0 0 0 0 0Prior Year s Taxation 0 0 0 0 0 0 0 0 0Gain on Forex Exch. Tran 0 0 0 0 0 0 0 0 0Others 0 0 0 0 0 0 0 0 0Net Cash Used in Investing Activities 951.4 -3047.4 -2436.8 -530.7 -193.7 -1551.1 37 -128.1 -193.5Cash Flow from Investing ActivitiesInvestment in Assets :Purchased of Fixed Assets -1620.7 -1685.8 -1395.5 -210.3 -482.5 -140.1 -101.7 -222.9 -603.6Sale of Fixed Assets 7.1 6.9 12.3 31.5 3.7 2.3 8.6 9.4 16.8capital WIP 0 0 0 0 0 0 0 0 0Capital Subsidy Recd 0 0 0 0 0 0 0 0 0Financial/Capital Investment :Purchase of Investments -17019.1 -18696.6 -12244.4 -9346.9 -5224.3 -5416.3 -2290.5 -1.3 -11Sale of Investments 19237.2 17012.3 10925.3 8822.2 5375.7 3845.5 2319.1 0 331.9Investment Income 0 0 0 0 0 0 0 0 0Interest Received 202.9 149 112.7 100.8 54.5 85.2 98.5 82.8 68.7Dividend Received 144 166.8 152.8 72 79.2 72.3 3 3.9 3.7Invest.In Subsidiaires 0 0 0 0 0 0 0 0 0Loans to Subsidiaires 0 0 0 0 0 0 0 0 0Investment in Group Cos 0 0 0 0 0 0 0 0 0Issue of Sh. on Acqu. of Cos 0 0 0 0 0 0 0 0 0Canc. of Invest. in Cos Acq. 0 0 0 0 0 0 0 0 0Acquisition of Companies 0 0 0 0 0 0 0 0 0Inter Corporate Deposits 0 0 0 0 0 0 0 0 0Others 0 0 0 0 0 0 0 0 0Net Cash Used in Financing Activities -536.2 132.3 430 -319.7 -91.8 -234 110 -541.5 494.2Cash Flow From Financing ActivitiesProceeds:Proceeds from Issue of shares (incl share premium) 0 0 0 0 0 0 399 0 0Proceed from Issue of Debentures 0 0 0 0 0 0 0 0 0Proceed from 0ther Long Term Borrowings 0 0 567.5 0 0 0 0 0 435.6Proceed from Bank Borrowings 0 0 0 0 0 0 0 0 0Proceed from Short Tem Borrowings 454.8 399.9 23.3 1.7 7.6 11.9 13.3 41.5 126.1Proceed from Deposits 0 0 0 0 0 0 0 0 0Share Application Money 0 0 0 0 0 0 0 0 0Cash/Capital Investment Subsidy 0 0 0 0 0 0 0 0 0Loans from a Corporate Body 0 0 0 0 0 0 0 0 0Payments:Share Application Money Refund 0 0 0 0 0 0 0 0 0On Redemption of Debenture 0 0 0 0 0 0 0 0 0Of the Long Tem Borrowings 0 0 0 0 0 -142.7 0 0 0Of the short term Borrowings -788.7 -63.4 -31.7 -237.6 -11.9 -13.3 -209.6 -504.1 0Of financial Liabilities 0 0 0 0 0 0 0 0 0Dividend Paid -144.4 -129.9 -101.1 -57.8 -43.2 -42.7 -39.7 0 0Shelter Assistance Reserve 0 0 0 0 0 0 0 0 0Interest Paid -57.9 -74.3 -28 -26 -44.3 -47.2 -53 -78.9 -67.5Others 0 0 0 0 0 0 0 0 0Net Cash Used in Financing Activities -536.2 132.3 430 -319.7 -91.8 -234 110 -541.5 494.2Net Inc/(Dec) in Cash and Cash Equivalent 1608.5 -1092.3 21.2 372.2 789.2 -749.2 917.5 -15.7 55.9Cash and Cash Equivalents at End of the year 1939 330.5 1422.8 1401.6 1029.4 240.2 989.4 71.9 87.6 59
  • Appendix 4Ratio Key Ratios for Maruti Suzuki 200903 200803 200703 200603 200503 200403 200303 200203 200103 200003 Key Ratios Debt-Equity Ratio 9% 10% 6% 4% 8% 11% 19% 33% 30% 12% Long Term Debt-Equity Ratio 6% 7% 6% 4% 8% 11% 18% 24% 15% 2% Current Ratio 1.22 1.13 1.52 1.73 1.42 1.37 1.47 1.35 1.22 1.25 Turnover Ratios Fixed Assets 2.9 3.13 3.1 2.95 2.77 2.43 2.02 2.2 2.42 3.18 Inventory 23.9 24.18 21.74 19.06 24.11 23.84 15.38 11.75 9.62 11.88 Debtors 29.45 29.97 24.69 23.69 20.69 16.24 11.89 12 15.64 25.08 Interest Cover Ratio 29.91 43 61.63 86.78 37.25 21.47 5.79 2.54 -2.55 7.4 Profitability Ratio PBIDTM (%) 9.63 14.89 15.05 13.93 13.48 12.91 6.98 5.92 1.44 7.6 PBITM (%) 6.58 12.19 13.47 12 10.05 8.43 3.4 2.15 -2.16 4.78 PBDTM (%) 9.41 14.61 14.83 13.8 13.21 12.52 6.4 5.07 0.59 6.96 CPM (%) 7.67 10.93 10.66 9.99 9.83 10.11 5.03 4.92 0.59 6.37 APATM (%) 4.63 8.23 9.08 8.06 6.4 5.63 1.44 1.15 -3.02 3.54 Return on Capital Ratio ROCE (%) 15.76 30.51 35.63 34.68 31.28 25.34 9.1 5.63 -5.44 14.6 RONW (%) 12.08 22.67 25.38 24.19 21.42 18.59 4.47 3.91 -9.7 11.93 60