Financial analysis on recession period conducted at mahindra & mahindra tractors
FINANCIAL ANALYSIS ON RECESSION PERIOD<br />1.1 Introduction<br />Financial analysis (also referred to as financial statement analysis or accounting analysis) refers to an assessment of the viability, stability and profitability of a business, sub-business or project.<br />It is performed by professionals who prepare reports using ratios that make use of information taken from financial statements and other reports. These reports are usually presented to top management as one of their bases in making business decisions. Based on these reports, management may:<br />Continue or discontinue its main operation or part of its business; <br />Make or purchase certain materials in the manufacture of its product; <br />Acquire or rent/lease certain machineries and equipment in the production of its goods; <br />Issue stocks or negotiate for a bank loan to increase its working capital; <br />Make decisions regarding investing or lending capital; <br />Other decisions that allow management to make an informed selection on various alternatives in the conduct of its business. <br />Comparing financial ratios is merely one way of conducting financial analysis. Financial ratios face several theoretical challenges:<br />They say little about the firm's prospects in an absolute sense. Their insights about relative performance require a reference point from other time periods or similar firms. <br />One ratio holds little meaning. As indicators, ratios can be logically interpreted in at least two ways. One can partially overcome this problem by combining several related ratios to paint a more comprehensive picture of the firm's performance. <br />Seasonal factors may prevent year-end values from being representative. A ratio's values may be distorted as account balances change from the beginning to the end of an accounting period. Use average values for such accounts whenever possible. <br />Financial ratios are no more objective than the accounting methods employed. Changes in accounting policies or choices can yield drastically different ratio values. <br />They fail to account for exogenous factors like investor behavior that are not based upon economic fundamentals of the firm or the general economy (fundamental analysis) . <br />Financial analysts can also use percentage analysis which involves reducing a series of figures as a percentage of some base amount HYPERLINK "
. For example, a group of items can be expressed as a percentage of net income. When proportionate changes in the same figure over a given time period expressed as a percentage is know as horizontal analysis HYPERLINK "
. Vertical or common-size analysis, reduces all items on a statement to a “common size” as a percentage of some base value which assists in comparability with other companies of different sizes .<br />Another method is comparative analysis. This provides a better way to determine trends. Comparative analysis presents the same information for two or more time periods and is presented side-by-side to allow for easy analysis.<br />What Does Recession Mean? <br />A prolonged decline in activity across the economy that lasts longer than a few months; recessions have a negative impact on industrial production, employment, real income, and wholesale-retail trade. Technically, a recession is said to have occurred when there have been two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP).<br />1.1 (a) Investopedia explains Recession <br />Recession is a normal (albeit unpleasant) part of the business cycle; however, one-time crisis events can often trigger the onset of a recession. A recession generally lasts from 6 to 18 months. Interest rates usually fall are lowered in recessionary times to stimulate the economy by offering cheap rates at which to borrow money.<br />1.1 (b) Meaning of recession<br />An extended decline in general business activity. The National Bureau of Economic Research formally defines a recession as three consecutive quarters of falling real gross domestic product. A recession affects different securities in different ways. For example, holders of high-quality bonds stand to benefit because inflation and interest rates may decline. Conversely, stockholders of manufacturing firms will probably see company profits and dividends drop.<br />1.2 Problem statement<br />When an analyst, business executive, or student is dealing with a financial issue, or wishes to understand the financial implications and economic trade-offs involved in decisions about business investment, operations, or financing, a wide variety of analytical techniques—and sometimes rules of thumb—is available to generate quantitative answers. Selecting the appropriate tools from these choices is clearly an important part of the analytical task. Yet, experience has shown again and again that first developing a proper perspective for the problem or issue is just as important as the choice of the tools themselves. Therefore, this book not only presents the key financial tools generally used, but also explains the broader context of how and where they’re applied to obtain meaningful answers. To this end, the second chapter provides an integrated conceptual backdrop both for the financial/economic dimensions of systematic business management and for understanding the nature of financial statements, data, and processes underlying financial analysis techniques. All subjects are viewed in the context of creating shareholder value—a fundamental concept that is revisited in the final chapter on managing for shareholder value.<br />While the tools and techniques covered in this book are discussed and demonstrated in detail, the user must not be tempted to view them as ends in themselves. It’s simply not enough to master the techniques alone! Financial/economic analysis is both an analytical and a judgmental process which helps answer questions that have been carefully framed in a managerial context. The process is at its best when the analyst’s efforts are focused primarily on structuring the issue and its context, and only secondarily on data manipulation. We can’t stress enough that the basic purpose of financial analysis is to help those responsible for results to make sound business decisions within a relevant cash flow framework.<br />Apart from providing specific numerical answers, “solutions” to financial problems and issues depend significantly on the points of view of the various parties involved, on the relative importance of the issue, and on the nature and reliability of the information available. In each situation, the objective of the analysis must be clearly understood before pencil is put to paper or computer keys are touched—otherwise, the process becomes wasteful “number crunching,” even if the workload itself is eased by analytical software.<br />Management has been defined as “the art of asking significant questions.” The same applies to financial analysis, which should be targeted toward finding meaningful answers to these significant questions—whether or not the results are fully quantifiable. In fact, the qualitative judgments involved in finding answers to financial/economic issues can often count just as heavily as the quantitative results, and no analytical task is complete until these aspects have been carefully spelled out and weighed.<br />1.3 Objective:<br />1. The ratio is computed for each financial statement in the sample.<br />2. These values are arrayed (listed) in an order from the strongest to the weakest. In interpreting ratios, the “strongest” or “best” value is not always the largest numerical value, nor is the “weakest” always the lowest numerical value. (For certain ratios, there may be differing opinions as to what constitutes a strong or a weak value. RMA follows general banking guidelines consistent with sound credit practice to resolve this problem.)<br />3. The array of values is divided into four groups of equal size. The description of each ratio appearing in the Statement Studies provides details regarding the arraying of the values.<br />1.4 Scope of study:<br /><ul><li>Strategic management,
By 2015 it wants to enter almost all continents of world
Plan to open 30 outlet pan in India by next 4 year
to make the production system even more efficient
To usher prosperity; for its customers, dealers, employees, society and all other stakeholders.
To be the market leader in all power segments of tractors</li></ul>3.5 Company Profile:<br />GROUPMAHINDRASECTORAUTOMOBILEINDUSTRYAUTOMOBILE TRACTORCHAIRMENKESHUB MAHINDRAAUDITORSDELLOIT HUSKIN AND SELLFINANCIAL YEARMARCHBOOK CLOSYREJULYBSE CODE500520BSE GROUP‘A’NSE SYMBOLM&MPAR VALUE10LISTINGBSE, NSE, KOLKATA, SINGAPORE, LUXEMBERGISINDMATINE101A01018NO.OF EMPLOYEE150000<br />3.6 Values<br />'We don't have a group-wide mission statement. Our Core Purpose is what makes all of us want to get up and come to work in the morning.'<br />Our Core Values are influenced by our past, tempered by our present, and will shape our future. They are an amalgam of what we have been, what we are and what we want to be.<br />Good Corporate Citizenship As in the past, we will continue to seek long term success, which is in alignment with our country's needs. We will do this without compromising ethical business standards. <br />3.6 (a) Professionalism We have always sought the best people for the job and given them the freedom and the opportunity to grow. We will continue to do so. We will support innovation and well reasoned risk taking, but will demand performance. <br />3.6 (b) Customer First We exist and prosper only because of the customer. We will respond to the changing needs and expectations of our customers speedily, courteously and effectively. <br />3.6 (c) Quality Focus Quality is the key to delivering value for money to our customers. We will make quality a driving value in our work, in our products and in our interactions with others. We will do it 'First Time Right'.<br />3.6 (d) Dignity of the Individual We will value individual dignity, uphold the right to express disagreement and respect the time and efforts of others. Through our actions, we will nurture fairness, trust and transparency. <br />These values are the compass that will guide our actions, both personal and corporate.<br />3.7 Background<br />Mahindra & Mahindra Limited (M&M), the flagship company of the US$ 3 billion Mahindra Group, was set up in 1945 to make general-purpose utility vehicles for the Indian market. It soon branched out into manufacturing agricultural tractors and LCV and later expanded its operations from automobiles and tractors to other sectors. The company has recently started a new division,<br />Mahindra Systems and Automotive Technologies (MSAT) in order to focus on developing components and to offer engineering services.<br />M&M has two main operating divisions – Automotive division and Farm Equipment division. The company entered into collaboration with Willys Overland Corporation (now part of the Daimler Chrysler group) to import and assemble the Willys Jeep for the Indian market. Thereafter, in 1965 the company started producing LCV. It went on to develop its manufacturing technology to indigenously produce vehicles within a short time of signing the collaboration agreement with Willys.Today, the Automotive Division of M&M manufactures and markets MUV, LCV and three-wheelers.<br />In 2005, the company entered into a joint venture with Renault of France for the manufacture of a mid-sized sedan, Logan, a newly developed vehicle that meets all the European regulations for emissions and safety. The Logan is expected to be launched in the Indian market in 2007. M&M has also launched a joint venture with International Truck & Engine Corporation, one of the leading commercial vehicle producers in the USA, for manufacture of trucks and buses in India. The Farm Equipment division was established in 1963 in the form of a joint venture with International Harvester Inc., and Voltas Limited, and christened as the International Tractor Company of India (ITCI). In 1977, ITCI merged with M&M and became its Tractor Division. After M&M's organisational restructuring in 1994, this<br />CompanyProductsEstablishedFounderDistributionProduction plantsM&MAutomobilesTractors, AutoComponents1945K.C. Mahindra & J.C. Mahindra withGhulam MohammedEurope, RussiaAsia, Africa, USA, South AmericaIndia<br />division was re-christened the Farm Equipment Sector Division. Today M&M is the largest<br />manufacturer of tractors in India. It designs, develops, manufactures and markets tractors as well as implements which are used in conjunction with tractors.<br />3.8 Mahindra And Mahindra Ltd’s Board Of Director:-<br />Board of director's as on 30th may, 2000 Keshub, Mahindra chairman R.K. Pitamber Deepak, S.Parekh, S.K Batanagar nadir, B.Godrej, M.M. Murugappan, Sanjivkapoor, nominee of unit trust of Idia Narayanan VaghulLewis , W.K Booth Philip, G.spender alternate director to lewis W.K Booth, B.R.Gupta-nominee of life insurance corporation of India A.S.Ganguly, R.K. KulkarniSanjiv, A Kerkar-nominee K.J Davasia Bharat Doshi Alan E Darante, A.K Nanda secretary A.K Nanda.<br /> Mahindra and Mahindra’s register office is in Gateway building, Apollabunder, Mumbai-400001, Plant locations in Mahindra and Mahindra ltd. All plants are located in Mahindra, Mumbai (1965), has facilities level, commander and armada range of vehicles and all tractors and spare parts manufactured on Nashik Plant.<br /> M and M has tractor manufacturing plants at Mumbai and Nagour in Maharashtra state where a wide range of tractors are produced. M and M’s tractors manufacturing unit at Kandiv is the single urges tractors manufacturing unit in the world it consist of modern machine shops ascertainable line and engine manufacturing facilities. M and M is one of the top four manufacturing of tractor's in the world value terms the plant in Nagpur. Maharashtra also produces a wide area of agricultural implements to soot every sole type and from operation and O.E components.<br /> The M and M tractors division to date as produce over 500000 tractors over 5000 of which has been exported to USA, Africa ,Europe, Srilanka, Bangladesh, Vietnam and other countries. Its marketing network spans the Entire globe with representation in most contents around the world. M and M has widest range of tractors among Indian companies.<br />Different tractors models cover disparate market segment form 25 HP to 50 HP tractors for more than a decade. M and M tractors have been market leaders.<br />But M and M is not content with being just a market leader research engines at machines developed a direct in injection tractors engine this gave for Greater fuel efficiency than even before and provided the advantage of an instant could start recently. M and M has “Increased warranty to India” on all its models to 2000 hours of usage or 2 years of service form 1000 hours or 1 year earlier strong emphasis on from continuous product innovation and improvement has helps to sustain our market leadership in the dynamic Indian tractor market. Strong manufacturing facilities backed by a strong R&D capability and a dynamic and customer oriented marketing function. M&M has secured the top position in the "
Domestic Tractor Market"
.<br />3.9 The Indian Tractor Market; <br /> The Indian tractor industry, dominated since time immemorial by a few known brands, is in the process of a change. A look at the average growth rate recorded by the tractor industry point towards a general slowdown. The growth rate for the eight month period April- November 1996 has dropped to 13% from 16% recoded during the previous year. Among the 3 Indian majors, Mahindra & Mahindra Tractor &Farm Equipment (TAFE) & Punjab tractors, only M&M has recorded a marginal drop in market share. Overall all of them have witnessed increased sales in terms of volume. As for the others which include the links of Eicher, HMT, ESCORTS etc., there has been steady erosion in the market share. A begin state policy, which provides the buyer subsidies & soft loans has seen the tractors become a popular substitute for the LCV as utility vehicle in rural areas.<br />Due to the general slowdown in the growth rate of the Economy, the industry expects to slow down. The growth rate in tractor declined from 18.5% in 1994-95 to 17.3% in 1995-96 & 1996-97 (April-Nov).<br />But there is one company which has defined this entire ‘slowdown’ pattern & is growing at a steady pace. The co. is Punjab Tractors Ltd... The market share of Punjab tractors has increased from 11% to 13.9% in 1996-97 (April- December). It overtook Eicher in 93-94& Farm Equipment (TAPE).<br /> The future of the tractor industry will see a shakeout of sorts. The small players will either have to survive. According to experts, ten years from now, the market will stagnate. If at all there is a market that will grow, it will be one for replacements. Till then Tractor players will continue to trudge along slowly maintaining a 5-6 percent growth rate.<br /> Hence the performance of the companies, from the automobile industry that have featured in this year's top50 reveals that though the industry is in the grip of recession players with very good fundamentals will always continue to reward the investors.<br />The Indian tractor industry sold approximately 2.2 lakh tractors between, April 1996&March 1997. On an average the tractor market gas grown by 6% to 7% each year since 1993. When the industry was of around 1.4 lakh tractors in all these years some of the companies had limited production capacities & the customer had to wait for most popular models. These problems were more acute in the season & often aggravated by the short supply of premium models.<br /> However, since October 1996, a distinct change has been observed in the tractor market. All tractors models, including the so called premium products, are readily available in the show room. The main reason for this phenomenon is that all tractor manufacturers have been gradually increasing their production volume in the last few years and presently the total production capacity of all the tractor manufacturers has reached approximately 2.7 lakh units. This will ease the supply position of tractors and in times to come the customer will not have any waiting period for a tractor. <br />3.10 Mahindra & Mahindra Tractor Sales Rise By 16%:<br />Mahindra & Mahindra announced that its tractor sales for the month of August 2008 stood at 7,000 units as compared to 6011 units for the same period last year, recording a growth of16.45%. 3.10 (a) Exports: -<br />They exports during August 2008 were 597 units as against 561 units for the same period last year, recording a growth of 6.42%. Total sales (domestic and exports) for the month were 7,597 units, as compared to 6,572 units for the same period last year, recording growth of 15.59%.<br /> Cumulatively, during this fiscal, Mahindra & Mahindra tractors sales in the domestic market were 41,455 units as compared to 37,611 units for the April- August quarter last year, recording a growth of 10.22%.<br /> Shares of the company declined Rs 5.2, or 0.9%, to settle at Rs 572.85. The total volume of shares traded was 15,411 at the BSE.<br /><ul><li>M &M In India:-</li></ul>MAHINDRA & MAHINDRA LTD. was established in 1962 at Mumbai. The company is India's first large scale project based on totally indigenously & totally indigenous design, know how & technology was promoted by the International Harvester company of U.K.At present the name of owner of the company is Anand G Mahindra.<br />The Mahindra Factory is located at Akurli Road. Mumbai & their implement division are at Nagpur. The factory is among the first to be set up in this Industrial town. Its main marketing Department is at World Road, Mumbai.<br />3.12 Growth Of The Organization:- <br />Mahindra & Mahindra Ltd... Consist of 3 divisions.<br />Mahindra tractor Division.<br /> Mahindra Jeep Division.<br />LCV Division FORD-ESCORT- MAHINDRA Collaboration.<br /> Mahindra tractor Division started with annual capacity of 500 tractors & with capacity of Rs 400 crores. It went into commercial production in the year 1962 with 35 HP ranges of tractor. At present the annual capacity of Mahindra Tractor division is 8000 tractors & with capacity of Rs 2000 crores.<br />The company is managed by seven Boards of Directors with Secretary, Deputy Manager, and Chairman. The day to day operations are managed by the Managing directors.Having Mahindra established in the Indian Market. Mahindra Tractor Division made a determined starts in 1995-96 year to establish itself in the international market over the years, a large number of Mahindra tractors & implements are operating in many countries like Australia, Pakistan, Brazil, Srilanka, and Alzeria. It would be very glad that the pure Indian company with Indian technology export tractors & the implements to other countries or foreign countries.<br />Most of the Mahindra Tractors are sold Foreign countries are 30 HP range of Model. But in Indian market 40 HP ranges of tractors is more demand. Mahindra has 728 dealers in the entire country & it has 30 dealers in Karnataka. <br />3.12 (a) Dynamic growth:-<br /> During the 35 years of its existence, Mahindra tractors division has not only expanded its tractors manufacturing capacity of tractors per annum but also more product in to manufacturing range Mahindra has emerged as a major industrial complex in India. The Mahindra is only one pure Indian company, without any alliance of collaboration with any multinational countries which manufactured the machine tools. Mahindra name is synonymous with the quality machine tools in the major industrial concerns in India. Mahindra was not only manufactured tractors but also manufactured harvesters, combines, forklifts, trucks, agriculture implements and automobile castings. High technology, sophisticated tool room equipment and modern R&D facilities, including computer aided designs and computerized testing machines, blending with decade of experience of Indian conditions, has resulted in technology relevant to Indian conditions. The export performance, Mahindra has always been conscious that the quality if its products lie in it acceptable in the world market, entry in export market means, it has to know what sells abroad and it has to design its product according to network in India, which will serve as a major source of competitive advantage.<br />The Indian tractor market is anxiously awaiting the arrival of global tractor giants like John Deere, New- Holland, Same, Steyretc and the existing players have also enhanced their product volumes, models range and quality. In this highly competitive market- driven scenario, the complete purchase process shall focus around the customer needs. At these crucial juncture, there shall be used to plan a series of multiple activities to gear up all over business processes to face the future market where in we envisage that “the customer will be king” and that “customer satisfaction” shall be the prime consideration for all over systems<br />Mahindra Tractors, also known as Mahindra & Mahindra Limited - an Indian automobile company, is one of the largest tractor manufacturers in the world. Mahindra entered the U.S. tractor market in 1994, and currently has two assembly and distribution centers in the United States. Mahindra was used at the end of World War II to assemble the Willy’s Jeep for American soldiers in India. Mahindra then later entered the world wide tractor market in 1947, after India’s independence.<br />Mahindra actually developed its first tractor through the help of International Harvester through a joint venture dating back to 1963. Some of the Mahindra tractor models are still based upon the IH B-414 successor. Mahindra has also done a joint venture with Ford Motor Company in 1995.<br />M&M had posted excellent results for the year ended 31st March 2003. Gross sales from operations at Rs 5,914 crore was up by 31.5%, while profit after tax (PAT) at Rs 348.5 crore was up by 139%, from that posted in 2002-03.<br />A total of 41,135 tractors were sold in July-March 2008-2009 as compared to 37,096 units in the same period of last fiscal year. Sale of tractors at 21,247 units and 19,888 units as compared to 18,342 and 18,754 units in July-March 2007-2008.<br />3.13 M&M Ltd. Tractors record 19% growth in Sales in June 2009<br />Mumbai Tuesday July 1, 2009.<br />Mahindra & Mahindra’s Farm Equipment Sector (FES), a part of the U.S. $6.7 billion Mahindra Group, significantly consolidated its leadership position in the tractor industry in June 2008. <br />For the month of June 2008, domestic sales of tractors of Mahindra & Mahindra Ltd. were 11054 nos., a growth of 16% and exports during the month were 954 nos., a growth of 69% over the corresponding month last year. Total sales for the month were 12008 nos., a growth of 19% over the corresponding month last year. <br />M&M is the third largest tractor company in the world. It is also the largest manufacturer of tractors in India with sustained market leadership of around 25 years. It designs, develops, manufactures and markets tractors as well as farm implements. <br />Mahindra & Mahindra grew from being a maker of army vehicles to a major automobile and tractor manufacturer. It has acquired plants in Chinaand the United Kingdomand has three assembly plants in the USA. M&M has partnerships with international companies like Renault SA, France and International Truck and Engine Corporation, USA.<br />3.14 World-class products with high quality, reliability, durability and multiple features.<br />Not only in India one of the largest tractors, markets, it is also one of the few growing markets in the world that is expected to saturate only by the year 2005, by when it shall have a stable demand of around 3.5 lakh units per annum.<br />In the near future the customer will have a multiple variety of models to choose from, not only in terms of quality, technology, reliability &overall economics. In this scenario the role of a dealership for delivering total customer satisfaction through all its thoughts, words and deeds becomes the single highest priority objective in the times to come.<br />3.14 (a) Distribution Network:-<br />The company has not only contributed by supplying a large number of tractors to the Indian farmers but has also ensured proper backup services to help them operate. Mahindra has a large network of sales, service, first aid centers &space parts dealers spread throughout the length & a breadth of the country.<br />Mahindra has 728 dealers in the entire country. It has main dealers in Karnataka. It is because of these well spread out facilities. That the ensures minimum downing time of the tractors. The dealership have well equipped workshops having special tools and equipment, field service motor- cycles to ensure prompt service is rendered at the door steps of the farmer.<br />3.14 (b) The demand of tractors in Indian market is generally as below.<br />ModelsPercentage of Demand.475-DI40275-DI20B-275-DI30OTHERS10TOTAL100<br />The above table shows in the below diagram.<br />3.14 (b) MAHINDRA USA, INC;-<br />In 2002, Mahindra USA completed a major expansion of its Tomball (Houston Area), Texas headquarters. They tripled the size of the parts warehouse and the production assembly lines. In 2003, a second assembly and distribution center was established in Calhoun, Georgia.<br />In 2004, a separate, much larger parts warehouse was put into operation outside of Houston, Texas, to keep up with the huge growth of Mahindra tractor sales in the U.S.A...Final assembly takes place here in the U.S.A. where we conduct a 51-point pre-delivery inspection, including dynamometer and road test<br />3.14 (c) COMPARISON WITH COMPLETIVE COMPANIES:<br />Comparison of stock market performance of different brands:-<br />COMPANY NAMEPRICEN/PCASH PROFITEicher16.583.31183.4M&M91183.04236.78Ford117.5180.7522.2Escort245.07541.33157.77<br /> <br />The above comparison shows in the following diagram.<br />3.14 (d) Comparison Of Installed Capacity And Its Utilization:-<br />COMPANYInstalled CapacityProductionCapacity UtilizationNAMES200820092008200920082009Eicher180001800016913158999488M&M28000280003778634886162223Ford850085001448212123170142Escort230002300018437130636647<br />The above comparison shows in the following diagram.<br />3.15 Firm Profile<br />3.15 (a) Brief History of Dealer<br />Sri Ganesh Agro Tractors is started in the year 2009 and registered under partnership Act of 1932. Mr. Sathish Gowda, Mr. Darmegowda are the partners of Sri Ganesh Agro Tractors. <br />The showroom of M&M tractors is situated in B.M. Road, Opp: Govt. First Grade College, Channarayapatna-573116. The showroom sports a uniform look and the service station is situated behind the show room. The service station area however upgraded as per company specification.<br />Mr. Sathish Gowda and Mr. Darmegowda are very good dealers in Hassan area. They are also having a skill of marketing. Mr. Naveen S. Kaggere the manager of the company, who is looking after all sales and services of the firm. He has very good tractor mechanic in Hassan area. He is also having a skill of marketing of tractors. <br />In the beginning the firm initial capital was 62 lakhs and sale of the tractor is 15 per month. The firm started to deal with Mahindra tractors & implements and spare parts of the Mahindra tractors in the range 25 hp,30hp,33hp 36hp,40 hp.50 hp ,with regard to 225-DI,265-DI,365-DI,275-DI,B-275, 475-DI,585-DI respectively. There is a large demand for the 295,275,475,575 tractors as other range of tractors.<br />3.16 INFRASTRUCTURE FACILITIES:-<br />Land and building:<br /> The firm is having its own building. The office covers an area of 13759.60 square feet, East- west 167'.8"
feet, North-south 90+74/2 feet.<br /><ul><li>Power:
The electric power requirement of the firm is of 250 to0350 unit’s pm. The electric power consumer by the firm’s showroom is about 150 units and service attain like water washing of vehicles etc., take the power consumption of 150 to 200 units.
Machinery: </li></ul>The firm is well equipped machines and tolls are used in services facilities to vehicle the value of tool is the firm more than Rs. 1, 50,000.<br />3. Recruited staff of the firm:<br /><ul><li>General
Accounts staff.</li></ul>5.Man power:<br />The firm has sufficient staff. There are 19 members working in the showroom. There are 14 foremen working in the showroom.<br /><ul><li>Advertisement:
Advertisement is the main aims for create demand for the product in the mind of the customer and improve the competitive strength. The dealer is advertisement its vehicles through various media such as local news paper and states news papers, magazines etc.</li></ul>3.17 Organization Structure:-<br />ORGANISATION STRUCTURE OF GANESHA AGRO MOTORS<br />WITH SPECIAL REGARD TO SALES<br />ProprietorStructure of Sri Ganesh Agro Tractors with Special Regard to Sales<br />Manager<br />Spare parts SupervisorsClerkSr. MechanicOffice In chargeSales ExecutiveSupervisor<br />HelperAccountantJr. Mechanic<br /> <br /> The service station is situated at the back side of the show room so that they can provide timely repairs, and other service like wash services, wheel alignment, oil change etc to the customers within time. They also provide after sales services like free services up to one year of purchase and demonstrations...etc. The place of purchase and place of service are situated at the same place and it would be economical to the customers as well as the service providers.<br /> 3.18 Demand For The Product:<br /> Generally the market is a medium to secure certain volume of sales. It is mainly interested in the demand side of the market. Market consists of individuals and group of people institution and corporate bodies, their needs, their resources, their buying habits and their preferences. The success of the marketing is also depends on the ability to forecast the strength and character of demand as it is the basis for allocation of resources in business.<br /> There are three variable factors that relate to tractors in market demand, that is demographic variables (population pattern) to ascertain size of demand, effective demand (purchasing power) to ascertain potential demand life style pattern of the customers.<br />3.19 Company Demand:-<br />Company demand is volume of sales expected under given environmental conditions for a specific time. It is function of firm strategies marketing effort and specific the amount of sales turnover which would be realized by a company under different levels of company’s selling efforts. It is the market share of a company.<br />3.19 (a) Target given by the company;<br />YEARTARGETSALES2004-051502852005-063505002006-073403502007-08500520<br />The above table showed in below diagram.<br /> Mahindra tractors are one of the main products of Mahindra and Mahindra ltd., this company is having collaboration with many foreign companies. But now it is indigenous in manufacturing Mahindra.<br />Following points affect the increased demand for Mahindra tractors:-<br />Manufacturing tractors by incorporating the best technology available.<br />Superior quality of raw material used in production.<br /> Tractors having good specification when compared to other tractors.<br /> Good service given by the agency to customers after sale tractors.<br />3.20 SWOT Analysis<br />3.20 (a) Strengths: <br />Over the years the company has emerged as one of the top players in the world in terms of number of tractors sold. This gives a clear indication that the company's market share is one of its biggest strengths.<br />The company's ability to introduce new products in the market and to generate sales from those new products is a major strength. The reason being that this is very essential for any company, for its survival in the long run.<br />Brand name and brand image.<br />The company has established its brand name in other countries of the world as well. It has a wide market spreading over the five continents. This is evident from the 40% market share that it holds in the 30-40 HP tractors market in the US.<br />Market leader in terms of market share is its biggest strength<br />The company's ability to introduce new products in the market and to generate sales from those new products is a major strength. The reason being that this is very essential for any company, for its survival in the long run.<br />The company has established its brand name in other countries of the world as well which is biggest strength of a company to extend and diversify the business<br />Large and effective distribution channel.<br />Sufficient financial resources.<br />3.20 (b) Weaknesses: <br />The company is highly dependent on the rural sector, and the rural sector in turn is highly dependent on the monsoons. As a result, if there happen to be bad monsoons (less of rains) for two consecutive years it could have an adverse impact on the demand of tractors for the company. <br />The company is highly dependent on the rural sector<br />Less technological ability as compared to Foreign players.<br />3.20 (c) Opportunities:<br />The government has been trying to strengthen the exports of agricultural products. As a result, the quality of agricultural products necessarily has to be very high. For this, they need better rural and agricultural infrastructure. This might result in an increase in demand for tractors.<br />In India, the penetration of tractors is 10 tractors per 1000 hectares of cropped area, which is much below the world average of 19 tractors for the same. Thus there is scope for the demand to increase. <br />3.20 (d) Threats: <br />The company has a history of having invested in unrelated diversifications such as telecom, holiday and resort inns, financial services, etc. which it has hived off as subsidiaries from time to time when these turned unmanageable. This is a cause for concern as such diversifications could divert the company's attention from its core business. It is a dangerous tendency as it leads to destruction of shareholders value.<br />The entry of foreign players in the tractors segment could pose a threat to the company as these foreign players are technically more competitive than Mahindra & Mahindra.<br /><ul><li>3.21 Milestone, Awards And Accolades
M&M’s 61st year was studded with a number of noteworthy achievements, prestigious prizes and glittering awards.
YEARACHIEVMENTS1986CJ 640 DP Vehicle introduced.1987MM 540 DP metal Body Wagonette introduced.1988M&M signed a MoU with Hyderabad Allwyn Nissan Limited to form Mahindra Nissan Allwyn Ltd., as its associate company with LCV operations in Andhra Pradesh.1989The CJ 340 DP model was introduced. M&M and Peugeot announced their tie up for the manufacture of Peugeot 504 pickup truck, BA 10 gearboxes and latest XD 3 diesel engines. M&M acquired automotive pressing unit at Kanhe, from Guest Keen Williams Ltd.1991Introduced CJ 500 DI model with MDI 2500 A direct injection diesel engines. M&M bags order to export 10,000 CKD kits. Commander range of models: 650 DI, 750 DP/HT were also launched with tremendous market response.1993The Mahindra Armada was launched1995Mahindra Nissan Allwyn Ltd. (MNAL) was merged with M&M and Zaheerabad LCV operations becoming part of Automotive Sector. FJ series of LCVs were shifted from Nasik to Zaheerabad. Igatpuri Engine Plant received ISO 9002 certificate.1996The new LCV model Cabking DI 3150 & Mahindra Classic vehicles were launched. New Commander 5 Door Hard Top introduced.1997Commercial production of the Ford Escort commenced at Nasik Plant. License & Technical Assistance Agreement signed with Mitsubishi Motors Corporation for Manufacture of SL Body at Zaheerabad (Voyager with XD 3 and BA 10). Kandivli and Nasik plants received ISO 9002 certificate from RW-TUV.1998Die shop Inauguration at Nasik Plant 2-8/8/97. Voyager was launched by the Chairman at Zaheerabad Plant on 12/11/971999The Company acquired major stake in Gujarat Tractors2000The Company unveils new logoMahindra Auto Specialties Ltd. a new 100% subsidiary is formed.M&M sets up its first satellite tractor plant at Rudrapur. The Company launches New Age Tractor, the Mahindra Arjun 605 DI (60 HP tractor).2003M&M opens a second tractor assembly plant in USA. M&M Tractors awarded the prestigious Deming Prize for excellence in Quality – The first tractor company in the world to receive the award. M&M launches India's first Turbo tractor - Mahindra Sarpanch 595 DI Super Turbo. Scorpio wins National Award for R&D. M&M ventures into Industrial Engine business2004Launched the Mahindra World Tractor - a 75 HP tractor in the overseas market. M&M becomes the first Indian company to achieve sales of one million tractors2005Acquired 51% stake in SAR Transmission Private Limited, a company engaged in manufacture of gears and transmission shafts. M&M Farm Equipment Sector launch operations in Australia.3.22 AwardsBombay Chamber Good Corporate Citizen Award for 2006-07 Business world FICCI-SEDF Corporate Social Responsibility Award – 2007Deming Application Prize.Japan Quality Medal in 2007.M&M, in 2004 announced that they had bought majority stake (80%) in Jiangling Tractor Company, and renamed it Mahindra Jiangling Motor Co Group (JMCG). This is the first instance of Indian tractor industries participating in India's reverse FDI. The plant in China reportedly has a production capacity of 12,000 tractors annually. M&M has two main tractor manufacturing plants located at Mumbai and Nagpur in Maharashtra. Apart from these two main manufacturing units, the Farm Equipment Sector has satellite plants located at Rudrapur in Uttaranchal and Jaipur in Rajasthan.The Farm Equipment Sector as reported by the Company has a dealer network of over 450 dealers. This dealer network is managed by 28 area offices, situated in all the major cities and covering all the principal states and M&M tractors has sold more than 13,00,000 tractorsData Interpretation and Analysis4.1 Balance Sheet on Mahindra agro Tractor20082007 Rupees in CroesI]Source of fund Share holders fund Capital I239.07 238.03Employee stock standing out Standing3.00 3.18Reserves & Surplus II4107.00 3311.7 4350.073552.91Loan Fund a) Secured fund III A617.26 106.65b) Unsecured fund III B1969.80 1529.35 2587.061636Deferred Tax liability (Net) ……. 56.7219.79 Total…………. 6993.855208.7 II] Application of fund Fixed Asset Gross Block……………………………… 3656.13 3229.69Less: Depreciation………………….1841.68 1639.12Net Block……………………………….. IV1813.45 1590.57Capital Work in Progress……….546.45 280.6 2360.901871.17Investment