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  • 1. INTRODUCTIONThe automobile sector is the one of the core sectors, the Indian automobile market is gearing towardsinternational standards to meet the needs of the global automobile giants and become a global hub.So investment in the stocks of the automobile industry is one of the attractive options.Investing in shares of a company is highly rewarding at the same time it is highly risky. Moreoverthe Indian stock market is highly volatile with large volumes being traded. Analysis of stocks ishighly helpful to reduce the risks and to make good money.This project is aimed at analyzing the Indian automobile industry in the view of its feasibility as aninvestment option. A detailed analysis of the Indian automobile industry is covered in respect of pastgrowth performance. The fundamental analysis is done which analyzes the economy in the broadersense and the industry is analyzed using industry life cycle and SWOT analysis.Three companies namely Tata motors, Mahindra& Mahindra and Maruthi Suzuki are chosen andtheir financial and non financial information are analyzed. The technical analysis is also done for thestocks using some technical indicators.Based on the analysis done the intrinsic value of the shares of the companies were found out andtheir future pricing directors were determined.Based on the analysis the future price directions are determined and recommendations are given tomake the project more meaningful.` 1
  • 2. OBJECTIVESPrimary ObjectiveA comparative study of share price on automobile sector using fundamental valuation model taken atangel Broking Company limited.Secondary Objectives • Detailed analysis of Automobile industry which is gearing towards international standard • Fundamental analysis of automobile sector • Comparative analysis of three tough competitors TATA Motors, Maruti Suzuki and Mahindra and Mahindra through fundamental analysis.` 2
  • 3. NEED OF THE STUDYThe automobile industry is one of the core industries in India and is optimistic of posting good salesin the coming years. So, the investment in shares and securities of automobile companies seems tobe profitable.Investing is one of the most crucial decisions that every earning individual has to make at one pointof the time or the other. One of alluring options available is the investment in the shares andsecurities of companies. The investment in share market is highly rewarding but highly risky.The concept of analysis comes into the picture when decision has to be made on the choosing aparticular company’s shares for investment. A proper analysis helps in reducing the risks oninvestment in the share markets less risky and highly rewarding.This project is aimed at finding the analyzing the securities of select companies in the automobileindustries and to assist investment decisions.` 3
  • 4. SCOPE OF THE STUDYThe scope of the study is identified after and during the study is conducted. The project is based ontools like fundamental analysis and ratio analysis. Further, the study is based on information of lastfive years. • The analysis is made by taking into consideration three companies i.e. TATA Motors, Maruti Suzuki and Mahindra and Mahindra. • The scope of the study is limited for a period of five years.The scope is limited to only the fundamental analysis of the chosen stocks.` 4
  • 5. METHODOLOGYResearch design or research methodology is the procedure of collecting, analyzing and interpretingthe data to diagnose the problem and react to the opportunity in such a way where the costs can beminimized and the desired level of accuracy can be achieved to arrive at a particular conclusion.The methodology used in the study for the completion of the project and the fulfillment of theproject objectives.The sample of the stocks for the purpose of collecting secondary data has been selected on the basisof Random Sampling. The stocks are chosen in an unbiased manner and each stock is chosenindependent of the other stocks chosen. The stocks are chosen from the automobile sector.` 5
  • 6. INDUSTRIAL PROFILEOVERVIEWThe Indian retail brokerage industry consists of companies that primarily act as agents for the buyingand selling of securities (e.g. stocks, shares, and similar financial instruments) on a commission ortransaction fee basis.It has two main interdependent segments: Primary market and the Secondary market.Evolution of the Indian Brokerage MarketThe Indian broking industry is one of the oldest trading industries that had been around even beforethe establishment of the BSE in 1875. Despite passing through a number of changes in the postliberalization period, the industry has found its way towards sustainable growth. The evolution of thebrokerage market is explained in three phases: pre1990, 1990-2000, post 2000.Early YearsThe equity brokerage industry in India is one of the oldest in the Asia region. India had an activestock market for about 150 years that played a significant role in developing risk markets as alsopromoting enterprise and supporting the growth of industry.The roots of a stock market in India began in the 1860s during the American Civil War that led to asudden surge in the demand for cotton from India resulting in setting up of a number of joint stockcompanies that issued securities to raise finance. This trend was akin to the rapid growth ofsecurities markets in Europe and the North America in the background of expansion of railroads andexploration of natural resources and land development.` 6
  • 7. Bombay, at that time, was a major financial centre having housed 31 banks, 20 insurance companiesand 62 joint stock companies.In the aftermath of the crash, banks, on whose building steps share brokers used to gather to seekstock tips and share news, disallowed them to gather there, thus forcing them to find a place of theirown, which later turned into the Dalal Street. A group of about 300 brokers formed the stockexchange in Jul 1875, which led to the formation of a trust in 1887 known as the “Native Share andStock Brokers Association”.A unique feature of the stock market development in India was that that it was entirely driven bylocal enterprise, unlike the banks which during the pre-independence period were owned and run bythe British. Following the establishment of the first stock exchange in Mumbai, other stockexchanges came into being in major cities in India, namely Ahmedabad (1894), Calcutta (1908),Madras (1937), Uttar Pradesh and Nagpur (1940) and Hyderabad (1944). The stock markets gainedfrom surge and boom in several industries such as jute (1870s), tea (1880s and 1890s), coal (1904and 1908) etc, at different points of time.Beginning of a new equity cultureA new phase in the Indian stock markets began in the 1970s, with the introduction of ForeignExchange Regulation Act (FERA) that led to divestment of foreign equity by the multinationalcompanies, which created a surge in retail investing. The early 1980s witnessed another surge instock markets when major companies such as Reliance accessed equity markets for resourcemobilisation that evinced huge interest from retail investors.` 7
  • 8. A new set of economic and financial sector reforms that began in the early 1990s gave furtherimpetus to the growth of the stock markets in India. As a part of the reform process, it becameimperative to strengthen the role of the capital markets that could play an important role in efficientmobilisation and allocation of financial resources to the real economy. Towards this end, severalmeasures were taken to streamline the processes and systems including setting up an efficient marketinfrastructure to enable Indian finance to grow further and mature. The importance of an efficientmicro market infrastructure came into focus following the incidence of market abuses in securitiesand banking markets in 1991 and 2001 that led to extensive investigations by two respective JointParliamentary Committees.The Securities and Exchange Board of India (SEBI), which was set up in 1988 as an administrativearrangement, was given statutory powers with the enactment of the SEBI Act, 1992. The broadobjectives of the SEBI include • to protect the interests of the investors in securities • to promote the development of securities markets and to regulate the securities marketsThe scope and functioning of the SEBI has greatly expanded with the rapid growth of securitiesmarkets in India in the last fifteen years.Following the recommendations of the High Powered Study Group on Establishment of New StockExchanges, the National Stock Exchange of India (NSE) was promoted by financial institutions withan aim to provide access to investors all over the country. NSE was incorporated in Nov 1992 as atax paying company, the first of such stock exchanges in India, since stock exchanges earlier weretrusts, being run on no-profit basis. NSE was recognized as a stock exchange under the Securities` 8
  • 9. Contracts (Regulations) Act 1956 in Apr 1993. It commenced operations in wholesale debt segmentin Jun 1994 and capital market segment (equities) in Nov 1994. The setting up of the National StockExchange brought to Indian capital markets several innovations and modern practices andprocedures such as nationwide trading network, electronic trading, greater transparency in pricediscovery and process driven operations that had significant bearing on further growth of the stockmarkets in India.Faster and efficient securities settlement system is an important ingredient of a successful stockmarket. To speed the securities settlement process, The Depositories Act 1996 was passed thatallowed for dematerialisation (and rematerialisation) of securities in depositories and the transfer ofsecurities through electronic book entry. The National Securities Depository Limited (NSDL) set upby leading financial institutions, commenced operations in Oct 1996. Regulations governingselection of various types of market intermediaries as depository participations were made.Subsequently, Central Depository Services (India) Limited promoted by Bombay Stock Exchangeand other financial institutions came into being.Indian Brokerage IndustryIndia in Global MarketsThe stature and significance of India is growing in the world capital markets. India is not onlyattracting greater interest from world markets, but is also assuming increasing importance in globalfinance. • India is a major recipient of foreign institutional flows amongst the emerging markets. Since the opening up of domestic stock markets to foreign investors, cumulative net FII investments reached Rs 517 Bn by 2008 end.` 9
  • 10. • India is major destination of private equity flows into the emerging markets • India was host to the annual meetings/conference of the World Federation of Exchanges (2005) and International Organization of Securities Commission (IOSCO) (2007) • India emerged a trillion dollar market capitalization market in 2007, and was among the top 10 stock exchanges in the world in terms of market capitalization • India is amongst the top fifteen stock exchanges in the world in respect of equity turnover • India emerged as a leading player in commodities futures market • India is amongst the top five in the number of transactions • India is among the top five in respect of volume traded in Stock Index Futures and Stock Futures • India is one of the few markets with extensive dematerialisation of shares • India’s T+2 securities settlement cycle is at par with the global standards • Indian stock markets have the largest number of listings, with trading taking place in about 2,500-3,000 stocks • India’s most popular stock index (Sensex) is constructed on the basis of full float methodology, one of the firsts in the Asian region and a global standard • Indian market indices such as Sensex and CNX Nifty are listed in foreign exchanges for trading as ETFs.` 10
  • 11. COMPANY PROFILEAngel Brokings tryst with excellence in customer relations began in 1987. Today, Angel hasemerged as one of the most respected Stock-Broking and Wealth Management Companies in India.With its unique retail-focused stock trading business model, Angel is committed to providing ‘RealValue for Money’ to all its clients.The Angel Group is a member of the Bombay Stock Exchange (BSE), National Stock Exchange(NSE) and the two leading Commodity Exchanges in the country: NCDEX & MCX. Angel is alsoregistered as a Depository Participant with CDSL.Product Profile: Online Trading Commodities DP Services PMS (Portfolio Management Services) Insurance IPO Advisory Mutual Fund Personal loans Quality AssuranceOnline- Trading:` 11
  • 12. Specially designed for the net savvy traders and investors who prefer operating from their home oroffice through the internet. The investor can access state of the art Technology with three different e-broking products and voila trading on BSE, NSE, F &O, MCX and NCDEX.Commodities:A commodity is a basic good representing a monetary value. Commodities are most often as inputsin the production of other goods or services. With the advent of new online Exchange, commoditiescan now be traded in futures markets. When they are traded on an Exchange, Commodities must alsomeet specified minimum standards known as basic grade.Types of Commodities • Precious Metals: Gold and Silver • Base Metals: Copper, Zinc, Steel and Aluminum • Energy: Crude Oil, Brent Crude and Natural Gas • Pluses: Chana, Urad and Tur • Spices: Black Pepper, Jeera, Turmeric, Red Chili • Others: Guar Complex, Soy Complex, Wheat and SugarIPO DISTRIBUTION AND ADVISORY:✔ Wide network of branches for better customer reach✔ Dedicated Research Teams generating sector related reports.✔ Ease in investing with informed decision making.✔ Advisory Help Desk for all IPO related queries.Nature of Business` 12
  • 13. The Angel Group has emerged as one of the top 3 retail broking houses in India. Incorporated inDecember 1997 in Mumbai, India, Angel Broking provides retail related services encompassingEbroking, Investment Advisory, Portfolio Management Services, Wealth Management Services andCommodities Trading. It is a member of Bombay Stock Exchange and National Stock Exchange. Itis also a registered depository participant with CDSL.History & MilestonesAngel Brokings tryst with excellence in customer relations began in 1987. Today, Angel hasemerged as one of the most respected Stock-Broking and Wealth Management Companies in India.With its unique retail-focused stock trading business model, Angel is committed to providing ‘RealValue for Money’ to all its clients. The Angel Group is a member of the Bombay Stock Exchange(BSE), National Stock Exchange (NSE) and the two leading Commodity Exchanges in the country:NCDEX & MCX. Angel is also registered as a Depository Participant with CDSL.Awarded with Broking House with Largest Distribution Network and Best Retail Broking Houseat Dun & Bred street Equity Broking Awards 2009· August, 2008 Crossed 500000 trading accounts● November, 2007 ‘Major Volume Driver’ for 2007● December, 2006 Created 2500 business associates● September, 2006 Launched Mutual Fund and IPO business● July, 2006 launched the PMS function● October, 2005 ‘Major Volume Driver’ award for 2005● September, 2004 Launched Online Trading Platform● April, 2004 Initiated Commodities Broking division● April, 2003 first published research report● November, 2002 Angel’s first investor seminar` 13
  • 14. ● March, 2002 developed web-enabled back office software● November, 1998 Angel Capital and Debt Market Ltd. Incorporated● December, 1997 Angel Broking Ltd. IncorporatedFuture Outlook:Angel broking Limited has to decrease its margin money up to Rs. 3000 it Attracts more new clientsand for sub-brokership company should decrease its Security up to Rs. 50,000 Company has to moreaggressive toward its existing client’s feedback and for their services after giving them productsbecause it can increase company loyalty as well its brand name` 14
  • 15. ANALYSIS OF AUTOMOBILE INDUSTRYOver a period of more than two decades the Indian Automobile industry has been driving its owngrowth through phases. With comparatively higher rate of economic growth rate index against thatof great global powers, India has become a hub of domestic and exports business. The automobilesector has been contributing its share to the shining economic performance of India in the recentyears.To understand this industry for the purpose of investment we need to analyze it by the followingapproach:Fundamental Analysis (E.I.C Approach) a. Economy analysis b. Industry analysis c. Company analysisFundamental AnalysisFundamental analysis is the study of economic, industry and company conditions in an effort todetermine the value of a company s stock. Fundamental analysis typically focuses on key statistics incompany s financial statements to determine if the stock price is correctly valued.Most fundamental information focuses on economic, industry and company statistics.The typical approach to analyzing a company involves three basic steps:1. Determine the condition of the general economy.` 15
  • 16. 2. Determine the condition of the industry.3. Determine the condition of the company.1. ECONOMY ANALYSISEconomic analysis is the analysis of forces operating the overall economy a country. Economicanalysis is a process whereby strengths and weaknesses of an economy are analyzed. Economicanalysis is important in order to understand exact condition of an economy.GDP and Automobile IndustryIn absolute terms, India is 16th in the world in terms of nominal factoryoutput. The service sector is growing rapidly in the past few years. This isthe pie- chart showing contributions of different sectors in Indian economy.Today, automobile sector in India is one of the key sectors of the economy in terms of theemployment. Directly and indirectly it employs more than 10 million people and if we add the` 16
  • 17. number of people employed in the auto-component and auto ancillary industry then the number goeseven higher.As the world economy slipped into recession hitting the demand hard and the banking sector takesconservative approach towards lending to corporate sector, the GDP growth has downgraded it to 7.1per cent for 2008-09 and it has increased to 8.6% in 2010 by overcoming the setbacks of recession.RecessionAuto industry in India had been hit hard by ongoing global financial recession. But it is in a goodshape now. Much of this optimism resulted from renewed interest being shown in India auto industryby reputed overseas car makers. Nissan Motors which is a well known Japanese car makingcompany regarded India automobile market as a global car manufacturing hub for future andinvested huge amount in our market. There are some other automobile companies of world who haveshown interest in India auto market. Major names among these are General Motors, Skoda Auto andMercedes-Benz. These companies have major plans lined up for India auto industry. These are fewsigns of the revolutionized auto industry after recession.InflationThe rise in inflation will have adverse impact on the industry that will not only see interest ratesgetting further hardened but also a drop in demand due to the squeeze in purchasing power. Theeffect of inflation has affected every sector which is related to car manufacturing and production.The increase in the price of fuel and the steel due to inflation has led to a slower growth rate of thecar industry in India.` 17
  • 18. Foreign Direct InvestmentThe automobile sector in the Indian industry is one of the high performing sectors of the Indianeconomy. This has contributed largely in making India a prime destination for many internationalplayers in the automobile industry who wish to set up their businesses in India. Automatic approvalfor foreign equity investment up to 100 per cent of manufacture of automobiles and component ispermitted.ExportsDespite recession, the Indian automobile market continues to perform better than most of the otherindustries in the economy in coming future; more and more MNC’s coming in India to setup theirventures which clearly shows the scope of expansion. During April-January 2010, overallautomobile exports registered a growth rate of 13.24 percent.` 18
  • 19. 2. INDUSTRY ANALYSIS (AUTOMOBILE)The automobile industry in India is the ninth largest in the world with an annual production of over2.3 million units in 2008. In 2009, India emerged as Asias fourth largest exporter of automobiles,behind Japan, South Korea and Thailand. The Automobile Industry is one of the fastest growingsectors in India. The increase in the demand for cars, and other vehicles, powered by the increase inthe income is the primary growth driver of the automobile industry in India. In 2009, estimated rateof growth of India Auto industry is going to be 9% .The Indian automobile sector is far from beingsaturated, leaving ample opportunity for volume growth.Segmentation of Automobile IndustryThe automobile industry comprises of Heavy vehicles (trucks,buses, tempos, tractors); passenger cars; Two-wheelers;Commercial Vehicles; and Three-wheelers. Following is thesegmentation that how much each sector comprises of wholeIndian Automobile Industry.Industry life cycleThe industrial life cycle is a term used for classifying industry life over time. Industry life cycleclassification generally groups industries into one of four stages: pioneer, growth, maturity anddecline. In the pioneer phase, the product has not been widely accepted or adopted. Businessstrategies are developing, and there is high risk of failure. However, successful companies can growat extraordinary rates. The Indian automobile sector has passed this stage quite successfully. Theindustry is growing rapidly, often at an accelerating rate of sales and earnings growth. IndianAutomotive Industry is booming with a growth rate of around 15 % annually. The growth rate of the` 19
  • 20. automobile industry in India is greater than the GDP growth rate of the economy, so the automobilesector can be very well be said to be in the growth phase.Swot analysis:A scan of the internal and external environment is an important part of the strategic planningprocess. Environmental factors internal to the firm usually can be classified as strengths (S) orweaknesses (W), and those external to the firm can be classified as opportunities (O) or threats (T).Such an analysis of the strategic environment is referred to as a SWOT analysis. SWOT analysis ofthe Indian automobile sector gives the following points:1. Strengths • Large domestic market • Sustainable labor cost advantage • Competitive auto component vendor base • Government incentives for manufacturing plants • Strong engineering skills in design etc2. Weaknesses • Low labor productivity • High interest costs and high overheads make the production uncompetitive • Various forms of taxes push up the cost of production • Low investment in Research and Development` 20
  • 21. • Infrastructure bottleneck3. Opportunities • Increasing challenges in consumer demands, technology development, and globalization. • Heavy thrust on mining and construction activity • Increase in the income level • Cut in excise duties4. Threats • Ignorance of Research & development • Rising interest rates • Cut throat competition3. COMPANY ANALYSISThe company analysis shows the long-term strenght of the company that what is the financialposition of the company in the market, where it stands among its competitors and who are the keydrivers of the company, what are the future plans of the company, what are the policies ofgovernment towards the company and how the stake of the company divested among differentgroups of people.Here, I have taken three companies namely TATA Motors, Maruti Suzuki and Mahindra andMahindra for the purpose of fundamental analysis.` 21
  • 22. Tata Motors Limited is Indias largest automobile company, with consolidated revenues of Rs.92,519 crores (USD 20 billion) in 2009-10. It is the leader in commercial vehicles in each segment,and among the top three in passenger vehicles with winning products in the compact, midsize carand utility vehicle segments. The company is the worlds fourth largest truck manufacturer, and theworlds second largest bus manufacturer.Maruti Suzuki is a subsidiary of Suzuki Motor Corporation Japan. More than half the numbers ofcars sold in India wear Maruti Suzuki badge. They offer a full range of cars – from entry levelMaruti 800 & Alto to stylish hatchback Ritz, A star, Swift, Wagon R, Estillo and sedans Dzire, SX4and Sports Utility Vehicle Grand Vitara. Since inception, it has produced and sold over 7.5 millionvehicles in India and exported over 500,000 units to Europe and other countries. Its turnover for thefiscal 2008-09 stood at Rs. 203,583 Million & Profit after Tax at Rs. 12,187 Million.The Mahindra Group’s Automotive Sector is in the business of manufacturing and marketing utilityvehicles and light commercial vehicles, including three-wheelers. It is the market leader in utilityvehicles in India since inception, and currently accounts for about half of India’s market for utilityvehicles. The Automotive Sector continues to be a leader in the utility vehicle segment with a` 22
  • 23. diverse portfolio that includes mass transport as well as new generation vehicles like Scorpio, Boleroand the recently launched Xylo.Balance sheet tata motors Mar 12 Mar 11 Mar 10 Mar 09 Mar 08Sources Of FundsTotal Share Capital 634.75 634.65 570.60 514.05 385.54Equity Share Capital 634.75 634.65 570.60 514.05 385.54Share Application Money 0.00 3.06 0.00 0.00 0.00Preference Share Capital 0.00 0.00 0.00 0.00 0.00Reserves 18,709.16 19,351.40 14,208.55 11,855.15 7,428.45Revaluation Reserves 23.75 24.19 24.63 25.07 25.51Networth 19,367.66 20,013.30 14,803.78 12,394.27 7,839.50Secured Loans 6,915.77 7,766.05 7,742.60 5,251.65 2,461.99Unsecured Loans 4,095.86 8,132.70 8,883.31 7,913.91 3,818.53Total Debt 11,011.63 15,898.75 16,625.91 13,165.56 6,280.52Total Liabilities 30,379.29 35,912.05 31,429.69 25,559.83 14,120.02 Mar 12 Mar 11 Mar 10 Mar 09 Mar 08Application Of FundsGross Block 27,111.76 21,883.32 18,416.81 13,905.17 10,830.83Less: Accum. Depreciation 9,965.87 8,466.25 7,212.92 6,259.90 5,443.52Net Block 17,145.89 13,417.07 11,203.89 7,645.27 5,387.31Capital Work in Progress 2,073.96 4,058.56 5,232.15 6,954.04 5,064.96Investments 20,493.55 22,624.21 22,336.90 12,968.13 4,910.27Inventories 4,588.23 3,891.39 2,935.59 2,229.81 2,421.83Sundry Debtors 2,708.32 2,602.88 2,391.92 1,555.20 1,130.73Cash and Bank Balance 1,115.08 638.79 612.16 638.17 750.14Total Current Assets 8,411.63 7,133.06 5,939.67 4,423.18 4,302.70Loans and Advances 6,400.65 5,852.42 5,248.71 5,909.75 4,831.36Fixed Deposits 725.88 1,790.13 1,141.10 503.65 1,647.17Total CA, Loans & Advances 15,538.16 14,775.61 12,329.48 10,836.58 10,781.23Deffered Credit 0.00 0.00 0.00 0.00 0.00Current Liabilities 21,271.45 15,740.69 16,909.30 10,968.95 10,040.37Provisions 3,600.82 3,222.71 2,763.43 1,877.26 1,989.43Total CL & Provisions 24,872.27 18,963.40 19,672.73 12,846.21 12,029.80Net Current Assets -9,334.11 -4,187.79 -7,343.25 -2,009.63 -1,248.57Miscellaneous Expenses 0.00 0.00 0.00 2.02 6.05Total Assets 30,379.29 35,912.05 31,429.69 25,559.83 14,120.02` 23
  • 24. Contingent Liabilities 3,284.12 4,798.83 3,708.33 5,433.07 5,590.83Book Value (Rs) 60.95 314.93 259.03 240.64 202.70P&L A/CProfit & Loss account of Tata Motors ------------------- in Rs. Cr. ------------------- Mar 12 Mar 11 Mar 10 Mar 09 Mar 08Income Sales Turnover 59,220.94 52,067.87 38,173.39 28,538.20 33,123.54 Excise Duty 5,003.72 4,110.63 2,800.10 2,877.53 4,355.63 Net Sales 54,217.22 47,957.24 35,373.29 25,660.67 28,767.91 Other Income -11.16 341.53 1,220.86 921.29 734.17 Stock Adjustments 623.84 354.22 606.63 -238.04 -40.48 Total Income 54,829.90 48,652.99 37,200.78 26,343.92 29,461.60Expenditure Raw Materials 41,081.79 35,047.05 25,366.12 18,801.37 20,891.33 Power & Fuel Cost 550.89 471.28 362.62 304.94 325.19 Employee Cost 2,691.45 2,294.02 1,836.13 1,551.39 1,544.57 Other Manufacturing Expenses 2,386.91 1,753.46 1,289.60 866.65 904.95 Selling and Admin Expenses 3,248.91 2,790.19 2,126.10 1,652.31 2,197.49 Miscellaneous Expenses 1,610.69 2,067.42 1,707.06 1,438.89 964.78 Preoperative Exp Capitalised -907.13 -817.68 -740.54 -916.02 -1,131.40 Total Expenses 50,663.51 43,605.74 31,947.09 23,699.53 25,696.91 Mar 12 Mar 11 Mar 10 Mar 09 Mar 08Operating Profit 4,177.55 4,705.72 4,032.83 1,723.10 3,030.52PBDIT 4,166.39 5,047.25 5,253.69 2,644.39 3,764.69Interest 1,218.62 1,383.79 1,246.25 704.92 471.56PBDT 2,947.77 3,663.46 4,007.44 1,939.47 3,293.13Depreciation 1,606.74 1,360.77 1,033.87 874.54 652.31Other Written Off 0.00 106.17 144.03 51.17 64.35Profit Before Tax 1,341.03 2,196.52 2,829.54 1,013.76 2,576.47Extra-ordinary items 0.00 0.00 0.00 15.29 0.00PBT (Post Extra-ord Items) 1,341.03 2,196.52 2,829.54 1,029.05 2,576.47Tax 98.80 384.70 589.46 12.50 547.55Reported Net Profit 1,242.23 1,811.82 2,240.08 1,001.26 2,028.92Total Value Addition 9,581.72 8,558.69 6,580.97 4,898.16 4,805.58Preference Dividend 0.00 0.00 0.00 0.00 0.00Equity Dividend 1,280.70 1,274.23 859.05 311.61 578.43Corporate Dividend Tax 181.54 192.80 132.89 34.09 81.25` 24
  • 25. Per share data (annualised)Shares in issue (lakhs) 31,735.47 6,346.14 5,705.58 5,140.08 3,855.04Earning Per Share (Rs) 3.91 28.55 39.26 19.48 52.63Equity Dividend (%) 200.00 200.00 150.00 60.00 150.00Book Value (Rs) 60.95 314.93 259.03 240.64 202.70Cash flow statementCash Flow of Tata Motors ------------------- in Rs. Cr. ------------------- Mar 12 Mar 11 Mar 10 Mar 09 Mar 08 12 mths 12 mths 12 mths 12 mths 12 mthsNet Profit Before Tax 1242.23 1811.82 2240.08 1001.26 2028.92Net Cash From Operating Activities 3653.59 1505.56 6586.03 1295.02 6174.50Net Cash (used in)/from 144.72 -2521.88 -11848.29 -10644.67 -5721.86Investing ActivitiesNet Cash (used in)/from Financing Activities -4235.59 1648.42 5348.49 8104.70 1132.46Net (decrease)/increase In Cash and Cash -437.28 632.10 86.23 -1244.95 1585.10EquivalentsOpening Cash & Cash Equivalents 1352.14 720.04 630.04 2386.77 806.21Closing Cash & Cash Equivalents 914.86 1352.14 716.27 1141.82 2391.31` 25
  • 26. Balance Sheet of Maruti Suzuki India ------------------- in Rs. Cr. ------------------- Mar 12 Mar 11 Mar 10 Mar 09 Mar 08Sources Of FundsTotal Share Capital 144.50 144.50 144.50 144.50 144.50Equity Share Capital 144.50 144.50 144.50 144.50 144.50Share Application Money 0.00 0.00 0.00 0.00 0.00Preference Share Capital 0.00 0.00 0.00 0.00 0.00Reserves 15,042.90 13,723.00 11,690.60 9,200.40 8,270.90Revaluation Reserves 0.00 0.00 0.00 0.00 0.00Networth 15,187.40 13,867.50 11,835.10 9,344.90 8,415.40Secured Loans 0.00 31.20 26.50 0.10 0.10Unsecured Loans 1,078.30 278.10 794.90 698.80 900.10Total Debt 1,078.30 309.30 821.40 698.90 900.20Total Liabilities 16,265.70 14,176.80 12,656.50 10,043.80 9,315.60 Mar 12 Mar 11 Mar 10 Mar 09 Mar 08Application Of FundsGross Block 14,734.70 11,737.70 10,406.70 8,720.60 7,285.30Less: Accum. Depreciation 7,214.00 6,208.30 5,382.00 4,649.80 3,988.80Net Block 7,520.70 5,529.40 5,024.70 4,070.80 3,296.50Capital Work in Progress 1,406.30 1,428.60 387.60 861.30 736.30Investments 6,147.40 5,106.70 7,176.60 3,173.30 5,180.70Inventories 1,796.50 1,415.00 1,208.80 902.30 1,038.00Sundry Debtors 937.60 893.30 809.90 918.90 655.50Cash and Bank Balance 1,776.10 95.50 98.20 239.00 324.00Total Current Assets 4,510.20 2,403.80 2,116.90 2,060.20 2,017.50Loans and Advances 2,140.10 1,626.30 1,739.10 1,809.80 1,173.00Fixed Deposits 660.00 2,413.00 0.00 1,700.00 0.00Total CA, Loans & Advances 7,310.30 6,443.10 3,856.00 5,570.00 3,190.50Deffered Credit 0.00 0.00 0.00 0.00 0.00Current Liabilities 5,420.50 3,805.20 3,160.00 3,250.90 2,718.90Provisions 698.50 525.80 628.40 380.70 369.50Total CL & Provisions 6,119.00 4,331.00 3,788.40 3,631.60 3,088.40Net Current Assets 1,191.30 2,112.10 67.60 1,938.40 102.10Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00Total Assets 16,265.70 14,176.80 12,656.50 10,043.80 9,315.60Contingent Liabilities 5,925.90 5,450.60 3,657.20 1,901.70 2,734.20` 26
  • 27. Book Value (Rs) 525.68 479.99 409.65 323.45 291.28P&L A/CProfit & Loss account of Maruti Suzuki India ------------------- in Rs. Cr. ------------------- Mar 12 Mar 11 Mar 10 Mar 09 Mar 08Income Sales Turnover 39,495.30 40,865.50 32,174.10 23,381.50 21,200.40 Excise Duty 3,937.10 4,304.00 2,856.40 2,652.10 3,133.60 Net Sales 35,558.20 36,561.50 29,317.70 20,729.40 18,066.80 Other Income 366.20 784.60 662.00 491.70 494.00 Stock Adjustments 160.10 73.20 200.90 -356.60 336.30 Total Income 36,084.50 37,419.30 30,180.60 20,864.50 18,897.10Expenditure Raw Materials 28,330.60 28,880.00 22,636.30 15,983.20 13,958.30 Power & Fuel Cost 229.50 210.20 216.60 193.60 147.30 Employee Cost 843.80 703.60 545.60 471.10 356.20 Other Manufacturing Expenses 1,856.20 1,949.40 1,061.60 716.10 523.30 Selling and Admin Expenses 1,209.29 1,153.87 1,032.17 817.66 521.48 Miscellaneous Expenses 272.32 289.73 201.73 236.84 287.62 Preoperative Exp Capitalised -42.70 -25.70 0.00 -22.30 -19.80 Total Expenses 32,699.01 33,161.10 25,694.00 18,396.20 15,774.40 Mar 12 Mar 11 Mar 10 Mar 09 Mar 08Operating Profit 3,019.29 3,473.60 3,824.60 1,976.60 2,628.70PBDIT 3,385.49 4,258.20 4,486.60 2,468.30 3,122.70Interest 55.20 24.40 33.50 51.00 59.60PBDT 3,330.29 4,233.80 4,453.10 2,417.30 3,063.10Depreciation 1,138.40 1,013.50 825.00 706.50 568.20Other Written Off 0.00 0.00 0.00 0.00 0.00Profit Before Tax 2,191.89 3,220.30 3,628.10 1,710.80 2,494.90Extra-ordinary items 109.10 18.90 51.10 37.90 76.60PBT (Post Extra-ord Items) 2,300.99 3,239.20 3,679.20 1,748.70 2,571.50Tax 511.00 820.20 1,094.90 457.10 763.30Reported Net Profit 1,635.20 2,288.60 2,497.60 1,218.70 1,730.80Total Value Addition 4,368.40 4,281.10 3,057.70 2,413.00 1,816.10Preference Dividend 0.00 0.00 0.00 0.00 0.00Equity Dividend 216.70 216.70 173.30 101.10 144.50Corporate Dividend Tax 35.10 35.10 28.80 17.20 24.80Per share data (annualised)Shares in issue (lakhs) 2,889.10 2,889.10 2,889.10 2,889.10 2,889.10` 27
  • 28. Earning Per Share (Rs) 56.60 79.21 86.45 42.18 59.91Equity Dividend (%) 150.00 150.00 120.00 70.00 100.00Book Value (Rs) 525.68 479.99 409.65 323.45 291.28Cash flowCash Flow of Maruti Suzuki India ------------------- in Rs. Cr. ------------------- Mar 12 Mar 11 Mar 10 Mar 09 Mar 08 12 mths 12 mths 12 mths 12 mths 12 mthsNet Profit Before Tax 2146.20 3108.80 3592.50 1675.80 2503.00Net Cash From Operating Activities 2229.40 3050.30 2887.40 1193.30 1830.40Net Cash (used in)/from -2918.30 73.40 -4783.30 951.40 -3061.50Investing ActivitiesNet Cash (used in)/from Financing Activities 616.50 -713.40 55.10 -536.20 132.30Net (decrease)/increase In Cash and Cash -72.40 2410.30 -1840.80 1608.50 -1098.80EquivalentsOpening Cash & Cash Equivalents 2508.50 98.20 1939.00 330.50 1422.80Closing Cash & Cash Equivalents 2436.10 2508.50 98.20 1939.00 324.00` 28
  • 29. BALANCESHEET OF MAHINDRA & MAHINDRABalance Sheet of Mahindra and Mahindra ------------------- in Rs. Cr. ------------------- Mar 12 Mar 11 Mar 10 Mar 09 Mar 08Sources Of FundsTotal Share Capital 294.52 293.62 282.95 272.62 239.07Equity Share Capital 294.52 293.62 282.95 272.62 239.07Share Application Money 0.00 33.97 8.01 0.00 0.00Preference Share Capital 0.00 0.00 0.00 0.00 0.00Reserves 11,799.26 9,974.62 7,527.60 4,959.26 4,098.53Revaluation Reserves 10.91 11.18 11.67 12.09 12.47Networth 12,104.69 10,313.39 7,830.23 5,243.97 4,350.07Secured Loans 400.18 407.23 602.45 981.00 617.26Unsecured Loans 2,774.04 1,998.06 2,277.70 3,071.76 1,969.80Total Debt 3,174.22 2,405.29 2,880.15 4,052.76 2,587.06Total Liabilities 15,278.91 12,718.68 10,710.38 9,296.73 6,937.13 Mar 12 Mar 11 Mar 10 Mar 09 Mar 08 12 mths 12 mths 12 mths 12 mths 12 mthsApplication Of FundsGross Block 8,063.18 5,849.27 4,866.18 4,653.66 3,552.64Less: Accum. Depreciation 3,552.36 2,841.73 2,537.77 2,326.29 1,841.68Net Block 4,510.82 3,007.54 2,328.41 2,327.37 1,710.96Capital Work in Progress 922.26 1,364.31 1,374.31 886.96 649.94Investments 10,310.46 9,325.29 6,398.02 5,786.41 4,215.06Inventories 2,358.39 1,694.21 1,188.78 1,060.67 1,084.11Sundry Debtors 1,988.36 1,354.72 1,258.08 1,043.65 1,004.88Cash and Bank Balance 630.57 447.62 475.17 635.61 310.58Total Current Assets 4,977.32 3,496.55 2,922.03 2,739.93 2,399.57Loans and Advances 2,767.19 2,653.52 2,034.47 1,402.45 866.19Fixed Deposits 557.86 167.02 1,268.06 938.82 550.65Total CA, Loans & Advances 8,302.37 6,317.09 6,224.56 5,081.20 3,816.41Deffered Credit 0.00 0.00 0.00 0.00 0.00Current Liabilities 6,921.73 5,289.67 3,822.50 3,520.20 2,525.31Provisions 1,845.27 2,005.88 1,796.54 1,277.56 943.46Total CL & Provisions 8,767.00 7,295.55 5,619.04 4,797.76 3,468.77Net Current Assets -464.63 -978.46 605.52 283.44 347.64Miscellaneous Expenses 0.00 0.00 4.12 12.55 13.53` 29
  • 30. Total Assets 15,278.91 12,718.68 10,710.38 9,296.73 6,937.13Contingent Liabilities 2,633.99 2,632.10 2,307.70 1,220.39 985.35Book Value (Rs) 205.32 174.85 138.02 191.91 181.43P&L A/CProfit & Loss account of Mahindra and ------------------- in Rs. Cr. ------------------- Mahindra Mar 12 Mar 11 Mar 10 Mar 09 Mar 08Income Sales Turnover 34,353.63 25,569.55 20,323.63 14,668.13 12,894.94 Excise Duty 2,518.43 2,092.02 1,807.30 1,587.05 1,584.57 Net Sales 31,835.20 23,477.53 18,516.33 13,081.08 11,310.37 Other Income 574.99 563.13 285.09 132.65 575.96 Stock Adjustments 597.33 202.23 23.69 -156.29 149.11 Total Income 33,007.52 24,242.89 18,825.11 13,057.44 12,035.44Expenditure Raw Materials 24,258.94 16,604.88 12,461.56 9,208.71 7,963.82 Power & Fuel Cost 175.78 143.93 120.97 98.69 91.33 Employee Cost 1,603.81 1,445.56 1,199.85 1,024.52 853.65 Other Manufacturing Expenses 125.81 98.33 96.92 75.36 73.35 Selling and Admin Expenses 1,811.88 1,735.63 1,439.26 1,109.96 1,108.33 Miscellaneous Expenses 760.05 261.10 264.21 165.83 257.84 Preoperative Exp Capitalised -73.53 -50.87 -59.55 -42.83 -46.49 Total Expenses 28,662.74 20,238.56 15,523.22 11,640.24 10,301.83 Mar 12 Mar 11 Mar 10 Mar 09 Mar 08 12 mths 12 mths 12 mths 12 mths 12 mthsOperating Profit 3,769.79 3,441.20 3,016.80 1,284.55 1,157.65PBDIT 4,344.78 4,004.33 3,301.89 1,417.20 1,733.61Interest 162.75 70.86 156.85 134.12 87.59PBDT 4,182.03 3,933.47 3,145.04 1,283.08 1,646.02Depreciation 576.14 413.86 370.78 291.51 238.66Other Written Off 0.00 0.00 0.00 0.00 0.59Profit Before Tax 3,605.89 3,519.61 2,774.26 991.57 1,406.77Extra-ordinary items 0.00 0.00 72.49 48.97 0.00PBT (Post Extra-ord Items) 3,605.89 3,519.61 2,846.75 1,040.54 1,406.77Tax 727.00 857.51 759.00 199.69 303.40Reported Net Profit 2,878.89 2,662.10 2,087.75 836.78 1,103.37Total Value Addition 4,403.80 3,633.68 3,061.66 2,431.53 2,338.01Preference Dividend 0.00 0.00 0.00 0.00 0.00Equity Dividend 767.48 706.08 549.52 278.83 282.61Corporate Dividend Tax 101.13 96.56 74.23 33.23 38.48Per share data (annualised)Shares in issue (lakhs) 5,890.30 5,872.47 5,659.08 2,726.16 2,390.73` 30
  • 31. Earning Per Share (Rs) 48.88 45.33 36.89 30.69 46.15Equity Dividend (%) 250.00 230.00 190.00 100.00 115.00Book Value (Rs) 205.32 174.85 138.02 191.91 181.43Cash flowCash Flow of Mahindra and Mahindra ------------------- in Rs. Cr. ------------------- Mar 12 Mar 11 Mar 10 Mar 09 Mar 08 12 mths 12 mths 12 mths 12 mths 12 mthsNet Profit Before Tax 3497.62 3402.13 2756.00 1026.20 1241.57Net Cash From Operating Activities 2734.95 2979.75 2336.49 1631.30 825.83Net Cash (used in)/from -1936.54 -3734.99 -1345.44 -1941.00 -2075.08Investing ActivitiesNet Cash (used in)/from Financing Activities -306.15 -383.72 -783.87 696.91 811.34Net (decrease)/increase In Cash and Cash 492.26 -1138.96 207.18 387.21 -437.91EquivalentsOpening Cash & Cash Equivalents 695.97 1753.13 1543.63 1174.62 1361.79Closing Cash & Cash Equivalents 1188.23 614.17 1750.81 1561.83 923.88 RATIO ANALYSIS OF TATA MOTORS, MARUTI SUZUKI AND MAHINDRA & MAHINDRA` 31
  • 32. Ratios: A ratio is an arithmetical expression of relationship between two variables of the financialstatements. It helps in easy comparison. The comparison may be inter firm or inter firm. A glance atthe ratios of the company gives the complete information about the company to investor. There are many ratios one calculate and no single ratio can tell the company story.Ratios are generally classified as: A) Liquidity Ratios: Liquidity ratios are the ratios which are used to measure the short term liquidity position of a firm. Some of the commodity used liquidity ratios are Current Ratio, Acid Test Ratio, etc. B) solvency Ratios: These are the Ratios that are used to measure the long term solvency position of a firm. These ratios are generally looked into by creditors of the companies. The common solvency ratios are Debt Equity ratio, Proprietary Ratio and etc. C) Profitability Ratios: The profitability ratios measure the efficiency of a firm. Some of the common profitability ratios are Gross profit Ratio, Net Profit Ratio, Operating Profit Ratio, Return on Assets, Return on Investments, Return on Capital Employed, etc. D) Activity Based ratios: Activity Based ratios are measures the efficiency of a firm. These ratios are also called as performance ratios. Some of the commonly used are inventory turnover ratio, Debtors turnover Ratio, Fixed Assets Turnover Ratio, etc. E) Market Based Ratios:` 32
  • 33. These ratios are usually calculated using the values in the financial statements and the market value of the share. Some of the commonly used ratios are: Price Earning Ratio, Dividend Earning Ratio, Market Price to Book Value Ratio, etc.Some important ratios that considered in the project are:NET PROFIT MARGIN:- The Net Profit Margin measures the relationship between net profit andsales of the firm. This ratio is indicative of management’s ability to operate the business successfullyand expresses the cost effectiveness of the organization. Earning After interest and tax Net Profit Margin= ---------------------------------------- × 100 Net SalesA high net profit margin would ensure adequate return to the owners as well as enable the firm towithstand adverse economic conditions like falling demand, rising costs, etc. while a low net profitmargin has the opposite implications.Debt-Equity Ratio:- This ratio is used to find out the long term solvency position of the firm. Long Term Debts Debt Equity Ratio= --------------------------- Equity FundsThis ratio serves of primary use to the creditors of the company. This ratio is also used by theinvestors to kwon their claim in the company.Return on Equity:- This ratio expresses the profitability of a firm in relation to the equityshareholders’ funds. Net Profit after taxes—Preference DividendReturn on Equity = ----------------------------------------------------------------------- × 100` 33
  • 34. Net worthThis is the single most important ratio to judge whether the firm has earned satisfactory return to theequity shareholders or not.Earnings Per Share (EPS):- This ratio measure the profit available to the equity shareholders on aper share basis, that is the amount they can get on every share held. It is the most widely used ratioby investors. Net Profit available to Equity share holdersEarning Per Share = ------------------------------------------------------------------- Total No. of Shares outstandingThis ratio only shows the profits earned per share but the same amount is not received by theshareholders.Price Earning (P/E) Ratios:- The (P/E) Ratio reflects the currently paid by the investors for theeach rupee of the reported EPS. Market Price Per SharePrice Earning Ratio= --------------------------------- Earning Per ShareIt measure the investors confidence in the firm’s future. The higher the ratio, the larger is theinvestor’s confidence in the firm’s future.Dividend Per Share (DPS):- This ratio shows the profits that are paid to equity shareholders on pershare basis Dividend Paid to Equity ShareholdersDividend Payout Ratio = -----------------------------------------------------` 34
  • 35. No. of Equity shares outstandingThe DPS is a better indicator than EPS As the former shows exactly what amount is received by theshareholders.Dividend Payout Ratio:- This ratio measure the relationship between the earning belonging to theequity shareholders and the dividend paid to them. Dividend Paid to Equity shareholdersDividend Payout Ratio= ----------------------------------------------------------- × 100 Profits belonging to Equity ShareholdersIf the dividend Payout Ratio is subtracted from 100 it shows the earning Retention Ratio, Whichshows the profits retained in the business. Dividend Yield Ratio:- This ratio reflects the price paid by the investor for each rupee of thedividend paid. Dividend Per ShareDividend Yield Ratio = --------------------------------------- × 100 Market Price Per ShareThis ratio is very significant from the point of view of those investors who are interested in dividendincome.Book Value Per Share :- Book value per share represents the claim of the shareholders on a pershare Basis. This ratio is sometimes used as a benchmark for comparison with the Market price pershare. Net WorthBook Value Per Share = ---------------------------------------------` 35
  • 36. No. of Equity share outstanding` 36
  • 37. No. of Equity share outstanding` 36

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