1. Managerial Accounting
Assignment No. 2
Projected financial statements of Maruti Suzuki Ltd. for year 2013-14
Tushar Upadhyay
Roll No: 311140
Division A

2. Statement of Profit and loss
Growth rate
* In percentage
Compounded
Annual growth
rate (CAGR)
Budgeted valueand
increase over 201314
22.48
13.26
49370.17(+13.26)
0.51
18.45
16.41
45791.83(+16.41)
-7.56
-19.47
50.96
15.35
5816.26(+15.35)
16.77
22.84
12.32
63.49
21.37
2259.06(+21.37)
71.41
25.04
0
11.53
19.04
287.72(+19.04)
2008-09
2009-10
2010-11 2011-12 2012-13
Sales
10.28
37.60
13.81
-2.81
Cost of goods sold
16.62
39.67
28.57
EBIT
-20.95
81.76
Depreciation
24.34
Dividends
-30.03
Parameters
EBIT, DEPRECIATION AND
DIVIDENDS GROWTH RATE
SALES AND COGS GROWTH RATE
Sales
COGS
45
EBIT
40
Depreciation
Dividends
100
35
80
30
25
60
20
40
15
20
10
5
0
0
-20
-5
2008-09
2009-10
2010-11
2011-12
2012-2013
CAGR
-40
2008-09
2009-10
2010-11
2011-12
2012-2013
CAGR

3. Balance sheet
* In percentage
Growth rate
Compounded
Annual growth
rate (CAGR)
Budgeted value and
increase over 201314
4.50
0
151.00(0)
9.52
22.33
15.12
21387.83(+15.11)
-43.77
5.25
125.85
-244.20
-1847.15(-244.19)
-2.80
22.20
38.23
9.51
-13.43
5060.61(-13.43)
19.70
19.33
12.61
25.26
33.76
11.37
21867.12(11.37)
2.12
2.75
124.29
8.89
-21.87
-259.53
-6444.21(-259.53)
2008-09
2009-10
2010-11 2011-12 2012-13
0.00
0.00
0.00
0.00
11.05
26.65
17.17
-20.19
12.22
19.57
Parameters
Share capital
Net worth
Long term liabilities
Current liabilities
Gross Block
Current Assets
200
Long term and current liability
growth rate
Gross block and current assets
growth rate
Share capital and Net worth
growth rate
30
100
200
25
100
20
0
-100
cagr
15
0
10
2008-09 2009-10 2010-11 2011-12 2012-13
-100
2008-09 2009-10 2010-11 2011-12 2012-13
5
-200
-200
0
2008-09 2009-10 2010-11 2011-12 2012-13
-300
Long term liability
current liability
share capital
Net worth
cagr
-300
Gross block
current assets
cagr

4. Analysis and Basis for the Budgeted values

There are too many minor as well as major dips and spikes in the above graphs that can be attributed to various political,
social, environmental factors as well as company decisions. But we will try to see major dips and spikes in the graphs above

The first major dip that we see is in the Sales and COGS graph in 2011-12 whereby sales of Maruti Suzuki declined by -2.81%.
It happened because of the Manesar plant incident and strike by the labor union.

Similarly in the case of EBIT and dividends, they followed the same pattern due to again, the above mentioned incident.

For the year 2012-13 Maruti Suzuki saw an increase in sales contributed by new product launches, increase in supply of diesel
vehicles (which was an implication of budget 2012) and also because the number of sales in 2011 were low which made the
base for calculation low itself.

Since Maruti Suzuki’s market share mainly comes from small car segment which is sensitive to fuel prices and economic
conditions, the demand for its cars keep on fluctuating with a slight increase/decrease in fuel prices and inflation, the
manesar plant and two plants in Gurgaon were shut down periodically to match the supply and demand.

On the basis of above as well as by the fact that as World Bank has lowered India’s growth for 2014 fiscal from 6.1% to 4.8%,
it can be said that the budgeted growth rate of sales of 13.26% would not be right. The Company has also declared its
forecast to be between 6-8%.

Already according to budget 2013 an excise duty of 3% was imposed on passenger vehicles in April, 2013 which will further
dampen sales for the fiscal.

Also India ratings, a research firm, solidifies the low sales growth for 2014 by saying that outlook for the Indian automotive
industry would be negative for the first time in 6 years.

This year has also seen the rupee dwindle over and over, which may lead to high import costs, which in turn may lead to hike
in price and low sales.

5. 
According to business standard Maruti Suzuki will cut down its import by 4% In order to maintain profitability, Thus due to
this action may lead to increase in EBIT. Also as the Indian currency has become cheaper, it would lead to imports being
cheaper and thus higher EBIT

Maruti Suzuki’s websites also suggest the company implementing various cost reduction programs such as cost engineering
and reduction in material costs by localization initiatives. This clearly suggests there would be future reduction in COGS.

Maruti Suzuki is set to launch its new SUV XA Alpha by 2014, this may boost sales but not by much as with rising fuel prices
SUV becomes somewhat redundant.