THE FINANCIAL PERFORMANCE OF MARUTI SUZUKI INDIA LIMITED

EXECUTIVE SUMMARY

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Executive Summery

The Project Report on Financial Statement Analysis of Maruti Suzuki India ltd. It
involves annual financial activities of Maruti Suzuki India ltd.

This project helped me to get the deeper understanding of the process of financial
statement analysis and how decisions are taken to strengthen the financial position. For this
study three years Profit & Loss Account& Balance Sheet have been taken for analysis.

The main purpose of study is to know academic activities & analysis it. Understand the
day-to-day functions of the Company.

Financial analysis means assessment of the stability & profitability of business. These
financial reports are made with using the information taken from financial statement of the
Company.

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INTRODUCTION

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Financial management is that part of management which deals with raising of funds in the
most economical and suitable manner, using the funds as profitability as possible, planning
future operations, inspections, controlling current performance and future development
through financial accounting and other means. No business can plan its activities without
considering its financial resources.
The business functions of a finance department typically include planning, organizing,
accounting, and controlling the company’s finance and to ensure intensive and economic use
of capital resources of the organization. Since business firms are profit seeking organizations,
their functions are to maximize the company’s wealth. Asset management, costing, budgeting,
credit management, debit management are the other functions of the finance department.
Finance in essence is considered with the acquisition and use of funds by a business firm. The
main objective of financial management is to control required funds for meeting short term and
long-term needs of business enterprise and to maximize the value of firm to its equity
shareholders.
To have a clear understanding of the profitability and financial position of business, the
financial statements must be analyzed and interpreted. Financial statements are preparedfor
decision making. They play a dominant role in setting the framework of managerial decisions.
But the information provided by the financial statement is not an end as no meaningful
conclusions can be drawn from these statements alone. However, the information provided by
the financial statement is of immense use in making decision through analysis and
interpretation of financial statement.
Financial analysis is the process of determining the significant operating and financial
characteristics of a firm from accounting data. The Profit and Loss account and Balance sheet
are indicators of two significant factors- profitability and financial soundness. Analysis of
financial statements means such a treatment of the information contained in the two statements
as to afford a full diagnosis of the profitability and financial position of the firm. It helps to
summarize large quantities of financial data and to make quantitative judgement about the
firm’s financial performance.
According to John N. Myers “Financial statement analysis is largely a study of relationship
among the various financial factors in a business as disclosed by a single set of statements
and a study of the trend of these factors as shown in a series of statements.”
This research is mainly done to find out the financial performance analysis and to determine
the liquidity, profitability, efficiency, and solvency position of the firm by using the equation
and graph method. Financial performance analysis is the process of identifying the financial
strengths and weaknesses of the firm by properly establishing the relationship between the
items of balance sheet and profit and loss account. It also helps in short term and long-term
forecasting and growth can be identified with the help of financial performance analysis. The
dictionary meaning of „analysis‟ is to resolve or separate a thing into its element or components
parts for tracing their relation to the things as whole and to each other. The study helps to assess
the profitability and financial position of a concern. This analysis can be done by comparing
the ratios for the same over a period of years. Accounting ratiosare calculated for several
years which shows the trend for the change of position. Totake certain important decisions
for their business various users like managements of the companies, bankers, investors and
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creditors etc. uses the accounting ratios for analyzing the financial position. The secondary data
is used for the entire study.
The study entitled ‘Financial Performance of Maruti Suzuki India Limited’ has been oriented
with a view to study the financial position of the company that help in making sound decision
by analyzing the recent trend.

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INDUSTRY PROFILE

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BUSINESS PROCESS OF THE AUTOMOTIVE INDUSTRY

The first automobile with a petrol engine was built in 1885 and soon the figure for total cars in
the world will be touching a mark of 1000 million cars and light trucks. This article presents a
quick overview of what we mean with the Automotive Industry and how it started and what is
the scale of this industry today.
The automotive industry designs, develops, manufactures, markets, and sells motor vehicles,
and is one of the earth's most important economic sectors by revenue. The term automotive
industry usually does not include industries dedicated to automobiles after delivery to the
customer, such as repair shops and motor fuel filling stations.
The first practical automobile with a petrol engine was built by Karl Benz in 1885 in
Mannheim, Germany. Benz was granted a patent for his automobile on 29 January 1886, and
began the first production of automobiles in 1888, after Bertha Benz, his wife, had proved with
the first long-distance trip in August 1888 (104 km from Mannheim to Pforzheim and back)
that the horseless coach was suitable for daily use. Since 2008 a Bertha Benz Memorial Route
commemorates this event.
Soon after, in 1889, Gottlieb Daimler and Wilhelm Maybach in Stuttgart designed a vehicle
from scratch to be an automobile, rather than a horse-drawn carriage fitted with an engine.
They also are usually credited as inventors of the first motorcycle, the Daimler Reitwagen, in
1885, but Italy's Enrico Bernardi, of the University of Padua, in 1882, patented a 0.024
horsepower (17.9 W) 122 cc (7.4 cu in) one-cylinder petrol motor, fitting it into his son's
tricycle, making it at least a candidate for the first automobile, and first motorcycle.
Until 2005, the U.S.A. led the world in total automobile production. In 1929 before the Great
Depression, the world had 32,028,500 automobiles in use, and the US automobile industry
produced over 90% of them. At that time the U.S. had one car per 4.87 persons. In 2006, Japan
narrowly passed the U.S. in production and held this rank until 2009, when China took the top
spot with 13.8 million units. By producing 18.3 million units in 2010, China produced nearly
twice the number of second-place Japan (9.6 million units), with the U.S. in third place with 7.8
million units.
Around the world, there were about 806 million cars and light trucks on the road in 2007,
consuming over 260 billion US gallons (980,000,000 m3) of gasoline and diesel fuel yearly.
The automobile is a primary mode of transportation for many developed economies. The
Detroit branch of Boston Consulting Group predicts that, by 2014, one-third of world demand
will be in the four BRIC markets (Brazil, Russia, India, and China). Other potentially powerful
automotive markets are Iran and Indonesia. Emerging auto markets already buy more cars than
established markets. According to a J.D. Power study, emerging markets accounted for 51
percent of the global light-vehicle sales in 2010. The study expects this trend to accelerate.
India is home to a vibrant automobile of more than 40 million vehicles. It has been one of the
few countries worldwide which saw growing passenger car sales during the recession of the
past two years. It is believed this upward trend will be sustained in the foreseeable future due
to a strong domestic market and increased thrust on exports. The Indian economy has grown at
an average rate of around 9 percent over the past five years and is expected to continue this
growth in the medium term. This is predicted to drive an increase in the percentage of the
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Indian population able to afford vehicles. India’s car per capita ratio (expressed in cars per
1,000 populations) is currently among the lowest in the world’s top 10 auto markets. The twin
phenomena of low car penetration and rising incomes, when combined with the increasing
affordability of cars, are expected to contribute to an increase in India’s automobile demand.
In the current competitive business environment, businesses must be able to reduce their
manufacturing costs by eliminating all non-value adding processes, ensuring compliance to
industry standards, ensuring proper storage of data, and fostering innovations in the industry.
Many manufacturers now adhere to the global environmental norms regarding
emission/technological standards and quality certifications. The industry grew by around20%
annually in the 1990s, and the average annual growth of exports was around 15% during that
period. Over the years, it has been able to modernize its technology and improve quality and
has developed capabilities to manufacture components for new-generation vehicles. Indian
companies maintained their traditional strengths in casting, forging and precision machining,
and fabricating (welding, grinding, and polishing) at technology levels matching the required
scale of operations. They achieved significant success in garnering engineering capabilities and
adapted to local requirements through local design. High growth has taken place in engine,
drive transmission, and steering parts. Engine parts, being high value-added in its nature, have
been contributing most to total production. Endowed with the potential of low-cost quality
products, India edges over many other developing countries in component manufacturing.
The automotive industry is growing, primarily driven by the increase in demand in middle-
income countries. The huge demand has resulted in the increase in the number of competitors
for the available buyers, which is coupled with the increased demand for unique and fuel-
efficient vehicles. There has also been an increase in the outsourcing of various products in
motor vehicles, which has resulted in the need for increased coordination between car
manufacturers and their suppliers. Additionally, most current car buyers require reliable
vehicles that use sophisticated technologies. For example, they require cars that are fuel
efficient, those that have sophisticated safety equipment, and have digital infotainment systems
(McGarrahan& Harris, 2008). Given the increased complexities in the manufactureof vehicles
due to high demand from both customers and motor vehicle regulators, enterprises in this
industry require an automated business process that will assist them in ensuring that they meet
our requirements and can perform their operations in an economical and sustainable means.
The primary importance of this business in the automotive industry is in the provision of
detailed analytics of various aspects of the company. In particular, the business will provide car
manufacturers with information on demand levels of various car brands. This information is
critical to the success of any business since its shows it the optimal number of vehicles that
should be manufactured for each region. More importantly, a detailed analysis of this data is
essential in enabling the company to identify the optimal production levels and the optimal
location for the manufacture of an assembly plant (Ferreira, Marques, Faria, &Azevedo, 2016).
Regarding the most optimal output, businesses can know their economic order quantity, which
helps them to identify its optimal order quantities and re-order levels for various outsourced
items. Moreover, a business can identify where to establish its assembly plant having factored
its logistics and manufacturing costs.

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Besides enabling companies to have information on the demand levels of the cars ordered by
customers, the business process management will help companies ensure that their vehicles.
Comply with the established safety standards. The business will require engineers to follow a
set of systematic steps for it to achieve its goals. In the first step, engineers will have to record
once they install a safety feature in each car. Secondly, there will be a test of the safety
equipment installed in each car. Lastly, there will be a random simulated test of each car made
by a manufacturer. In most cases, one car will be tested for its safety. This test will be necessary
for providing car manufacturers with actual information of their safety kits. Further, this
information will ensure that carmakers comply with safety laws, which will in turn cases of
litigations due to the manufacturing errors.
Finally, the information provided by the business management system will be essential in
enabling car manufacturers to develop the best car designs for their customers. The business
management systems will always customer’s demand for specific products based on their
unique characters and market trends. This information will be necessary for ensuring car
manufacturers remain competitive by developing, modern, affordable, and stylish cars.

MARKET DEMAND AND SUPPLY, CONTRIBUTION TO GDP,REVENUE

GENERATION
Indian automotive industry is among the largest automotive industries across the globe. The
India automotive industry accounts for 7.1% of the country's total Gross Domestic Product
(GDP). Two wheelers market is the major segment in the Indian automobile market with
approximately 80% market share, owing to a growing middle class and a young population in
the country. Moreover, the market players are now exploring the rural markets of the country
which has been further augmenting the growth of Indian automobile industry growth. On the
other hand, passenger vehicles segment accounts for about 15% of total automobile industry
of the country. India is also a flourishing automobile exporter to its neighboring countries such
as Africa, Bangladesh and Sri Lanka among others and also has robust export progression
prospects for the nearby future. Total automobile trades grew 13.01 per cent year-on-year from
2016 to 2017. Additionally, the India automotive industry is anticipated to observe major
changes in the form of electric vehicles (EVs), shared mobility, Bharat Stage- VI emission and
safety norms which will significantly influence the growth of automobile industry in the
country.
Goldstein Market Intelligence analyst forecast the automobile Industry in India is likely to grow
at a CAGR of +12% during the forecast period 2017-2030. Moreover, Indian automotive
industry sales of passenger vehicles and two wheelers up surged by 5.3% and 40.31% year-
on-year respectively, in December 2017. Further, total automobile exports grew by 13.0% year-
on-year between April-December 2017.
The automobile industry in India is world’s fourth largest, with the country currently being the
world's fourth largest manufacturer of cars and seventh largest manufacturer of commercial
vehicles in 2018. Indian automotive industry (including component manufacturing) is expected
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to reach Rs 16.16-18.18 trillion (US$ 251.4-282.8 billion) by 2026. Two-wheelers dominate

the industry and make up 81 per cent share in the domestic automobile sales in FY19. Overall,
Domestic automobiles sales increased at 6.71 per cent CAGR between FY13-18 with 26.27
million vehicles being sold in FY19. Indian automobile industry has received Foreign Direct
Investment (FDI) worth US$ 23.89 billion between April 2000 and December 2019. Five per
cent of total FDI inflows to India went into the automobiles sector. The future growth prospects
of the India automotive industry for 2017- 2030 along with the total sales of automobiles in the
country and the total revenue from aftermarkets, service providers and automotive components
industry. They calculated the market size and revenue share on the basis of revenue generated
from the sales of automobile and component manufacturers across India.
India Automotive Industry Outlook 2017-2030 has been prepared based on an in-depth market
analysis from industry experts. The report covers the competitive landscape and current
position of major players in the India automotive industry market. The report also includes
porter’s five force model, SWOT analysis, company profiling, business strategies of market
players and their business models. India automotive industry report also recognizes value chain
analysis to understand the cost differentiation to provide competitive advantageto the existing
and new entry players.

CONTRIBUTION OF GDP
The Automotive sector in India is valued at $93 billion currently and is growing at a steady
pace. The automotive industry contributes a whopping 49% of India’s manufacturing GDP. In
2018, the Automotive Sector contributed to 7.5% of India’s total Gross Domestic Product
(GDP). While this percentage dropped to 7% in the current year, owing to COVID-19, new
emission norms and the economic downturn, experts believe that it may show an increase
towards the end of this year. From March 2020 to April 2020, all automotive manufacturers
and dealers were shut down for a period of 40 days, further contributing to the decline in GDP.
As a result, the GDP, which saw an increasing trend, began to feel the pinch of anunexpected
and unforeseeable downfall.

REVENEW GENERATION
In order to keep up with the growing demand, several auto makers have started investing
heavily in various segments of the industry during the last few months. The industry has
attracted Foreign Direct Investment (FDI) worth US$ 24.53 billion between April 2000 and
June 2020, according to the data released by Department for Promotion of Industry and Internal
Trade (DPIIT).
Some of the recent/planned investments and developments in the automobile sector in India
are as follows:
 In November 2020, Mercedes Benz partnered with the State Bank of India to provide
attractive interest rates, while expanding customer base by reaching out to potential
HNI customers of the bank.
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 Hyundai Motor India invested ~Rs. 3,500 crores (US$ 500 million) in FY20, with an
eye to gain the market share. This investment is a part of Rs. 7,000 crores (US$ 993
million) commitment made by the company to the Tamil Nadu government in 2019.
 In October 2020, Kinetic Green, an electric vehicles manufacturer, announced plan to
set up a manufacturing facility for electric golf carts besides a battery swapping unit in
Andhra Pradesh. The two projects involving setting up a manufacturing facility for
electric golf carts and a battery swapping unit will entail an investment of Rs. 1,750
crores (US$ 236.27 million).
 In October 2020, Japan Bank for International Cooperation (JBIC) agreed to provide
US$ 1 billion (Rs. 7,400 crores) to SBI (State Bank of India) for funding the
manufacturing and sales business of suppliers and dealers of Japanese automobile
manufacturers and providing auto loans for the purchase of Japanese automobiles in
India.
 In October 2020, MG Motors announced its interest in investing Rs. 1,000 crores (US$
135.3 million) to launch new models and expand operations in spite of the anti-China
sentiments.
 n October 2020, Ultraviolet Automotive, a manufacturer of electric motorcycle inIndia,
raised a disclosed amount in a series B investment from Go Frugal Technologies, a
software company.
 In September 2020, Toyota Kirloskar Motors announced investments of more than Rs
2,000 crores (US$ 272.81 million) in India directed towards electric components and
technology for domestic customers and exports.
 During early September 2020, Mahindra & Mahindra singed a MoU with Israel-based
REE Automotive to collaborate and develop commercial electric vehicles.
 In April 2020, TVS Motor Company bought UK’s iconic sporting motorcycle brand,
Norton, for a sum of about Rs. 153 crores (US$ 21.89 million), making its entry into
the top end (above 850cc) segment of the superbike market.
 In March 2020, Lithium Urban Technologies partnered with renewable energy
solutions provider, Fourth Partner Energy, to build charging infrastructure across the
country.
 In January 2020, Tata Auto Comp Systems, the auto-components arm of Tata Group
entered a joint venture with Beijing-based Prestolite Electric to enter the electric vehicle
(EV) components market.
 In December 2019, Force Motors planned to invest Rs. 600 crores (US$ 85.85 million)
to develop two new models over the next two years.
 In December 2019, Morris Garages (MG), a British automobile brand, announced plans
to invest an additional Rs. 3,000 crore (US$ 429.25 million) in India.
 Audi India planned to launch nine all-new models including Sedans and SUVs along
with futuristic E-Tron EV by end of 2019.
 MG Motor India planned to launch MG ZS EV electric SUV in early 2020 and have
plans to launch affordable EV in the next 3-4 years.
 BYD-Olestra, Tata Motors and Ashok Leyland will supply 5,500 electric buses for
different state departments.

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LEVEL AND TYPE OF COMPETITION – FIRMS OPERATING IN THE

INDUSTRY
European, Asian, and American carmakers dominate the worldwide car-manufacturing market.
The “big five” carmakers in the global industry are Toyota, Ford, General Motors, Hyundai,
and Volkswagen. The automobile market is oligopolistic. An oligopolistic market implies
that the industry is dominated by a small number of carmakers. Such a market is unique because
the business action of one car manufacturer significantly influences theoperations of the other
players.
In the middle of 1991, the Indian Government made significant changes to its economic and
industrial policies leading to the liberalization of the markets. This provided the impetus for
the Indian automobile industry to flourish further. A new automobile policy was launched in
1993, facilitating the entry of global assemblers. Auto licensing was abolished in 1991, and the
weighted average tariff was lowered from 87% to 20.3% in 1997. The PMP policy ended in
1992. The Indian Government introduced a memorandum of understanding (MOU) systemthat
continued to emphasize localization of components, up to 50%, for approving financial
collaboration proposals on a case-by-case basis, which was raised to 70% later. Mass emission
regulatory norms for vehicles were introduced, and a national highway policy was announced
in this decade.
In 1997, automatic FDI approval of JVs with a 51% majority share for the foreign partner
was allowed. Liberalized policies and the attraction of a huge unsaturated market made many
globally competitive automakers to enter the passenger car market. The most common route
of entry was through JVs with Indian firms. Some manufacturers also left the market due to
increased competition.
Japanese participation in the Indian automobile industry brought significant changes to the
structure of the passenger car market, including utility vehicles. Gradually, established players
such as Telco entered the commercial passenger car segment capitalizing on their engineering
capabilities, and economies of scale, and domestic players in the commercial vehicle segment
started developing passenger cars on a limited scale. Indian companies such as Telco, M&M,
Hindustan Motors, Premier Automobiles, and DCM entered into JVs with Ford, Mercedes,
General Motors (GM), and Peugeot for assembly of medium-sized cars fromknocked-down
units. This increased the market competition and restructured pressures on existing players.
The post-1992 period is widely regarded as the second wave of FDI in the sector, which played
a crucial role in bringing dynamism, diversification, and intense competition in the industry.
Many companies started operating at a significant scale in the market and started operations in
the midsize car segment. Indian companies such as Tata Motors introduced special purpose
vehicles and platforms to enter the passenger car segment. This period saw reaction of wide
networks, as many companies had full technology and competence inproducing state-of-the-
art models of vehicles and had contractual arrangements with their component suppliers.
The role of foreign presence in the passenger vehicle segment grew much more than all the
other segments of automobiles, followed by the multi-utility vehicle segment. Thus, foreign
partners now hold all or a greater share of the equity in most of these cases even though most
of them initially formed JV of equal sharing of equity. The inability of the Indian partners to
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contribute toward capacity expansion allowed foreign partners to increase their stake or take
total control by buying out their Indian partners.
In both the waves of FDI that occurred in 1983 and post-1992 period, a significant amount of
FDI by the multinational corporations (MNCs) flowed into the country to build modern plants.
Maruti Suzuki’s investment in the early 1980s was made possible mainly due to its willingness
to invest capital. Subsequently, various MNC manufacturers have made investments of
millions of US dollars in the country.
In the post-2000 period, Indian firms such as Maruti Suzuki slowly started moving toward
building its own design and development capabilities. Tata Motors made rapid strides toward
developing an advanced level of technological capability by launching the first indigenously
developed Indian car, “Tata Indica” (1998). In 2002, M&M launched “Scorpio” as a sport
utility vehicle (SUV) – a product of in-house design and development effort. In 2004, Tata
Motors signed a JV with Daimler-Benz for manufacturing Mercedes-Benz passenger cars in
India. The Mercedes-Benz India Limited plant assembled completely knocked-down units
imported from abroad.
Increased competition led to restructuring and cutting of costs, enhanced quality, and improved
responsiveness to demand. MNC automakers such as Hyundai, Nissan, Toyota, Volkswagen,
and Suzuki which had established production plants in India eventually started using India as
an export platform for their overseas networks. The small car segment did particularly well,
and India’s potential as a global hub for manufacturing small cars began to be recognized.
Between the years 2001 and 2010, passenger vehicle sales grew at a compound annual
growth rate (CAGR) of 15.67%. Of the total sales, roughly 10% were contributed by exports.
Between 2000 and 2015, the average year-on-year growth rate of export of vehicles from the
country was approximately 23%. The industry is known for export of mini hatchbacks and an
evo living export base for midsize cars and compact SUVs. As per the World Trade
Organization’s World Trade Statistical Review 2017, India was the tenth largest exporter of
automobile products worldwide in 2016, accounting for US$ 13 billion worth of exports.
In the last decade again, various trade and investment restrictions were removed to speed up
momentum for large-scale production. As of today, the government encourages foreign
investment and allows 100% FDI in the sector via the automatic route. The industry is fully de-
licensed, and free imports of automotive components are allowed. India is the second fastest-
growing market for automobiles and components globally (after China).
With an outward vision of component makers, and competitive pressures from international
firms, the component industry had to upgrade process and product qualities and technology
standards to gain and sustain capabilities. Many manufacturers now adhere to the global
environmental norms regarding emission/technological standards and quality certifications.
The industry grew by around 20% annually in the 1990s, and the average annual growth of
exports was around 15% during that period. Over the years, it has been able to modernize its
technology and improve quality and has developed capabilities to manufacture components for
new-generation vehicles. Indian companies maintained their traditional strengths in casting,
forging and precision machining, and fabricating (welding, grinding, and polishing) at
technology levels matching the required scale of operations. They achieved significant success
in garnering engineering capabilities and adapted to local requirements through local design.
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High growth has taken place in engine, drive transmission, and steering parts. Engine parts,
being high value-added in its nature, have been contributing most to total production. Endowed
with the potential of low-cost quality products, India edges over many other developing
countries in component manufacturing.

The Porter Five Forces in the World’s Automobile Industry

 Threat of Entry
According to Porter (2008), threats of new entry determine whether it is easier or difficult for
new companies to enter the industry. Threats of entry are very low in the automaker industry
(Unwished, 2012). New companies cannot enter the automobile industry easily. Car
manufacturers, like manufacturers in other sectors, must develop products with unique
features. A new entrant, therefore, must have a high capital investment to ensure that they
ma unfactored cars with unique designs, comfort, safety features, and sophisticated electronic
functions. Fuel consumption is a major challenge in the automobile industry. Car manufacturers
must use modern technology in making engines to ensure their cars are fuel- efficient.
The threat of entry is also very low because the industry gives prominence to brand loyalty.
Car manufacturers depend on brand loyalty to ensure that their loyal and existing customers
keep coming back. For this reason, it is technically difficult for new carmakers to enter the
industry and convince new clients to purchase their products. Examples of carmakers that enjoy
strong brand loyalty include Mercedes, General Motors, Volkswagen, and BMW. It will be
difficult for new entrants to compete with these companies or brands because they (new
entrants) aim at winning new customers while existing companies aim at retaining their
customers. Strong brand loyalty offers numerous advantages. For instance, a company with a
stronger brand loyalty incurs lower marketing costs than a company with a lower loyalty.
Carmakers with stronger brand loyalties also enjoy more freedom in making price changes than
manufacturers (new entrants) without. Besides, existing car manufacturers have significant
shares in the market as compared to new entrants, who must invest to gain market share or woo
consumers to their side (Porter, 2008).

 Competitive Rivalry
The second force of competition in the industry is the rivalry between competitors. The internal
rivalry in this industry is moderate. The car industry is oligopolistic with 10 global
manufacturers controlling over 70 percent of the global car market according to 2013 statistics
(OICA, 2013). The top 20 carmakers sold about 78 million cars out of the total 87 million
vehicles in 2013. The internal rivalry is only intense among the top five carmakers. However,
the rivalry is likely to go higher because of the effects of globalization. Globalization has forced
companies to expand and compete in emerging markets (Unwished, 2012). The rivalry in the
car manufacturing business is also moderate because the number of competitors is relative.
Despite the industry having more than 50 players, only four companies produced more than 5
million vehicles each in 2013 (OICA, 2013). The internal rivalry between competitors is also
moderate because the industry attracts strong customer loyalty.
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 Threats of Substitutes
The third competitive force in the industry is the threat of substitutes. The threat of substitutes
in the global car-manufacturing market is strong. The industry has many substitute companies
that are ready to capture the attention of customers sensitive to price (Lee, 2011). Any change
in the price of one carmaker will lead to an increase in demand for another. Consumers prefer
cars that are less costly and cheaper to maintain. For instance, consumers will prefer substitutes
(carmakers) that manufacture durable cars at the expense of less durable cars. Customers will
also purchase vehicles that are fuel-efficient and flexible (e.g. hybrid cars). Price-elasticity in
this industry makes consumers seek more information on the products before making
purchasing decisions.

 Power of Consumers
The fourth force in the industry is the bargaining power of consumers. The bargaining power
of buyers in the industry is moderate. After purchasing a house, people think of buying cars.
Most buyers are sensitive to prices, therefore, would negotiate with automakers to obtain better
deals. However, carmakers tend to offer significant discounts to corporations that make
purchases in bulk. To create a balanced playing field, where they sell cars for profits while
preserving customer loyalty, automakers try to make durable and efficient products. They also
provide quality customer services to convince their consumers to purchase cars at profitable
prices.
 Supplier Power
The last competitive force is supplier power. Supplier power in the car-manufacturing business
is very low. The power of suppliers is low in the industry because carmakers have the
opportunity to choose parts from a range of manufacturers (Min, 2005). Carmakers go for
suppliers with low production and labor costs because they sell less expensive parts. The
bargaining power of suppliers also remains low in the automobile industry because some
carmakers prefer to manufacture their components. Carmakers often demand priceconcessions
from suppliers because they have a pool of suppliers from whom to choose.

PRICING STRATEGIES IN THE AUTOMOBILE INDUSTRY

Indian Car Pricing Trend Analysis is an exclusive Analysis of Indian Passenger Vehicle. Pricing
is one of the most important criteria for Indian buyers. Each segment is having different user,
dynamics, expectation, and Outlook and product position. Our latest report gives an in-depth
analysis of Vehicle pricing, how it curved with product and market.
parameters and other key detail. It is expected that the Indian car market will be the globaltop
market in the next 5 years.
Effective pricing strategies shall help a company sell its products in a competitive market to
witness a profit. So, it is a way or literally an approach to find the competitive price of service
or a product in that particular market. This strategy is one of the other marketing strategies
followed in the system of every management. It is indeed a known fact that a company's

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ultimate goal is to maximize their turnover. In order to maximize the profit, one has to choose
the right strategy for price setting.
Business magnate might use different combinations of price strategies to increase sales, but
finding the right strategy is a crucial step in the journey towards success. Often, the
misconceived thought on price setting is, sales volume is directly proportional to profit. An
increase in sales volume is expected to increase a company's profit. There are different
strategies one can depend on in the process of price setting. A few significant factors are given
below.

 Penetration & psychological pricing strategies

In order to gain a great market share, many companies embrace the penetration pricing strategy.
The company aims to set up a customer-based price in the market. This is primarily achieved
by providing a free to low price for their products or services to a limited period of time. This
later on, with a revised version comes into the market as a premium product with a little raise
in the price. This strategy is implied to meet the expectation that consumers will hop on to new
brands when they're priced low. On the other hand, a psychological pricing strategy is a method
that embraces a consumer's emotional response rather than considering their rational one. Here
consumer ignores the quality of a service/ product but sticks on to the costing price.

 Product line & economy pricing strategies

The product line pricing strategy is nothing but, providing service with an option to upgrade
upon choosing higher value packs. Consumers are pushed to compare the packages and choose
a wise plus cost-effective product or service. The other purpose of the product line strategy is
to bring a product or service to the spotlight which had low visibility or r ecognition earlier.
The economy pricing strategy embraces no to the low marketing cost in product or service
promotion. It's more like the budget pricing of a product or service. A great example would
be promoting only a certain range of products or services that shall gain specific and quick
attention among people.

 Customer value-based pricing strategy

This is the most effective method that is followed by many successful companies. Value- based
pricing is a nothing but, price setting strategy that exclusively focuses on consumer perceived
value of a service or product. This is entirely based on how consumers value the product or
service and how they find it worth buying. Many companies that offer unique and high-value
products choose this strategy in setting the price. The value-based pricing embraces customer's
abilities to buy a product by considering the unparalleled experience upon buying a particular
service or a product. Many luxury automakers find customer-value based pricing strategy an
effective method of approach. A value-based strategy will enable manufacturing companies to
extend the life cycle of existing products and will help to establish a great bond with value-
added suppliers.

 Pricing analytics
Manufacturers and service providers predict the future well enough to carry out a price
optimization system. They evaluate the past performance with a specific set of market
conditions and suggest the state of conditions for the probability of profit for your product or
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service in the market. This will help the automotive industry to gain an insight into pricing
strategy. Pricing analytics include the process of finding the underperformers of a particular
industry. It's highly crucial to analyze why certain product lines become your cause of down
economy. We develop reports exclusively after researching the probabilities and will let you
understand the customer value definition with facts and figures.

 Customer satisfaction
When a pricing system includes detailed pricing analytics, it will definitely boost the
customers' satisfaction. The system of achieving maximum profit with minimum wasted effort
shall only be obtained upon consulting the business consultants. ACG shall help you find not
only the best pricing strategy for your company but also identify the substitute p roduct
or service that might better fit in a customers' budget. This will help your sales team create a
budget-based service or product that shall come with a package deal to the customers which in
turn allows you to enhance customer's ability to purchase.
Almost everything in business aims for justification for the value of a specific price. Customers
do not buy a product or service by just seeing the price tag; they meticulously research before
buying it. With much of comparisons, they find the right choice that will fit in their budget and
lifestyle. Our business consulting services shall help you understand how customers understand
the value of a service or product. We consider a lot of factors, impacts on buying decisions with
that of other parameters before drawing the conclusion.

PROSPECTS AND CHALLENGES OF THE AUTOMOTIVE INDUSTRY

The Indian automotive sector has witnessed excellent growth in the recent past and is
all set to continue this momentum. The Indian a u t o m o b i l e industry has come
a long way since i t s launch in erstwhile Bombay in 1898. Currently, the automotive
sector is contributing majorly to the Indian economy both in terms of revenue and in terms
of employment. Directly or indirectly this sector employs more than ten million people in
the country. The Indian automotive industry comprises heavy vehicles, passenger cars
and two- wheelers. While the heavy v e h i c l e sector is dominated by major players
like Eicher Motors, Mahindra and Mahindra, Ashok Leyland and Tata Telco, the major car
manufacturers are Hindustan Motors, Maruti Udyog, Ford India Ltd, Hyundai Motors
India Ltd. and Tata Motors. In the two-wheeler segment, the dominant players are Bajaj,
Hero Honda, TVS and Yamaha.
Since independence, there have been several limitations that the automotive sector
has overcome. Measures such as reduction of tariffs on imports, relaxation of
the foreign exchange and equity regulations, and refiningthe banking policies played a
major driver in turning around the Indian automobile industry. The Indian automotive
industry is gearing up for major challenges in the coming years. Entrepreneurs in the
automotive manufacturing industry are confronted with many challenges. With
changes in government regulations, altering the world economy, relative prices, and market
dynamics it becomes difficult to adopt strategic planning for the automotive business.
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Key challenges in the Indian Automotive Sector

There are some pressing questions that are currently worrying the automotive
manufacturers in India: Will there be a decline in car ownership with the rise of
autonomous driving? How will make of the vehicles change with the government’s
increasing focus on fuel-efficient technology?
How should the automakers modify their business strategies as sales slowdown in
mature markets’ demands and demographics start shifting?
There are five key challenges that form the crux of these indispensable areas of
concern in the Indian automotive world:
The ever-expanding Chinese market: one of the biggest challenges of automakers outside
China is the risk of competing with China. In the last fifteen years, China has been the
leading automotive market. The volume growth has helped the country to overcome other
structural and competitive challenges. The biggest challenge for the planners of the automotive
market is to plan a strategy keeping in mind China’s outlook.
The evolution of connected cars: connected are the biggest transformational changes in
the automotive industry, but it is also one of the biggest unknowns. The concepts of
connected cars serve as a communication hub that receives and transmits data from its
surroundings. However, this technology is still in such a nascent stage the at it is creating
uncertaint ies and questions such as who will buy the car, which will deliver these
services, whether the current automakers will be able to navigate through all these
uncertaint ies keep plaguing the automotive world.
Increased competition: of all the myriad issues facing the automotive world, one of the
pressing problems is the sales demand flattening in mature markets like Europe, Japan,
and competition rising from other manufacturers. The slowdown of sales is directly
proportional to the increasing competition.
Balance of demands of the technology and government: The major global automotive
markets had been facing stringent legislation focusing on controlling carbon dioxide
emission and other exhaust gas e missions. This is done to improve fuel economy. One
of the key challenges in the industry is to make the right power trains and technology
choices to cater to changing social preferences in a changing regulatory environment.
Consolidation of platforms: intensifying competition, state regulators and global consumers
are making global automakers rethink their platform strategy. The trend towards consolidation
of modular architectures or mega-platforms is slowly replacing the earlier rationalization of
segments. Hence this is becoming one big challenge for automakers.

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KEY DRIVERS OF THE AUTOMOTIVE INDUSTRY

Economic Conditions:
The first key driver is economic conditions. When economic conditions are favorable, people
are more likely to purchase new vehicles giving momentum to the industry. Slowdown in
economic output leads to reduced consumer and business confidence and levels of vehicle
consumption goes down.
Automotive manufacturers need to plan capacity to achieve economies of scale. Companies
plan their capacities based on their sales predictions which are totally dependent on economic
cycles. The capacity issue has a strong influence on industry economics as vehicle prices are
calculated on forecast capacities and reduced capacity means higher unit costs. Vehicle makers,
therefore, get heavily impacted due to economic conditions.

Consumer Demand and Interests:

The second key driver is consumer interest, their preferences and demand. There is a growing
demand for more choice. Volume production may become similar to that for premium cars,
with a greater number of vehicles being made to order on the basis of a multi-option choice.
The market for niche vehicles is growing, as consumers demand more variation of body
shape and styling. This has led to a variety of body shapes being constructed on standard
platforms.
There is an increased awareness of occupant and pedestrian safety, and consumers also look
for greater fuel economy, exemplified by the growing rise of fossil fuel prices. Consumer are
becoming more aware of specifications and looking for inclusion of more on-board electronics
and telecommunications systems. Automobile safety is tremendously important to consumers
in all markets and consumers are willing to pay more for vehicles with safety features.

Globalization:
The third key driver is globalization and global industry influences. Today, the modern global
automotive industry operates in a global competitive marketplace. Globalization of the
automotive industry has been greatly accelerated during the last half of the 1990's due to the
construction of important overseas facilities and establishment of mergers between giant
multinational automakers. The world's largest automobile manufacturers invest intoproduction
facilities in emerging markets in order to reduce production costs. Automakers have merged
with, and in some cases established commercial strategic partnerships withother automobile
manufacturers, enabling them to expand in overseas markets.
Increasing global competition amongst the global manufacturers and positioning within foreign
markets has divided the world's automakers into three tiers, the first tier being GM, Ford,
Toyota, Honda and Volkswagen, and the two remaining tier manufacturers attempting to
consolidate or merge with other lower tier automakers to compete with the first-tier companies.

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Technological Innovations:
The fourth key driver influencing automotive industry significantly is Technology. Automotive
companies seek to take advantage of sophisticated technology to address the competitive
pressure and to meet increased customer expectations on quality and cost. Technological
advances help them add value to their vehicles and offset the squeeze on costs and profit
margins. Technology also helps them meeting the demands of environmental legislation. It is
through technology that manufacturers can address consumer demands for increased safety and
sophistication.
Other innovations that consumers are interested in including features that improve navigation,
like GPS, and features that enhance entertainment, including satellite radio and in-car access
to digital music.
In terms of the vehicle, the innovations that are likely to be in demand are more electronics and
telemetric, move to a 42-volt electrical system, safety improvements, electrically c-controlled
steering, braking, ABS and suspension. There might be continued development of electric,
hybrid and fuel cell drives, especially for city cars and fleet vehicles.
Features likely to be introduced could be sophisticated route guidance, inter-model route
planning, lane guidance and proximity radars for speed control and warning systems. The
consumer in this sector always demands innovation and technology-driven innovations such as
fuel-efficient, safer, more comfortable low-emission vehicles will shape the future of the
industry.

Government & Regulations:

The fifth key driver of the automotive industry is government. Legislation is a major driver of
the industry; emissions and recycling legislation have a strong impact both on vehicle
technologies and construction. In many countries, governments have imposed strict
environmental regulations dealing with fuel economy and emissions control on auto
manufacturers. These environmental legislations vary in different countries and define
standards that are compulsory for all vehicles sold in those countries. This has huge impact
on global auto manufacturers as they must keep updating the products, they sell in different
parts of the world to comply with these regulations. This can add significantly to manufacturing
costs.

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COMPANY PROFILE

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Jagrut Motors Private Limited is an unlisted private company incorporated on 18 March 2014.
It is classified as a private limited company and is in Ratnagiri, Maharashtra. Its authorized
share capital is INR 4.05 cr and the total paid-up capital is INR 4.01 cr.

Description: The company is engaged in automobile distributorship business. It provides

new and used car, spare parts, and repairing services.

Products & Services: New car, Used Car, Spare Parts, Accessories and Car financing
services
Category: Distributor
The status of Jagrut Motors Private Limited is - Active.
The last reported AGM (Annual General Meeting) of Jagrut Motors Private Limited, per our
records, was held on 30 November 2021.
Jagrut Motors Private Limited has three directors - Rajendra Keshav Joshi, Reshma Rajendra
Joshi, and Aditya Joshi.
The Corporate Identification Number (CIN) of Jagrut Motors Private Limited is
U50401PN2014PTC151029. The registered office of Jagrut Motors Private Limited is at D-22,
MIDC MIRJOLE RTN, RATNAGIRI, RATNAGIRI, Ratnagiri, Maharashtra.

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 CIN
U50401PN2014PTC151029

 INCORPORATION DATE / AGE

18 March 2014 / 10 yrs.

 LAST REPORTED AGM DATE

30 November 2021

 AUTHORIZED CAPITAL
INR 405.0 Lacs

 PAIDUP CAPITAL
INR 401.0 Lacs

 INDUSTRY
Trading

 TYPE
Unlisted Private Company
 CATEGORY
Company limited by Shares.
 SUBCATEGORY
Non-govt company

OUR PRODUCTS

BREZZA

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SWIFT

WAGONR

ERTIGA

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S PRESSO

DZIRE

NEW ALTO K10

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AWARDS AND ACHIEVEMENT

JAGRUT MOTORS RECEIVED AN PRESTIGIOUS ROYAL PLATINIUM BAND

AWARD FROM MARUTI SUZUKI INDIA LIMITED. (2022 – 2023)

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OJECTIVES

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Objectives of the Study

The objectives of financial statement analysis is to provide information about financial

position, performance and changes in the financial position of the Company.
 This is useful to a wide range of users in making economic decision.

 To know how to analysis financial statement.

 To help the predict future.

 To examine past and current financial data.

 To help users make better decision.

 To evaluation of financial statement.

 To know the recent trend.

 To review the company’s performance over past periods.

 To assess the current financial position.

 To forecast the profitability trends.

 To measure the managerial efficiency.

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REVIEW OF LITERATURE

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Mr. V. Elaya Bharathi, Mrs. D. Praveena, Mrs. S. Rathika (2019), “a study on financial
performance analysis with reference to TNSC Bank, Chennai”. They analyzed the financial
performance of the TNSC APEX CO-OPERATIVE BANK. They suggested the bank needs to
maintain proper receivables. The performance should be continued and improvement to be
made in order to attain the objectives of the concern which pave the way to have the result in
attaining the competitive advantage.
Lam Weng Hoe, Lam Weng Siew, Liew Kah Fai (2019), “a study on performance analysis on
Telecommunication companies in Malaysia with TOPSIS model”. The objective of this paper
is to propose a conceptual framework to evaluate, compare and rank the financial performance
of companies in Malaysia. They concluded that the best ideal and worst ideal solutions for each
financial ratio can serve as the benchmark to the telecommunication companies for further
improvement. Dr.
D. Pathma Priya (2019), “a study on financial performance analysis of HDFC limited”. The
study was made to analyze the financial performance of HDFC limited for the period of five
years and to offer suggestions based on their findings of the study. She concluded that the
financial performance of the HDFC Limited is at satisfactory level and suggested to concentrate
to get back the funds from debt-to-equity funds and also reduce and long-term financial
obligations.
Agarwal, Nidhi (2015) The study focusses on the comparative financial performance of Maruti
Suzuki and Tata motors ltd. The financial data and information required for the study are drawn
from the various annual report of the companies. The liquidity and leverage analysis of both
the firms are done to analyze the leverage position four ratios are considered namely, capital
gearing, debt-equity, total debt and proprietary ratios. The result show that Tata motors ltd has
to increase the portion of proprietors fund in business to improve long term solvency position.
Chacko and Selvaraj: concluded that there may be a number of factors which are responsible
for the changing purchase preference of the consumer in four-wheelers. Among those variables
- safety, maintenance, mileage, easy mode of financing and easy driving are found to be pointed
influencing buying preference of consumers. With the rapid and consistent growth in the price
of the fuel consumers are more conscious about mileage. So, they highly prefer mileage while
buying a car. This study found that consumers also prefer easy mode of financing a car. With
the growing competition in automobile sector, companies are providing easy financing facility
to grab maximum of consumers. This allows consumers from a middle-income group to

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conveniently own a car by giving easy installments which is also forcing consumers to buy a
car. Lastly, it was found that consumers also prefer model while purchasing a car.
Mishra: observed that mostly, Tata customers purchased cars on loan and using them for
personal purpose. It is also seen that mostly people recommend to their friends and relatives
who have car, to adopt preventive maintenance of car from authorized dealer only once it
completes one year and up to five years. In terms of level of customer satisfaction, it was found
that the customers are mostly satisfied with price, design, safety, mileage, interior space, status
brand name, comfort level, spares part and aftersales service. Finding also indicates that the
most influencing factor for customer satisfaction in the case of Tata Motors were price, mileage,
and interior space. Talking of 4 competitiveness among cars is concern it is seen that customer
mostly prefers Maruti car as more loyal than Tata Motors.
P. Krishnaveni in her article focuses on historical developments, financial analysis and various
brands of Maruti Suzuki. The article highlighted the performance of Maruti Suzuki with respect
to Production, Manufacturing and Exports of company. The article also describes the various
innovations of the company for e.g. introduction of electronic power steering, introduction of
superior quality of 16*4 hypotrich engines. Maruti Suzuki India Limited in their Sustainability
Report 2009-10 focuses on its Give, Get & Grow mantra. This report speaks about Economic,
Environmental & Social performance of Maruti Suzuki India limited.
Mr. Bhargava-Chairman, Maruti Suzuki India Limited, in this report stated that, the sustained
growth achieved by Maruti Suzuki over its 26-year journey is the result of stakeholder centric
policies adopted from their formative years, which have also kept in view the interests of
society and the company’s ability to respond to the changing market requirements. Mr.
Bhargava also opined that recognizing the importance & necessity of clean and cost-effective
fuel options, Maruti Suzuki embarked on a journey to develop alternate fuel vehicles and out
of the alternative fuel options, CNG seems to be the most suitable option for India .
Shinde Govind P. & Dubey Manisha (2011) the study has been conducted considering the
segments such as passenger vehicle, commercial vehicle, utility vehicle, two and three-wheeler
vehicle of key players performance and analyze SWOT analysis and key factors influencing
growth of automobile industry.
Sharma Nishi (2011) studied the financial performance of passenger and commercial vehicle
segment of the automobile industry in the terms of four financial parameters namely liquidity,
profitability, leverage and managerial efficiency analysis for the period of decade from 2001-
02 to 2010-11. The study concludes that profitability and managerial efficiency of Tata motors
as well as Mahindra & Mahindra ltd are satisfactory, but their liquidity position is not
satisfactory. The liquidity position of commercial vehicle is much better than passenger vehicle
segment.
Singh Amarjit & Gupta Vinod (2012) explored an overview of automobile industry. Indian
automobile industry itself as a manufacturing hub and many joint ventures have been setup in
India with foreign collaboration. SWOT analysis done there are some challenges by the virtue
of which automobile industry faces lot of problems and some innovative key features are
keyless entry, electrically controlled mechanisms enhanced driving control, soft feel interiors
and also need to focus in future on like fuel efficiency, emission reduction safety and durability.

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Zafar S.M. Tariq & Khalid S.M (2012) the study explored that ratios are calculated from
financial statements which are prepared as desired policies adopted on depreciation and stock
valuation by the management. Ratio is simple comparison of numerator and a denominator that
cannot produce complete and authentic picture of business. Results are manipulated and also
may not highlight other factors which affect performance of firm by promoters.
Ray Sabapriya (2012) studied the sample of automobile companies to evaluate the performance
of industry through indicators namely sales, production, and export trend etc. for period of
2003-04 to 2009-10. The study finds that automobile industry has been passing through
disruptive phases by over debt burden, underutilization of assets and liquidity instability. The
researcher suggested to improving the labour productivity, labour flexibility and capital
efficiency for success of industry in future.
Dawar Varun (2012) Study to analyze the effect of various fundamental corporate policy
variables like dividend, debit, capital expenditure on stock prices of automobile companies of
India. The study tends that dividend & investment policy are relevant and capital structure
irrelevant to stock prices.
Mistry Dharmendra S. (2012) understood a study to analyze the effect of various determinants
on the profitability of the selected companies. It concluded that debt equity ratio, inventory
ratio, total assets were important determinants which effect positive or negative effect on the
profitability. It suggerted to improve solvency as to reduce fixed financial burden on the
company profit & give the benefit of trading on equity to the shareholders.
Murlidhar, A. Lok Hande & Rana Vishal S. (2013) the author tries to evaluate the performance
of Hyundai Motors Company with respect to export, Domestic Sales, productions and profit
after tax. For this purpose, the pie chart and bar graph are used to show the performance of
company various years.
Dharmaraj, A.and Kathirvel N. (2013) explored an overview of new industrial policy act 1991,
which allow 100 percent foreign direct investment. An attempt is made to find out the effect of
FDI on financial performance of automobile industry. It is concluded that the liquidity ratios
show minor changes and profitability shows an increasing trend during post FDI when
compared to pre FDI. Post FDI efficiency ratio shows that companies are efficiently utilizing
the available resources.
Rapheal Nisha (2013) the author tries to evaluate the financial performance of Indian tyre
industry. The study was conducted for period 2003-04 to 2011-12 to analyze the performance
with financial indicators, sales trend, export trend, production trend etc. The result suggests the
key to success in industry is to improve labour productivity and flexibility and capital
efficiency.
Hotwani Rakhi (2013) the author examines the profitability position and growth of company
in light of sales and profitability of Tata Motors for past ten years. Data is analyzed through
rations, standard deviations, and coefficient of variance. The study reveals that there not exists
a strong relationship between sales & profitability of company.
Sharma Rashmi, Pande Neeraj & Singh Avinash (2013) for understanding how social media
monitoring can help diving the consumer decision & also study. The functions of social media

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i.e. monitor, responses amplify and lead at Maruti Suzuki India ltd. The researcher had
discussion with social media team median managers for collecting data & also visited the
official social media sites of MSIL.
Daniel A. Moses Joshunar (2013) the study has been conducted to identify the financial strength
and weakness of the Tata motors Ltd. using past 5-year financial statements. Trend analysis &
ratio analysis used to comment of financial status of company. Financial performance of
company is satisfactory and also suggested to increase the loan levels of company for the better
performance.
Dhole Madhavi (2013) Investing the impact of price movement of share on selected company
performance. It advise due investors consider various factors before choosing the better
portfolio. Sentimental factors do play a role in price movement only in short term but in long
run annual performance is sole factor responsible for price movement.
Shende Vikram (2014) this research will be helpful for the new entrants and existing car
manufacturing companies in India to find out the customer expectations and their market
offerings. The objective of study is the identification of factors influencing customers
performance for particular segment of cars.
Azhagaiah R. & Gounasegaran (2014) recognized India’s per capita real GDP growth as one
of key drivers of growth for country’s automobile industry. The central government would be
set up various task forces on issue related to taxation, land acquisitions, labour reform and skill
development for auto industry.
Buvaneswari. R & Kanimozhip (2014) to study the credit worthiness of selected firms in Indian
car industry, tiruchy. Professor Edward Altman of New York University developed method Z
score analysis to predict the company failure or bankruptcy. To measure the fiscal fitness of a
company combined a set of five financial ratios.
Idhayajothi, R et al (2014) the main idea behind this study is to analyze the financial
performance of Ashoka Leyland ltd. at Chennai. The result shows that financial performance
is sound and also suggested to improve financial performance by reducing the various
expenses.
Huda Salhe Meften & Manish Roy Tirkey (2014) have studied the financial analysis of
Hindustan petroleum corporation ltd. The study is based on secondary data. The company has
got excellent gross profit ratio and trend is rising in with is appreciable indicating efficiency in
production cost. The net profit for the year 2010-11 is excellent & it is 8 times past year
indicating reduction in operating reduction in operating expenses and large proportion of net
sales available to the shareholders of company.
Srivastava Anubha (2014) Data analysis has been done using the top-down approach.
Economic analysis, industry analysis, company and technical analysis to find relationship
between automobile sector index with market index. Mahindra and Mahindra have a great
position on the stock market and will attract investor and this could lead to expansion and
growth. Thus, Tata motors and Maruti Suzuki need to take care of their stock and expansion.
Sarangi Pradeepta K et al (2014) undertook a study to forecast the future trend of automobile
industry. The study highlighted the six different experiments have been conducted for period
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of 12 years data to estimate values for next 3 years. In each experiment graph has been plotted
using spreadsheet and then linear trend has been drawn and expanded to calculate future values.
Kumar Sumesh & Kaur Gurbachan (2014) Automobile sector is the dominant player in
economy of world. After liberalization Indian automobile industry has emerged as a major
contributor to India’s GDP. The study identified that there is no significant in the means score
of various financial ratios of Maruti Suzuki and Tata motors but in meeting their long-term
obligations and efficacy of utilizing the assets show the significant difference in the efficiency
of both the firms.
Krishnaveni, M. & Vidya, R. (2015) find that Indian automobile industry is a high-flying sector
these days and emerging as an export hub in wake of liberalization and globalization. This
paper revises the category wise production, sales and exports of automobile industry in India.
Industry growth can be viewed in term of pre and post liberalization. As government allows
100 percent FDI, increase 15% in customs duty on cars and MUVs to encourage local
manufacturer and concessional import duty on specified parts of hybrid vehicles.
Sarada Walmik Kachru (2015) analyzed the effects of liberalization, government delicensing
and liberal trade policies on the growth of Indian auto mobile industry. The study recommends
that investing four- wheeler is going to be smart potion not only in India but all around the
world.
Becker Dieter (2015) the report shows about the current state and prospects of the worldwide
automobile industry. This survey report the manufacturer, executive and consumer views about
four aspects, mobility culture, technological fit, business model readiness and market share.
Surekha B. & Krishnaiah K. Rama (2015) this study reveals the prosperity of Tata motors
company. It can be concluded that inner strength of company is remarkable. Company can
further improve its profitability by optimum capital gearing, reduction in administration and
financial expenses for the growth of company.
Anu B. (2015) tried to examine the relationship between capital structure indicators, market
price per shares and also to test relationship between debt-equity and market price per share of
selected companies in industry. The study concludes that all three companies support the
hypothesis that there is relation between debt-equity and MPS.
Maheswari, V. (2015) made an attempt to analyze the financial soundness of the Hero Honda
motors limited have identified three factors, namely liquidity position, solvency position and
profitability position based on the study of period 2002 to 2010 using ratio analysis.

Agarwal, Nidhi (2015) the study focusses on the comparative financial performance of Maruti
Suzuki and Tata motors ltd. The financial data and information required for the study are drawn
from the various annual reports of companies. The liquidity and leverage analysis of both the
firms are done. To analyze the leverage position four ratios are considered namely, capital
gearing, debt-equity, total debt and proprietary ratio. The result shows that Tata motors ltd has
to increase the portion of proprietor’s fund in business to improve long term solvency position.

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Nandhini, M. & Sivasakthi, V. (2015) have studied the impact of both financial leverage as
well as operating language on the profitability of TVS motor company. The result shows that
company suffers from certain weakness & suggested to control fixed cost as well as variable
cost to gain adequate profits.
Jothi, K. & Kalaivani, P. (2015) studied the comparative performance of Honda Motors and
Toyota Motor that both companies have satisfactory short term liquidity position. As for as
cash ratio concerned Honda company has upper hand upper hand in sound cash management
practice during the study period. In case of profitability, it is rising from both of companies but
remained much higher earning potential in Honda motor ltd.
Krishnaveni, M. & Vidya, R (2015) author has selected 87 companies out of 242 companies in
capital line database to discuss the standard current ratio of automobile industry is matched
with tractor and four sectors like engine parts, lamps, gears and ancillaries with standard norms.
The study concludes that current and liquidity ratio of automobile industry is matched with
tractor and the four sectors, but other sectors have to improve the repaying capacity to
strengthen the financial aspects.
Takeh Ata & Navaprabha Jubiliy (2015) Author has made conceptual model to outline the
impact of capital structure on the financial performance i.e. capital structure is independent
variable that value is measured by using four ratios namely, financial debt, total debt equity,
total asset debt and interest coverage ratio whereas financial performance is dependent variable
that value is measured by using four ratios as return on assets, return on equity , operating profit
margin and return on capital employed. Researcher has selected 13 major steel industries and
applied various statistical tools like standard deviation, correlation matrix, a nova etc. are
employed for testing hypothesis with help of SPSS22.
Kumar Rakesh Rasiklalajani & Bhatt Satyaki J. (2015) the proposed research is intended to
examine the trend and pattern of financing the capital structure of Indian companies. The study
is to analyze the determinants of total debt ratios as well as determinants of short term and
long-term ratios.
Kumar Neeraj & Kaur Kuldip (2016) tried to test the size and profitability relationship in the
Indian automobile industry. To analyze the relationship linear regression model as well as
cross-sectional has been employed for the year 1998to 2014. For profitability analysis two
different measures have been used (I) ratio of net profit to total sales turnover (ii) ratio of net
income to net assets plus working capital and for form size two indicators used namely, total
sales turn over and net assets. The time series analysis showed the positive relationship between
firm size and profitability but cross-sectional show no relationship between firm size and
profitability.
Ravichandran, M. & Subramanium M Venkata (2016) the main idea behind this study is to
assessment of viability, stability and profitability of Force motors limited. Operating position
of the company can be measured by using various financial tools such as profitability ratio,
solvency ratio, comparative statement & graphs etc. This study finds that company has got
enough funds to meet its debts & liabilities. Company can further improve financial
performance by reducing the administrative, selling & operating expenses.

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Mathur Shivam & Agarwal Krait (2016) Ratios are an excellent and scientific way to analyze
the financial performance of any firm. The company has received many awards and
achievements due to its new innovations and technological advancement. These indicators help
the investors to invest the right company for expected profits. The study shows that Maruti
Suzuki limited is better than Tata motors limited.
Jothi, K. & Geethalakshmi, A. (2016) this study tries to evaluate the profitability & financial
position of selected companies of Indian automobile industry using statistical tools like, ratio
analysis, mean, standard deviation, correlation. The study reveals the positive relationship
between profitability, short term, and long-term capital.
Kumar Mohan M.S, Vasu. V. and Narayana T. (2016) the study has been made through using
different ratios, mean, standard deviation and Altman’s Z score approach to study the financial
health of the company. The study reveals there is a positive correlation between liquidity and
profitability ratios except return on total assets as well as Z score value indicate good health of
the company.
Kaur Harpreet (2016) the author tries to examine the qualities & quantities performer of Maruti
Suzuki co. & how had impact on its market share in India, for this study secondary data has
been collected from annual reports, journals, report automobile sites. Result shows that MSL
has been successfully leading automobile sector in India for last few years.

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RESEARCH METHODOLOGY

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Research Methodology
Research can be defined as systematic efforts to gain knowledge. Research is carried out by
two methodologies I.e. primary data and secondary data.

 Area of study-

The study is conducted in Jagrut Motors Private Limited.

 Period of study-

This study is conducted in 2016 to 2021.

 Sources of data-

 Primary Data:

Primary data was collected from the visit to the Company.

Discussion with CEO and Managers.

 Secondary Data:

Sources from where secondary data was collected from Company.

 Website of the Company.

Related books Like Annual Report of Company.

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LIMITATION
Financial Statement Analysis is very important, but it has certain limitations which are to be
kept in mind. Following are the limitations of financial analysis.
 Not a Substitute of Judgment

 Based on Past Data

 Problem in Comparability

 Reliability of Figures

 Various methods of Accounting and Financing

 Change in Accounting Methods

 Changes in the Value of Money

 Limitations of the Tools Application for Analysis

 No Assessment of Managerial Ability

 Change of Business Condition

 Financial statements are prepared according to certain conventions at a point of

time, whereas the investor is concerned with the present and future of the company.
 The results shown by financial statements may be misleading if price level changes
have not been accounted for.
 Financial analysis does not measure the qualitative aspects of the firm e.g. skill,
technicalknow-how etc.
 Results shown by analysis may be misleading in the absence of absolute data.
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 The accuracy and reliability of analysis depends on reliability of figures derived from
financial statement.

SCOPE
 The scope of the study is limited to single organization Maruti Suzuki.

 Major scope of this study is to find out the financial strength andweakness of the

firm from analyzing the financial statements.

 To understand past performance, present financial conditions and to findsuggestions

for the future improvements.

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DATA COLLECTION

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In this chapter explains the theoretical framework applied for the present study. Finance is the
life blood of every business. Every business enterprise whether large, medium, and small size
needs finance to carry out its operations and to achieve its targets. Proper financial planning
and control is necessary.
Business is mainly concerned with the financial activities. To ascertain the financial status of
the business every enterprise prepares certain statements, known as financial statements.
Financial statements are mainly prepared for decision making purposes. But the information as
is provided in the financial statements is not adequately helpful in drawing a meaningful
conclusion. Thus, an effective analysis and interpretation of financial statements is required.

FINANCIAL STATEMENT
A financial statement is an organized collection of data according to logical and consistent
accounting procedures. Its purpose is to convey an understanding of some financial aspects of
a business firm. It may show a position at a moment of time as in the case of a balance sheet,
or may reveal a series of activities over a given period of time, as in the case of an income
statement.
The objective of income statements is to provide information about the financial position,
performance and changes in financial position of an enterprise that is useful to a wide range
of users in making economic decisions. Financial statements should be understandable,
relevant, reliable and comparable. Reported assets, liabilities, equity, income and expenses are
directly related to an organization’s financial position.

Balance Sheet
Statement of Financial Position, also known as the Balance Sheet, presents the financial
position of an entity at a given date. It is comprised of the following three elements:
Assets: Something a business owns or controls (e.g. cash, inventory, plant and machinery, etc)

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Liabilities: Something a business owes to someone (e.g. creditors, bank loans, etc)
Equity: What the business owes to its owners. This represents the amount of capital that
remains in the business after its assets are used to pay off its outstanding liabilities. Equity
therefore represents the difference between the assets and liabilities.

Profit and loss account.

Income Statement, also known as the Profit and Loss Statement, reports the company's
financial performance in terms of net profit or loss over a specified period. Income Statement
is composed of the following two elements:
Income: What the business has earned over a period (e.g. sales revenue, dividend income, etc)
Expense: The cost incurred by the business over a period (e.g. salaries and wages, depreciation,
rental charges, etc.)
Net profit or loss is arrived by deducting expenses from income.

Ratio Analysis
Financial ratio analysis is the process of calculating financial ratios, which are mathematical
indicators calculated by comparing key financial information appearing in financial statements
of a business, and analyzing those to find out reasons behind the business’scurrent
financial position and its recent financial performance, and develop expectation about its future
outlook.
Financial ratio analysis is very useful tool because it simplifies the process of financial
comparison of two or more businesses. Direct comparison of financial statements is not
efficient due to difference in the size of relevant businesses. Financial ratio analysis makes
the financial statements comparable both among different businesses and across different
periods of a single business.
There are different financial ratios to analyze different aspects of a business’ financial position,
performance and cash flows. Financial ratios calculated and analyzed in a particular situation
depend on the user of the financial statements. For example, a shareholder is primarily
concerned about a business’s profitability and solvency; a debt-holder is concerned about its
solvency, liquidity and profitability in the descending order of importance; a creditor/supplier
is worried mainly about the business’ liquidity, etc.

Classification of ratios.
The ratios can be classified in to four broad groups

 Liquidity Ratio
 Solvency or Leverage Ratio
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 Turnover Ratio
 Profitability Ratio

LIQUIDITY RATIO
Liquidity ratio assesses a business’s liquidity, i.e. its ability to convert its assets to cash and pay
off its obligations without any significant difficulty (i.e. delay or loss of value). Liquidity ratios
are particularly useful for suppliers, employees, banks, etc.
The various ratios that explain about the liquidity of the firm are
 Current Ratio
 Acid Test Ratio / quick ratio
 Absolute liquid ration / cash ratio

Current ratio
Current ratio is a liquidity ratio which measures a company's ability to pay its current liabilities
with cash generated from its current assets. In a sound business a current ratio of 2:1 is
considered an ideal one. High ratio indicates sound solvency and low ratio indicates inadequate
working capital. It is calculated by dividing current assets by current liabilities.
Current Ratio = Current Asset/Current Liabilities
Current assets are assets that are expected to be converted to cash within normal operating
cycle, or one year. Examples of current assets include cash and cash equivalents, marketable
securities, debtors, bills receivable, inventories, and prepaid expenses.
Current liabilities are obligations that require settlement within normal operating cycle or
next 12 months. Examples of current liabilities include sundry creditors, bills payable, short-
term loans, income tax liability, accrued expenses and dividends payable.

Quick ratio
The quick ratio or acid test ratio is a liquidity ratio that measures the ability of a company to
pay its current liabilities when they come due with only quick assets. Quick assets are current
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assets that can be converted to cash within 90 days or in the short-term. It is calculated by
dividing quick assets by the current liabilities.
Quick ratio = Quick assets / Current liabilities
Quick assets refer to the more liquid types of current assets which include cash and cash
equivalents, marketable securities, and short-term receivables. Inventories (stock) and
prepayments are not included.

Absolute liquidity ratio

It shows the relationship between absolute liquid or super quick current assets and liabilities It
is more conservative compared to the current ratio and quick ratio since only cash and
marketable securities are compared with current liabilities.
Absolute liquid ratio = Absolute liquid assets / Current liabilities
The current ratio measures liquidity by comparing all current assets with current liabilities. The
quick ratio is more conservative in that it measures liquidity using quick assets (cash and cash
equivalents, marketable securities, and short-term receivables). Cash ratio is an even more
conservative ratio since it considers cash and marketable securities only.

Solvency Ratio
Leverage ratio / Solvency ratio assess the long-term financial viability of a business i.e. its
ability to assure the long-term creditors with regard to periodic payment of interest during the
period and loan repayment of principal on maturity or in predetermined installments at due
dates. Information about solvency is critical for banks, employees, owners, bond holders,
institutional investors, government, etc.
There are thus two aspects of the long-term solvency of a firm.
 Regular payment of the interest.
 Ability to repay the principal amount when due.

Solvency ratios are.

 Debt equity ratio
 Proprietary (equity) ratio
 Fixed assets to net worth ratio.

Debt equity ratio

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The debt-to-equity ratio is a financial, liquidity ratio that compares a company’s total debt to
total equity. The debt-to-equity ratio shows the percentage of company financing that comes
from creditors and investors. A higher debt to equity ratio indicates that more creditor financing
(bank loans) is used than investor financing (shareholders).
Debt equity ratio = Outsider Funds (Total Debts)/Shareholder Funds or Equity
The outsider fund includes long-term debts as well as current liabilities. The shareholder funds
include equity share capital, preference share capital, reserves and surplus including
accumulated profits. The shareholder funds so calculated are known as net worth of the
business.

Proprietary (Equity) Ratio

The proprietary ratio (also known as net worth ratio or equity ratio) is used to evaluate the
soundness of the capital structure of a company. This ratio indicates the proportion of total
assets of the company financed by its owners (equity shareholders). It is calculated by dividing
Shareholder funds by total assets.
Proprietary (equity) ratio = Shareholder funds/Total assets
This ratio shows the financial strength of the company. It helps the creditors to find out the
proportion of shareholders fund in the total assets. Higher ratio indicates a secured position to
creditors and a low ratio indicates greater risk to creditors. It indicates the long term solvency
of the firm.

Fixed assets to net worth ratio.

Fixed assets to net worth is a ratio measuring the solvency of a company. This ratio indicates
the extent to which the owners' cash is frozen in the form of fixed assets, such as property,
plant, and equipment, and the extent to which funds are available for the company's operations
(i.e. for working capital).
Fixed assets to net worth ratio = Fixed Assets / Net Worth
The Net worth (shareholder funds) include equity share capital, preference share capital,
reserves and surplus. The shareholder funds so calculated are known as net worth of the
business.

TURNOVER RATIO
Activity ratios/Turnover ratio assesses the efficiency of operations of a business. For example,
these ratios attempt to find out how effectively the business is converting inventories into sales
and sales into cash, or how it is utilizing its fixed assets and working capital, etc. Key activity
ratios are:
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 Fixed asset turnover ratio

 Net working capital turnover ratio
 Capital Turnover Ratio
 Fixed asset turnover ratio

The definition of fixed asset turnover analysis and ratio shows what portion of sales is
generated from fixed asset investment. If compared with the previous year it indicates that,
whether the investment in the fixed assets has been judicious or not.In general, the higher the
value, the better the company is.
Fixed asset turnover = Total Sales / Fixed Assets

Net Working Capital Turnover ratio

Working capital turnover ratio is an activity ratio that measures dollars of revenue generated
per dollar of investment in working capital. Working capital is defined as the amount by which
current assets exceed current liabilities.
Working Capital Turnover Ratio = Net Sales / Working Capital Working Capital = Current
Assets − Current Liabilities

Capital Turnover Ratio

Capital Turnover Ratio indicates the efficiency of the organization with which the capital
employed is being utilized. A high capital turnover ratio indicates the capability of the
organization to achieve maximum sales with minimum amount of capital employed. Higher
the capital turnover ratio better will be the situation.
Capital turnover ratio = Sales / Shareholders fund.

PROFITABILITY RATIO
Profitability ratios measure the ability of a business to earn profit for its owners. While liquidity
ratios and solvency ratios explain the financial position of a business, profitability ratios and
efficiency ratios communicate the financial performance of a business. Important profitability
ratios are;
 Gross profit margin or ratio
 Net profit margin or ratio
 Gross Profit Margin or Ratio

It measures the relationship between gross profit and net sales. It is calculated by dividing gross
profit by net sales. It is a popular tool to evaluate the operational performance of the business.
Gross profit is the difference between sales and cost of goods sold.

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Gross profit margin or ratio = Gross profit /Net sales *100

Net Profit Ratio

It measures the relationship between net profit and sales of a firm. It represents the proportion
of sales that is left over after all relevant expenses have been adjusted. It is calculated by
dividing net profit after tax by sales.
Net profit margin or ratio = Earnings after tax /Net Sales *100

COMPARATIVE BALANCE SHEET

Comparative Balance Sheet of Maruti Suzuki India Ltd,
year ended March2015-2016 and 2016-2017
Particulars 2015-2016(Cr) 2016-2017(Cr) Increase / % Change
Decrease

Liabilities

Share Capital 151.00 151.00 0 0

Reserve & Surplus 29733.20 36280.10 6546.9 22.01

Current Liabilities 11039.20 13226.40 2187.2 19.81

Long Term Provision 14.80 21.90 7.1 47.97

Assets

Fixed Assets 13516.90 14545.00 1028.1 7.60

Long term Loans & 0.40 0.30 -0.1 -25

Advances
Capital work in progress 1006.90 1252.30 245.4 24.37

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Investment 18875.40 26302.20 7426.8 39.34

Deferred Tax Asset 0 0 0 0

Current Assets 7846.00 8776.20 930.2 11.85

The comparative balance sheet of the company reveals the comparison between two years of
the financial data. The fixed assets are decreased by 7.60 %, the current liabilities by 19.81 %
and the current assets are increased by 11.85 %

Comparative Balance Sheet of Maruti Suzuki India Ltd,

year ended March2016-2017 and 2017-2018

Particulars 2016-2017(Cr) 2017-2018(Cr) Increase / % Change

Decrease

Liabilities
Share Capital 151.00 151.00 0 0

Reserve & Surplus 36280.10 41606.30 5326.2 14.68

Current Liabilities 13226.40 15442.10 2215.7 16.75

Long Term Provision 21.90 26.50 4.6 21

Assets
Fixed Assets 14545.00 15484.90 939.9 6.46

Long term Loans & 0.30 0.20 -0.1 -33.33

Advances
Capital work in progress 1252.30 2125.90 873.6 69.75

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Investment 26302.20 34072.90 7770.7 29.54

Deferred Tax Asset 0 0 0 0

Current Assets 8776.20 7921.40 -854.8 -9.73

The comparative balance sheet of the company reveals the comparison between two years of
the financial data. The fixed assets are increased by 6.46 %, the current liabilities by 16.75 %
and the current assets are decreased by 9.73 %.

Comparative Balance Sheet of Maruti Suzuki India Ltd,

year ended March2017-2018 and 2018-2019

Particulars 2017-2018(Cr) 2018-2019(Cr) Increase / % Change

Decrease

Liabilities
Share Capital 151.00 151.00 0 0

Reserve & Surplus 41606.30 45990.50 4384.2 10.53

Current Liabilities 15442.10 14150.30 -1291.8 -8.36

Long Term Provision 26.50 39.50 13 49.05

Assets
Fixed Assets 15484.90 17007.90 1523 9.83

Long term Loans & 0.20 0.20 0 0

Advances

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Capital work in progress 2125.90 1600.10 -525.8 -24.73

Investment 34072.90 31469.50 -2603.4 -7.64

Deferred Tax Asset 0 0 0 0

Current Assets 7921.40 12361.60 4440.2 56.05

The comparative balance sheet of the company reveals the comparison between two years of
the financial data. The fixed assets are decreased by 9.83 %, the current assets by 56.05 %
and the current liabilities decreased by 8.36 %.

Comparative Balance Sheet of Maruti Suzuki India Ltd,

year ended March2018-2019 and 2019-2020

Particulars 2018-2019(Cr) 2019-2020(Cr) Increase / % Change

Decrease

Liabilities
Share Capital 151.00 151.00 0 0

Reserve & Surplus 45990.50 48286.00 2295.5 4.99

Current Liabilities 14150.30 11294.80 -2855.5 -20.17

Long Term Provision 39.50 51.60 12.1 30.63

Assets
Fixed Assets 17007.90 17118.60 110.7 0.65

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Long term Loans & 0.20 0.20 0 0

Advances
Capital work in progress 1600.10 1337.40 -262.7 -0.16

Investment 31469.50 35248.80 3779.3 0.12

Deferred Tax Asset 0 0 0 0

Current Assets 12361.60 8427.40 -3934.2 -0.31

The comparative balance sheet of the company reveals the comparison between two years of
the financial data. The fixed assets are decreased by 0.65 %, the current assets by 0.31 % and
the current liabilities decreased by 20.17 %.

Comparative Balance Sheet of Maruti Suzuki India Ltd,

year ended March2019-2020 and 2020-2021

Particulars 2019-2020 2020-2021 Increase / % Change

Decrease
(Cr) (Cr)

Liabilities
Share Capital 151.00 151.00 0 0

Reserve & Surplus 48286.00 51215.80 2929.80 6.06

Current Liabilities 11294.80 16106.70 4811.9 42.60

Long Term Provision 51.60 44.70 -6.9 -13.37

Assets

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Fixed Assets 17118.60 16446.80 -671.8 -3.92

Long term Loans & 0.20 0.20 0 0

Advances
Capital work in progress 1337.40 0.00 0 0

Investment 35248.80 33371.00 -1877.8 -5.32

Deferred Tax Asset 0 0 0 0

Current Assets 8427.40 18526.70 10099.3 119.8

The comparative balance sheet of the company reveals the comparison between two years of
the financial data. The fixed assets are decreased by 3.92%, the current liabilities by 42.60 %
and the current assets are increased by 119.8 %.

DATA ANALYSIS AND INTERPRETATION

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DATA ANALYSIS
Researchers often find data analysis the most enjoyable part of carrying out a research study,
since after all the hard work and waiting they get a chance to find out the answers. So, analyzing
the data and interpreting the results are the reward of the work of collecting data.
It is used in all of the sciences; it is used in business, administration, and policy. Data do not,
however, “speak for themselves”. They reveal what the researcher can detect. Analysis,
especially in the case of survey or experimental data involves converting raw data into
information, which is meaningful. As with most other aspects of a study, analysis and
interpretation of the study should relate to the study objectives and research questions.

RATIO ANALYSIS
 LIQUIDITY RATIO
 CURRENT RATIO
Current ratio is a liquidity ratio that measures a company’s ability to pay short-term obligations.
In a sound business a current ratio of 2:1 is considered an ideal one. High ratio indicates sound
solvency and low ratio indicates inadequate working capital. Current ratio is an index of the
firm’s financial stability.
Current Ratio = Current Asset/Current Liabilities
TABLE
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YEAR CURRENT ASSET CURRENT LIABILITY CURRENT

(Cr.) RATIO
(Cr.)

2016-2017 8776.20 13226.40 0.66

2017-2018 7921.40 15442.10 0.51

2018-2019 12361.60 14150.30 0.87

2019-2020 8427.40 11294.80 0.75

2020-2021 18526.70 16106.70 1.15

Average 0.788

INTERPRETATION
The above table shows that the current ratio in the year 2016-17 was 0.66 and then it decreases
to 0.51 and increases to 0.87, 0.75 in the next two years and finally it upwards to
1.15 in the last year.
The ideal current ratio is 2:1. The above table shows that the current ratio of the firm is lower
than 2 % in all five years. The average current ratio of the period from 2016 to 2021 is 0.788,
which mean average ratio of the company is not satisfactory.

 QUICK RATIO
This ratio is also known as Acid test ratio or Liquid ratio. It is the best measure of the liquidity
of the company. It shows the ability of business to meet its immediate financial commitments.
Quick ratio is more conservative than the current ratio. The quick asset is computed by
adjusting current asset to eliminate those assets which are not in cash.
Quick ratio /Acid Test Ratio = Quick Assets/Current liabilities

TABLE

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YEAR QUICK ASSET (Cr.) CURRENT QUICK RATIO

LIABILITY(Cr.)

2016-2017 5514 13226.40 0.41

2017-2018 4760.6 15442.10 0.30

2018-2019 9035.9 14150.30 0.64

2019-2020 5212.5 11294.80 0.46

2020-2021 15476.7 16106.70 0.96

Average 0.544

INTERPRETATION
Quick ratio is the test of business solvency. The standard quick ratio is 1:1. A higher ratio
indicates sound financial position, here the ratios are 0.41, 0.30, 0.64, 0.46, 0.96 and the
average ratio is 0. 544.We can conclude that firm has not in a position to meet its current
liabilities immediately or within a month.

 ABSOLUTE LIQUIDITY RATIO

This is also known as super quick ratio or cash ratio. In calculating this ratio, both inventories
and receivables are deducted from the current assets to arrive at absolute liquid asset such as
cash, bank and easily marketable investments in securities. The ideal Absolute liquidity ratio
is 1:2 Higher the ratio, the higher is the cash liquidity.
Absolute liquid ratio = Absolute liquid assets/Current liability.
TABLE

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YEAR ABSOLUTE LIQUID CURRENT ABSOLUTE

ASSET (Cr.) LIABILITIES(Cr.) LIQUIDITYRATIO

2016-2017 2192.60 13226.40 0.17

2017-2018 1288.40 15442.10 0.08

2018-2019 5224.40 14150.30 0.36

2019-2020 5523.20 11294.80 0.48

2020-2021 6036.40 16106.70 0.37

Average 0.292

INTERPRETATION
The acceptable norm for this ratio is 1:2 to attain liquidity position. In Maruti Suzuki India Ltd
the absolute liquidity ratio is very low in the years 2016-2017 and 2017-2018 then the ratio
upturns in the next year. The average ratio of the company is 0.292, when the ratios are less
than the recommended level; the company fails to manage day to day cash management
progression.

 SOLVENCY RATIO

 DEBT EQUITY RATIO

This ratio indicates the relative proportion of debt and equity in financing the assets of a firm.
An acceptable norm for this ratio is 2:1. A high ratio shows that the claim of creditors is greater
those of owners. From the point of view of the company, the lower this ratio, the less company
must worry in meeting its fixed obligations.
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Debt equity ratio = Outsider Funds (Total Debts)/Shareholder Funds or Equity.

TABLE
YEAR DEBT (Cr.) EQUITY(Cr.) DEBT-EQUITYRATIO

2016-2017 1593.10 151 10.55

2017-2018 2170.70 151 14.37

2018-2019 2640.00 151 17.48

2019-2020 2820.30 151 18.67

2020-2021 2593.90 151 17.17

Average 15.648

INTERPRETATION
An acceptable norm for this ratio is 2:1. A high ratio shows that the claimsof creditors are
greater those of owners. A very high ratio is unfavorable from the point of view of the firm.
Here the ratios are 10.55, 14.37, 17.48, 18.67 and 17.17 respectively for the continuous five
years and the average ratio of the company is 15. 648.Hence we can conclude that long term
solvency position of the firm is bad.

 PROPRIETARY RATIO

Proprietary ratio shows the extent to which shareholders own the business and thus indicates
the general financial strength of the business. A higher ratio indicated a secured position to the
creditors of the company and low ratio indicates that the creditors will have no guarantee for
their money.
Proprietary (equity) ratio = Shareholder funds/Total assets

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TABLE
YEAR SHAREHOLDERS TOTAL ASSET(Cr.) PROPRIETARY
FUND (Cr.)

RATIO
2016-2017 36431.10 51250.60 0.71

2017-2018 41757.30 59370.10 0.70

2018-2019 46141.50 62931.80 0.73

2019-2020 48437.00 62552.10 0.77

2020-2021 51366.80 70067.40 0.73

Average 0.728

INTERORETATION
The proprietary ratio is computed for the purpose of knowing how much funds have been
provided by the shareholder towards the total asset. A high ratio indicates safety to the
creditors and low ratio shows greater risk to the creditors. The acceptable norm of the ratio is
1:3. But the company shows the proprietary ratio less than that of the general ratio and the
average ratio of the company is 0. 728.This indicate greater risk to the creditors. Hence, we
can conclude that the firm takes the advantage of trading on equity.

 FIXED ASSET TO NET WORTH RATIO

This ratio shows the relationship between fixed assets and shareholder’s fund. The purpose of
this ratio is to find out the percentage of the owners’ fund is invested in fixed assets such as
property, plant and equipment, and the extent to which funds are available for the company’s
operation. If the ratio is greater than 1, it means that creditor’s funds have been used to
acquire a part of the fixed assets.
Fixed assets to net worth ratio = Fixed Assets / Shareholders fund.

TABLE

YEAR FIXED ASSET SHAREHOLDERS RATIO

(Cr.) FUND (Cr.)
2016-2017 14545.00 36431.10 0.39

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2017-2018 15484.90 41757.30 0.37

2018-2019 17007.90 46141.50 0.36

2019-2020 17118.60 48437.00 0.35

2020-2021 16446.80 51366.80 0.32

Average 0.358

INTERPRETATION
If the ratio is greater than one, it means that creditors fund has been used to acquire a part of
fixed asset. The average ratio of the company is 0.358; here the ratios are very much
satisfactory. So, we can conclude that Maruti Suzuki India Ltd does not need creditors fund for
acquiring fixed asset.

 ACTIVITY RATIO
 FIXED ASSET TURNOVER RATIO

This ratio measures a company’ ability to generate sales from its investments in fixed assets
such as plant and machinery, land and building etc. Generally, a high ratio indicates efficient
utilization of fixed assets in generating sales and low ratio may signify that the firm has an
excessive investment in the fixed assets.
Fixed asset turnover = Net Sales/ Fixed Assets
TABLE

YEAR NET SALES FIXED ASSET RATIO

(Cr.) (Cr.)

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2016-2017 66909.40 14545.00 4.60

2017-2018 78104.80 15484.90 5.04

2018-2019 83026.50 17007.90 4.88

2019-2020 71690.40 17118.60 4.18

2020-2021 66562.10 16446.80 4.04

Average 4.548

INTERPRETATION
The effective utilization of fixed asset will result in increased production and reduced cost.
Yearly there is a decreasing trend in the ratio except the period 2017-2018.The effective
utilization of fixed assets shows a higher ratio in the year2017-2018 and the average ratio of
the company is 4.548. The fluctuation in the ratio indicates the need of better utilization of
fixed asset.

 WORKING CAPITAL TURN OVER RATIO

The Working capital turnover ratio measures how efficiently a company using its working
capital in making sales. A high ratio shows the efficient utilization of working capital in
generating sales. A low ratio, on the other hand, may indicate excess of net working capital.
The ratio thus shows whether working capital is efficiently utilized or not.
Working Capital Turnover Ratio=Net Sales/Working Capital

TABLE
YEAR NET SALES (Cr.) WORKING RATIO
CAPITAL(Cr.)

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2016-2017 66909.40 -4450.20 -15. O3

2017-2018 78104.80 -7520.70 -10.38

2018-2019 83026.50 -1788.70 -46.41

2019-2020 71690.40 -2867.4 -25.00

2020-2021 66562.10 2420 27.50

Average -69.32

INTERPRETATION
Fluctuation in the working capital due to the variation of net working capital shows that the
need of consistent working capital management policy.

 CAPITAL TURNOVER RATIO

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Capital turnover ratio shows how much sales are entertained from the capital. A high capital
turnover ratio indicates the capability of the organization to achieve maximum sales with
minimum amount of capital employed.
Capital Turnover Ratio = Net sales / Shareholders fund
TABLE
YEAR NET SALES (Cr.) SHAREHOLDERS RATIO
FUND
(Cr.)
2016-2017 66909.40 36431.10 1.84

2017-2018 78104.80 41757.30 1.87

2018-2019 83026.50 46141.50 1.79

2019-2020 71690.40 48437.00 1.48

2020-2021 66562.10 51366.80 1.29

Average 1.654

INTERPRETATION
The above table shows the relationship between the sales and proprietors funds. In the year
20117-18 the ratio is 1.87 and then it decreasing to 1.79, 1.48 and 1.29 in the next three years.
The average ratio of the company is 1.654. It shows the firms is not maintaining the better
utilization of own funds.

 PROFITABILITY RATIO
 GROSS PROFIT RATIO

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Gross profit ratio is a profitability ratio that shows the relationship between gross profit and
net sales revenue. The ratio thus reflects the margin of profit that a concern can earn on its
trading and manufacturing activity.
Gross Profit Ratio = Gross Profit / Net Sales * 100
TABLE
YEAR GROSS PROFIT NET SALES RATIO
(Cr.) (Cr.)
2016-2017 68034.80 66909.40 101.68

2017-2018 79762.70 78104.80 102.12

2018-2019 86020.30 83026.50 103.60

2019-2020 75610.60 71690.40 105.46

2020-2021 70332.50 66562.10 105.66

Average 103.704

INTERPRETATION
Mostly higher gross profit ratio is considered better. The above table shows the relationship
between the gross profit and net sales in percentage. In 2016-2017 the gross profit
was101.68 and it increasing to 102.12, 103.60, 105.46, and 105.66 in the next four years.
Theaverage ratio is 103.70.

NET PROFIT RATIO

Net profit ratio is a measure of the overall profitability. A firm with a high net profit ratio is
in an advantageous position to survive in the face of rising cost of production and falling selling
prices.
Net profit margin or ratio = Net Profit / Net Sales

TABLE
YEAR NET PROFIT(Cr.) NET SALES(Cr.) NET PROFIT RATIO

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2016-2017 9960.30 66909.40 14.88

2017-2018 11003.40 78104.80 14.08

2018-2019 10465.60 83026.50 12.60

2019-2020 7064.80 71690.40 9.85

2020-2021 5159.40 66562.10 7.75

Average 8730.7 73258.64 11.832

INTERPRETATION
This ratio is used to measure the overall profitability and hence it is very useful to proprietors.
Here the ratio shows decreasing trend year after year so operational efficiencyof the concern
reaches the lowest level in the year 2019-2020 and 2020 -2021.This fluctuating trend indicate
the need of cost management and sales promotion.

TREND ANALYSIS
An aspect of technical analysis that tries to predict the future movement based on past data.
It also forms the basis for future projections.
The table showing the trend for net profit from 2016-17 to 2020-21

TABLE – NET PROFIT

YEAR X Y XY X2

2016-2017 1 9960.30 9960.30 1

2017-2018 2 11003.40 22006.8 4

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2018-2019 3 10465.60 31396.8 9

2019-2020 4 7064.80 28259.2 16

2020-2021 5 5159.40 25797 25

TOTAL 15 43653.5 117420 55

INTERPRETATION
the net profit shows a gradual decline from 2019-2020 and reaches the downin the year 2020-
2021.

Y= a + bXWhere
b= N ∑XY - ∑X∑YN ∑X 2 - ∑(X) 2

= 5* 117420- 15* 8730.7

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5*55 – (15)2
= 587100- 130960.5
50
= 456139.5

50
= 9122.79

a= ∑Y - b (∑X)
N
= 8730.7 – {9122.79(15)}
5
= 8730.7– (136841.85)
5
= -25622.23 (a)

Profit for the year 2021-22 to 2025-26

Y= a + bX

2021-2022
Y =- 25622.23+ 9122.79*6
= -25622.23 + 54736.74
= 29114.51

2022-2023
Y= - 25622.23+ 9122.79*7
= -25622.23 + 63859.53
=38237.3

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2023-2024
Y= - 25622.23+ 9122.79*8
= -25622.23 + 72982.32
= 47360.09

2024-2025
Y= - 25622.23+ 9122.79*9
= -25622.23 + 82105.11
= 56482.88

2025-2026
Y= - 25622.23+ 9122.79*10

= -25622.23 + 91227.9
= 65605.67

TABLE
Estimated profit from 2021-2022 to 2025-2026

YEAR PROFIT

2021-2022 29114.51

2022-2023 38237.3

2023-2024 47360.09

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2024-2025 56482.88

2025-2026 65605.67

TABLE – FUTURE PROFIT

INTERPRETATION
From the past data (2016-2017 to 2020 -2021) of the trend of net profit is estimated for the next
five years (2021-2022 to 2025-2026) the graph shows that the movement of net profit has a
positive trend in the future.

The table showing the trend for net sales from 2016-2017 to 2020-2021
2
YEAR X
X Y XY
2016-2017 1 66909.40 66909.40 1

2017-2018 2 78104.80 156209.6 4

2018-2019 3 83026.50 249079.5 9

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2019-2020 4 71690.40 286761.6 16

2020-2021 5 66562.10 332810.5 25

TOTAL 15 366293.2 1091770.6 55

The sales show a gradual decrease from 2016-2017 to 2020-2021.

Y= a + bX
Where?
b= N ∑XY - ∑X∑YN ∑X 2 - ∑(X) 2

= 5*1091770.6 – 15*366293.25*55- (15)2

= 5458853- 5494398
50
= -35545
50
=-710.9
a= ∑Y - b (∑X)

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N
= 366293.2- {-710(15)}
5
= 366293.2+10650

5
= 75388.64

Sales for the year 2021-2022 to 2025-2026

Y= a + bX
2021-2022
= 75388.64+ (-710)*6
= 75388.64+ (- 4260)
= 71128.64

2022-2023
= 75388.64+ (-710) *7
= 75388.64+ (-4970)
= 80358.64

2023-2024
=75388.64+ (-710) *8
= 75388.64+ (-5680)
= 69708.64

2024-2025
=75388.64+ (-710) *9
= 75388.64+ (-6390)
= 68998.64

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2025-2026
= 75388.64+ (-710) *10
= 75388.64+ (-7100)
= 82488.64

TABLE – ESTIMATED SALES FOR 2021-2022 TO 2025- 2026

YEAR SALES

2021 - 2022 71128.64

2022 - 2023 80358.64

2023 – 2024 69708.64

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2024– 2025 68998.64

2025 - 2026 82488.64

INTERPRETATION
From the past data (2016-2017 to2020-2021) the trend of net sales isestimated for the next five
years (20121-2022 to 2025-2026) the graph shows that the movement of net sales for the future
has a positive trend.

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FINDINGS

FINDINGS
The following were the findings from the research study.

 The ideal current ratio is 2:1. The current ratio of the firm is lower than 2 % in all five
years. The average current ratio of the period from 2016 to 2021 is 0.788, which mean
average current ratio of the company is not satisfactory.
 The standard quick ratio is 1:1. A higher ratio indicates sound financial position, here
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the ratios are 0.41, 0.30, 0.64, 0.46, 0.96 and the average ratio is 0.544. So, firm has not
in a position to meet its current liabilities immediately or within a month.
 On the whole liquidity position of the Maruti Suzuki India Ltd is not satisfactory.
 The accepted norm of debt-equity ratio is 2:1 and here the average ratio is 15.648. This
indicate that the claim of creditors is greater those of owners. A high debt- equity ratio
is unfavorable to the company.
 The acceptable norm of the ratio is 1:3. But the company shows the proprietary ratio
less than that of the general ratio and the average ratio of the company is 0. 728.This
indicate greater risk to the creditors.
 Fixed assets to net worth ratio of the firm is below one. Here the 0.358 ratio are very
much satisfactory. We can conclude that company does not need to use creditors fund
for acquiring fixed asset.
 The firm was able to maintain a good level fixed assets turnover ratio. The ideal ratio
is 0.75:1 and the firm achieved an average of 4.548, which is very good for a business
concern.
 Fluctuations in the working capital due to the variation of net working capital shows
that the need of consistent working capital management policy.
 The capital turnover ratio of the company is decreasing year by year. It is found that
the company is not maintaining the better utilization of own fund.
 In 2016-2017 the gross profit was 101.68 and it increasing to 102.12, 103.60, 105.46,
and 105.66 in the next four years. The average ratio is 103.704.
 The net profit ratio measures the overall profitability and hence it is very useful to
proprietors. Here the ratio shows increasing trend year after year so operational
efficiency of the concern is good.
 The movement of net profit and net sales has a positive trend in the future.

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SUGGETIONS

 Continue to diversify the product portfolio by introducing new models or variants that
cater to different segments of the market. This can help capture a broader customer base
and increase sales.
 Invest in research and development for electric vehicles to align with the growing global
trend towards sustainable and eco-friendly transportation. This can also position Maruti
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Suzuki as a leader in the Indian EV market.

 Implement cost-effective measures in manufacturing processes, supply chain, and
distribution to improve operational efficiency and reduce production costs.
 Explore opportunities to expand into untapped markets within India and consider
international expansion to increase market share and revenue.
 Enhance after-sales services and customer support to build customer loyalty. Satisfied
customers are more likely to become repeat buyers and recommend the brand to others.
 Embrace digital technologies for marketing, sales, and customer engagement. This
includes online sales platforms, digital marketing strategies, and customer relationship
management (CRM) systems.
 Explore partnerships with other companies, both within and outside the automotive
industry, to leverage synergies, share resources, and accelerate innovation.
 Strengthen the supply chain by diversifying suppliers, ensuring a steady flow of critical
components, and adopting digital solutions for better supply chain visibility.
 Invest in employee training programs to ensure a skilled and motivated workforce.
Well-trained employees contribute to increased productivity and innovation.
 Implement effective financial risk management strategies to mitigate currency risks,
interest rate risks, and other financial uncertainties that may impact the company's
financial performance.

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CONCLUSION

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CONCLUSION

Maruti Suzuki India Ltd as of Five-Year Assessment and the connected Profit and Loss
Account. Specific objectives have been set for the study and secondary data for the period of 5
years from 2016-2017 to 2020-2021 were analyzed findings of the study revealed that liquidity
position of the company is poor, and the solvency position of the company isgood. The
analysis done with the help of collected information’s from different sources and it shows the
overall performance of the organization. The points noted in the findings are important factors
regarding the firm. The study concluded that, the overall financial performance of the company
is average.

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BIBLIOGRAPHY

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Reports
Annual reports& accounts of Maruti Suzuki India Ltd from 2016-2017 to 2020-2021 (Money
control.com)

Books of Reference
Chandra, P. “Financial Management”, Tata Me Graw-Hill Publishing Company Ltd., New
Delhi,2014
Dr. Maheshwari, S.N. “Financial Management Principles and Practices”, Sultan Chand and
Sons, New Delhi, 2009
Jain and Narang. “Financial Accounting”, Kalyani Publishers, 2005

Websites and Journals

wwwmoneycontrol.com
www.Marutisuzuki.com
www.capitalmarket.com
www.carandbike.com

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