SHRI R.G.P.

GUJARATI PROFESSIONAL INSTITUTE, INDORE

MAJOR RESEARCH PROJECT

ON
FINANCIAL PERFORMANCE OF MARUTI SUZUKI LTD.

Submitted to Devi Ahilya Vishwavidhyalaya in partial fulfilment

of the requirements for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

By
YAMINI KANUNGO
ROLL NO. 231310007

Under the guidance of

Dr. SUNIL KUMAR VERMA

Faculty Guide
 CERTIFICATE

This is to certify that the project report entitled “FINANCIAL PERFORMANCE OF

MARUTI SUZUKI INDIA Ltd.”is a bonafide report of the project work undertaken by
YAMINI KANUNGO, third semester MBA student of SHRI R.G.P. GUJARATI
PROFESSIONAL INSTITUTE.

Dr. Sunil Kumar Verma

Faculty Guide
 DECLARATION

I hereby declare that this project report entitled “FINANCIAL PERFORMANCE OF

MARUTI SUZUKI INDIA Ltd. NEWDELHI” is a bonafide report of the study undertaken by

me, under the guidance of Dr. SUNIL KUMAR VERMA.

I also declare that this project report has not been submitted to any other University or
Institute for the award of any degree or diploma.

Place: Indore
Date: 30 /05/2021 Yamini Kanungo
 ACKNOWLEDGEMENTS

Firstly, I would like to express my deep sense of gratitude to God Almighty for his endless
blessings, which led to the successful completion of my project.

I take this opportunity to express my sincere thanks to all who helped me throughout of
completion of my project successfully.

I express my heartfelt thanks to Dr. Ravleen Kaur (HOD, Department of Management

Studies), for his valuable guidance, unfailing support, good suggestions and timely
encouragement for the preparation.

I express my deep sense of gratitude to the faculty guide Dr. Sunil Kumar Verma, for
encouraging and inspiring me for developing the project. Let me also thank all the faculty
members of the department of management studies for their help in the successful
completion of the project.

My project work involves many people at different stages. I would like to thank all those
who have directly or indirectly contributed to the success of the project.

Finally, I thank my parents and friends near and dear ones who have contributed to the
successful completion of my project. It is my duty and pleasure to acknowledge them.

YAMINI KANUNGO
 LIST OF TABLE

Table No. Title Page No.

5.1 Current Ratio 45
5.2 Quick Ratio 46
5.3 Absolute Liquidity Ratio 47
5.4 Debt Equity Ratio 48
5.5 Proprietary Ratio 49
5.6 Fixed Asset to Net worth Ratio 50
5.7 Fixed Asset turnover Ratio 51
5.8 Working capital turnover Ratio 52
5.9 Capital turnover Ratio 53
5.10 Gross Profit Ratio 54
5.11 Net Profit Ratio 55
5.12 Net Profit 56
5.13 Estimated Profit 57
5.14 Net Sales 58
5.15 Estimated Sales 59
5.16 Comparative balance sheet of 2015- 63
16&2016-17
5.17 Comparative balance sheet of 2016- 64
17&2017-18
5.18 Comparative balance sheet of 65
2017-18&2018-19
5.19 Comparative balance sheet of 2018- 66
19&2019-20
5.20 Comparative balance sheet of 2019- 67
20&2020-21
 LIST OF FIGURES

Fig No. Title Page No.

5.1 Net Profit 56
5.2 Future Profit 59
5.3 Net Sales 60
5.4 Future Sales 62
 ABREVIATIONS

FDI : Foreign Direct Investment

DPIIT : Department for Promotion of Industry and Internal Trade
GDP : Gross Domestic Product
MNC : Multinational Corporations
EV : Electric Vehicles
SWOT : Strength Weakness Opportunity and Threat analysis
SUV : Sports Utility Vehicles
FY : Financial Year
 CONTENTS

Sl. No. Title Page No.

CHAPTER I INTRODUCTION 1-4

1.1 Background of the Study 2

1.2 Statement of the Problem 3

1.3 Relevance & Scope of the Study 4

1.4 Objectives of the Study 4

CHAPTER II PROFILE OF AUTOMOBIL INDUSTRY 5-24

2.1 Business Process of the industry 6-9

2.2 Market Demand and Supply- Contribution to GDP- 9-12

Revenue Generation
2.3 Level and Type of Competition-Firms Operating in the 12-17
Industry
2.4 Pricing Strategies in the Industry 17-20

2.5 Prospects and Challenges of the Industry 20-22

2.6 Key Drivers of the Industry 22-24

CHAPTER III REVIEW OF LITERATURE 25-41

3.1 Brief Theoretical Construct related to the Problem 26-39

3.2 An Overview of Earlier Studies 39-41

3.3 Uniqueness of Research Study 41

CHAPTER IV METHODOLOGY OF THE STUDY 42-43

4.1 Research Approach and design 43

4.2 Sources of Data 43

4.3 Data Analysis Tools 43

4.4 Report Structure 43

4.5 Limitations of the Study 43

CHAPTER V DATA ANALYSIS, INTERPRETATION AND INFERENCE 44-67

CHAPTER VI FINDINGS OF THE STUDY 68-69

CHAPTER VII CONCLUSION 70-71

BIBLIOGRAPHY 71

APPENDIX 72-76
CHAPTER -1
INTRODUCTION

1
1.1 Background of the Study
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 share
holders.

To have a clear understanding of the profitability and financial position of business, the
financial statements have to be analysed and interpreted. Financial statements are prepared for
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 in itself 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

2
summarise 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 in to 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 ratios are
calculated for a number of years which shows the trend for the change of position. To take
certain important decisions for their business various users like managements of the companies,
bankers, investors and 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.

1.2 STATEMENT OF THE PROBLEM

The financial statements reveal a true and fair view of the financial position of a
concern. The analysis of financial statement is a process of evaluating the relationship between
the component parts of financial statement to obtain a better understanding of the firm’s
position and performance. To evaluate the company’s profitability, liquidity, efficiency and
solvency using the financial statements. To take certain important decisions for their business

3
various users like managements of the companies, bankers, investors and creditors etc. uses the
accounting ratios for analyzing the financial position.

1.3 RELEVANCE AND SCOPE OF THE STUDY

• The scope of the study is limited to single organization Maruthi Suzuki.
• Major scope of this study is to find out the financial strength and weakness of
the firm from analyzing the financial statements.
• To understand past performance, present financial conditions and to find suggestions
for the future improvements.

1.4 OBJECTIVE OF THE STUDY

The following specific objective have been framed for the study

• To study the financial performance of Maruti Suzuki India Ltd over a period of five
years ( 2016-2017 to 2020-2021)
• To evaluate financial position of the company in terms of solvency, profitability,
liquidity and efficiency
• To estimate the trend in sales and profit of the firm.
• To analyze the balance sheet and income statement and to identify the trends and
relationships between financial statement items.

4
 CHAPTER – 2

PROFILE OF AUTOMOBILE INDUSTRY

5
2.1 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 absolutely 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.

6
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
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 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

7
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

middleincome 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 fuelefficient 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 also have digital infotainment
systems (McGarrahan& Harris, 2008). Given the increased complexities in the manufacture of
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 also 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.

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

8
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.

2.2 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 StageVI 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

9
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
to reach Rs 16.16-18.18 trillion (US$ 251.4-282.8 billion) by 2026. Two-wheelers dominate
the industry and made 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 20172030 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 the 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 advantage to the existing
and new entry players.

2.2.1) Contribution to 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

10
GDP. As a result, the GDP, which saw an increasing trend, began to feel the pinch of an
unexpected and unforeseeable downfall.

2.2.2) Revenue 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.
• 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
antiChina sentiments.

11
 • In October 2020, Ultraviolette Automotive, a manufacturer of electric motorcycle in
India, raised a disclosed amount in a series B investment from GoFrugal
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 AutoComp 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-Olectra, Tata Motors and Ashok Leyland will supply 5,500 electric buses for
different state departments.

2.3 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

12
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 the operations 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) system that
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 from knocked-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 creation of wide

13
networks, as many companies had full technology and competence in producing 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
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 evolving
export base for midsize cars and compact SUVs. As per the World Trade

14
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.
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.

2.3.1. The Porter Five Forces in the World’s Automobile Industry a)

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
(Uzwyshyn, 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 manufacture

15
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 fuelefficient.

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).

b) 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 (Uzwyshyn, 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.

c) 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

16
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.

d) 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.

e) 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 price concessions
from suppliers because they have a pool of suppliers from whom to choose.

2.4 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

17
key detail. It is expected that the Indian car market will be the global top 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
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.

2.4.1 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.

2.4.2 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 recognition earlier.
The economy pricing strategy embraces no to the low marketing cost in product or service

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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.

2.4.3 Customer value-based pricing strategy

This is the most effective method that is followed by many successful companies. Valuebased
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.

a) 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
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.

b) 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 product or service that
might better fit in a customers' budget. This will help your sales team create a budget based

19
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.

2.5 PROSPECTS AND CHALLENGES OF THE AUTOMOTIVE INDUSTRY

The Indian automotive sector has witnessed excellent growth in the recent past and is all set to
carry on this momentum. The Indian automobile industry has come a long way since its 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 twowheelers. While the heavy vehicles 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 refining the 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.

Key challenges in the Indian Automotive Sector

There are some pressing questions that are currently worrying the automotive manufacturers in
India:

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• 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:
a) 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.
b) 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 that it is creating
uncertainties 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
uncertainties keep plaguing the automotive world.
c) 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 and
Japan and competition rising from other manufacturers. The slowdown of sales is
directly proportional to the increasing competition.
d) 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 emissions. 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.
e) 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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2.6 KEY DRIVERS OF THE AUTOMOTIVE INDUSTRY
a) 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.

b) 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.

c) 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 into production
facilities in emerging markets in order to reduce production costs. Automakers, have merged

22
with, and in some cases established commercial strategic partnerships with other 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.

d) 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 are able to address consumer demands for increased
safety and sophistication.

Other innovations that consumers are interested in include 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 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.

e) 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

23
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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 CHAPTER -3

REVIEW OF LITERATURE

3.1 BRIEF THEORETICAL CONSTRUCT RELATED TO THE

PROBLEM
In this chapter explains the theoretical frame work 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. In order 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.

25
3.1.1 FINANCIAL PERFORMANCE ANALYSIS
The analysis of financial statement is a process of evaluating the relationship between the
component parts of financial statement to obtain a better understanding of the firm’s position
and performance.

The dictionary meaning of ‘analysis’ is to resolve or separate a thing in to its element or

components parts for tracing their relation to the things as whole and to each other.It helps to
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. This analysis can be undertaken by management of the firm or by parties
outside the namely, owners, creditors, investors

3.1.2 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.

Financial statements are intended to be understandable by readers who have a reasonable

knowledge of business and economic activities and accounting and who are willing to study
the information diligently. They are useful for the following reasons:

• To determine the ability of a business to generate cash, and the sources and uses of that
cash.

• To determine whether a business has the capability to pay back its debts.

26
 • To track financial results on a trend line to spot any looming profitability issues.

• To derive financial ratios from the statements that can indicate the condition of the
business.

• To investigate the details of certain business transactions as outlined in the disclosures

that accompany the statements

Main types of financial statements are:

1. 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)
• 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

2. 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

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3.1.3 ANALYSIS 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 statement 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 concerned. Broadly, the term financial analysis is applied to almost any kind of
detailed enquiry into financial data. A financial executive has to evaluate the past
performance , present financial position, liquidity position, enquire into profitability of the
firm and to plan for future operations.

Definition

Metcalf and Titard: “Analysis of financial statement is a process of evaluating the relationship
between components part of a financial statement to obtain a better understanding of a firms
position and performance.”

3.1.4 PURPOSE OF FINANCIAL ANALYSIS

The following are the main purpose of the analysis of financial statements:

• To estimate the earning capacity of the firm.

• To determine the long-term liquidity of the funds.
• To judge the solvency of the firm.
• To determine the debt capacity of the firm.
• To decide about the future prospects of the firm.
• To measure the efficiency of operations.

3.1.5 TYPES OF FINANCIAL ANALYSIS

The following points highlight the important types of financial analysis,

• According to Material Used

• According to Modus Operandi,

• According to Time Horizon or Objective of Analysis According to Material Used

According to material used, financial analysis can be of two types;

28
(a)External Analysis

This analysis is done by outsiders who do not have access to the detailed internal accounting
records of the business firm. These outsiders include investors, potential investors, creditors,
potential creditors, government agencies, credit agencies, and the general public.

For financial analysis, these external parties to the firm depend almost entirely on the published
financial statements. External analysis, thus serves only a limited purpose. However, the recent
changes in the government regulations requiring business firms to make available more
detailed information to the public through audited published accounts have considerably
improved the position of the external analysis.

(b) Internal Analysis

The analysis conducted by persons who have access to the internal accounting records of a
business firm is known as internal analysis. Such an analysis can, therefore, be performed by
executives and employees of the organization as well as government agencies which have
statutory powers vested in them. Financial analysis for managerial purposes is the internal type
of analysis that can be affected depending upon the purpose to be achieved.

According to Modus operandi:

(a) Horizontal Analysis

Horizontal analysis refers to the comparison of financial data of a company for several years.
The figures for this type of analysis are presented horizontally over a number of columns. The
figures of the various years are compared with standard or base year. A base year is a year
chosen as beginning point

This type of analysis is also called ‘Dynamic Analysis’ as it is based on the data from year to
year rather than on data of any one year. The horizontal analysis makes it possible to focus
attention on items that have changed significantly during the period under review

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(b) Vertical Analysis

Vertical analysis refers to the study of relationship of the various items in the financial
statements of one accounting period. In these types of analysis the figures from financial
statement of a year are compared with a base selected from the same year’s statement.

Since vertical analysis considers data for one time period only, it is not very conducive to a
proper analysis of financial statements. However, it may be used along with horizontal analysis
to make it more effective and meaningful

According to Time Horizon or Objective of Analysis:

(a) Short-term Analysis:

Short-term analysis measures the liquidity position of a firm, i.e. the short- term paying capacity
of a firm or the firm’s ability to meet its current obligations

(b)Long-term Analysis

Long-term analysis involves the study of firm’s ability to meet the interest costs and repayment
schedules of its long-term obligations. The solvency, stability and profitability are measured
under this type of analysis.

3.1.6 OBJECTIVES OF FINANCIAL ANALYSIS

• 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 of the firm.

3.1.7 LIMITATIONS OF FINANCIAL ANALYSIS

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;

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 • 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,
technical know-how etc…

• Results shown by analysis may be misleading in the absence of absolute data.

•The accuracy and reliability of analysis depends on reliability of figures derived from financial
statement.

3.1.8 TECHNIQUES OR TOOLS OF FINANCIAL ANALYSIS

The analysis of financial statements consists of a study of relationships and trends to
determine whether or not the financial position of the concern and its operating efficiency
have been satisfactory. In the process of this analysis various tools or methods are used
by the financial analyst. The analytical tools generally available to an analyst for this purpose
are as follows

• Comparative financial and operating statements

• Common-size statement
• Trend ratio (trend percentage)
• Average analysis
• Statement of changes in working capital

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 • Ratio analysis
i) Comparative Financial Statement

Financial data becomes more meaningful when compared with similar data for a previous
period or number of prior periods. Statements prepared in form that reflects financial data
of two or more periods are known as comparative statements. Annual data can be compared
with similar data for prior years. Such statements are very helpful in measuring the effect of
the conduct of business during consideration. Comparative statements can be of two types:

Comparative Balance sheet.

Comparative Income statement.

The Comparative Balance sheet analysis is the study of the trend of the same items, group
of item and computed items in two or more Balance sheet of the same business enterprise on
different dates.
The comparative income statement is a statement prepared to get an idea of the progress of a
business over a period of time.

ii) Common Size Statements

Those are the statements prepared to show the relationship of different individual item with
some common items. These are the comparative statement that gives only the vertical
percentage ratio for financial data without giving rupee value. These are also known as 100%
statements. Common size statements include.
• Common size balance sheet
• Common size income statements

Common size balance sheet is a statement in which balance sheet items are expressed as
percentage of each asset and percentage of each liability to total of liabilities is called common
size balance sheet.
Common size income statement is a statement in which each item of expense is shown as a
percentage

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 iii) Trend Percentage Analysis (TPA)

The trend analysis is a technique of studying several financial statements over a series of years.
In this analysis the trend percentages are calculated for each item by taking the figure of that
item for the base year taken as 100. Generally the first year is taken as a base year.
The analyst is able to see the trend of figures, whether moving upward or downward.

In brief, the procedure for calculating trends is as:

• One year is taken as a base year which is generally is the first year or last year.

• Trend percentages are calculated in relation to base year.

iv) Average Trend Analysis

It is an improvement over trend analysis method. When trend ratios have been determining for
the concern, these figures are compared with the average trend of the industry. Both these
trends can be presented on the graph paper also in the shape pf curves. This presentation of fact
in the shape of picture makes the analysis and comparison more comprehensive and impressive.

v) Statement of Changes in Working Capital

A change in Working Capital is the net change in current assets and current liabilities. Working
Capital is a measure of a company's short term liquidity or its ability to cover short term
liabilities. Working capital is defined as the difference between a company's current assets and
current liabilities. That is,

Working Capital = Current Assets - Current Liabilities.

Changes in Working Capital is reported in the cash flow statement since it is one of the major
ways in which net income can differ from operating cash flow. Under the accruals system,
companies calculate revenue and expenditure when a transaction occurs instead of when the
cash actually changes hands.

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 vi) 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’s current 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
• Turnover Ratio
• Profitability Ratio
A. 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 explains about the liquidity of the firm are

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 1. Current Ratio
2. Acid Test Ratio / quick ratio
3. Absolute liquid ration / cash ratio

1. 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.

2. 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
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.

3. Absolute liquidity ratio

It shows the relationship between absolute liquid or super quick current assets and liabilitiesIt
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

35
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.

B. LEVERAGE / 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

1. Debt Equity Ratio

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.

36
2. 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.

3. 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.

C. 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:

• Fixed asset turnover ratio

• Net working capital turnover ratio
• Capital Turnover Ratio

37
1. 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

2. 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

3. 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

D. 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 ;

1. Gross profit margin or ratio

2. Net profit margin or ratio

1. 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.

38
 Gross profit margin or ratio = Gross profit /Net sales *100

2. 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

3.2 AN OVERVIEW OF EARLIER STUDIES

A number of researches have already undertaken various studies on different aspects relating
to the management of finance of different types of industries. Some of those studies were
reviewed and a brief report is given below.

Jagan Mohan Rao (1993) has conducted a study on financial appraisal of Indian Automotive
Tyre Industry. The study was intended to measure and evaluate the financial performance
through inter-company and inter- sectoral analysis over a given period of time (1981-1988).
The main findings are that fixed assets utilization in many of the tyre undertakings was not as
productive as expected and inventory was managed fairly well. The tyre industry’s overall
profit performance was subjected to inconsistency and ineffective.

Pai, Vadivel and Kamal (l995) have studied the diversified companies and financial
performance. An effort was made to study the relationship between diversified firms and their
financial performance. Seven large firms having different products-both related and otherwise
in their portfolio and operating in diverse industries were analyzed. A set of performance
measures ratios and employed to determine the level of financial performance. The results
reveal that the diversified firms studied have been healthy financial performance. However
variation in performance from one firm to another has been observed and statically established.

Vijaya Kumar .A (1996) has in his study on ‘Assessment of corporate liquidity -discriminate
analysis approach‘revealed that the growth rate of sales, leverage. Current fat. Operating
expenses to sales and vertical integration are the important variables which determine the
profitability of companies in the sugar industry. Future.The author has studied the short-term
liquidity position in twenty-eight selective sugar factories in co-operative and private sectors.
A discrimination analysis has been undertaken to distinguish the good risk companies from

39
poor risk companies based on current and liquidity ratios. And according to the ‘2’ scores the
companies are ranked in the order of liquidity.

Sidhu and Gurpreet Bhatia (1998) have studied the factors affecting profitability in Indian
textile industry. An attempt was made in this study to identify the major determinants of
profitability in Indian textile industry with the help of empirical data taken from directory of
Bombay Stock Exchange for the year 1983. The regression analysis applied for the study
revealed that there exists no clear cut relationship between current profitability and capital
intensity. The age of the firm was having generally negative but statistically insignificant
relationship with current profitability which points towards the fact firms in Indian textile
industry are absolute and need modernization.

Rajeswari (2000) has studied the Liquidity Management of Tamil Nadu Cement Corporation
LtdAlangulam. The study revealed that the liquidity position of TANCEM is not stable.
Regarding liquidity ratios, there was too much of liquidity in the first two years of the study
period. A very high degree of liquidity is also bad as idle assets earn nothing and effects
profitability. It can be concluded that the liquidity management of TANCEM is poor and is
not satisfactory 64.

Vijayakumar (2002) has in his study on‘ Determinants of profitability A firm level study
of the sugar industry of Tamil Nadu’, delved into the various determinants of profitability viz.,
growth rate of sales, vertical integration and leverage. Apart from these three variables, he
had selected current ratio, operating expenses to sales ratio and inventory turnover ratio.
Economic models were used to test the various hypotheses relating to profitability and reported
the poor liquidity performance of the sugar mills.

Vijayakumar and Kadirvel (2003) have studied the profitability and size of firm in Indian |:
Minerals and Metals Industry. For this purpose, Indian public sector minerals and metals a
industry has been selected. The study reveals that size is found to be significantly associated
with “the profitability during the study period. It is also evident from the analysis that size is
positively associated with the profitability. Thus, larger firm may be in a position to earn higher
rate of return on investment through diversification and moving into higher technology.

40
3.3 UNIQUENESS OF RESEARCH STUDY
Finance is a crucial part of any business. Many of the previous studies are focus on the
performance evaluation of selected automotive industries. The above kinds of literature clearly
state that many studies have been done on profitability, financial performance, and liquidity
analysis of various industries. The present study mainly concentrated on analyzing and
evaluating the overall financial efficiency of Maruti Suzuki India and the financial trend of the
company for a period of five years.

• These Research Study has conducted during the period of Indian pandemic
COVID-19
• The study is entirely based on online data.
• Data collected from reliable sources.
• The tools were used for analysis are updated as well as have advanced
techniques.

CHAPTER 4

METHODOLOGY OF THE STUDY

41
4.1 RESEARCH APPROACH AND DESIGN
Analytical Research
The study is primarily based on the internal records and the annual records of the company.
4.2 SOURCES OF ONLINE DATA

• Websites
• Books
• Magazines
• Articles and Journals
• Secondary data

4.3 DATA ANALYSIS TOOLS

The data collected where classified and analyzed with the help of percentages , averages,
accounting rates and comparative financial statement.

4.5 REPORT STRUCTURE

The report is presented in five chapters as given below; Chapter
1 Introduction.

42
Chapter 2 Profile. of automotive industry in India Chapter
3 Review of Literature.
Chapter 4 Methodology of the Study.
Chapter 5 Data Analysis, Interpretation, Inference.
Chapter 6 Findings of the Study
Chapter 7 Conclusions

4.5 LIMITATIONS OF THE STUDY

The study was conducted with the following limitations;

• The study has been based on secondary data sources, namely published financial
statements of the company. Therefore, the reliability of the ratios is linked to the
accuracy of information in these statements.
• The study is for a period of five years only. I.e. FY 2015-16 to 2020-21.
• The study involves the use of various financial tools, which itself is having its own
limitations.

CHAPTER 5

DATA ANALYSIS, INTERPRETATION & INFERENCE

43
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.

5.1 RATIO ANALYSIS

A) LIQUIDITY RATIO • CURRENT RATI

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 5.1

Current Ratio
YEAR CURRENT ASSET CURRENT CURRENT
(Cr.) LIABILITY RATIO
(Cr.)
8776.20 13226.40 0.66
2016-2017

44
 7921.40 15442.10 0.51
2017-2018
12361.60 14150.30 0.87
2018-2019

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.

5.1.2 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 5.2

Quick Ratio
YEAR QUICK ASSET CURRENT QUICK RATIO
(Cr.) 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

45
 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.

5 .1.3 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 5.3 Absolute Liquidity Ratio

YEAR ABSOLUTE CURRENT ABSOLUTE
LIQUID ASSET LIABILITIES LIQUIDITY
(Cr.) (Cr.) RATIO

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

46
 2020-2021 6036.40 16106.70 0.37

0.292
Average

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.

B) SOLVENCY RATIO
5.1.4 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 considered to be 2:1. A high ratio shows that the claim of
creditors are greater those of owners.From the point of view of the company, the lower this
ratio, the less company has to worry in meeting its fixed obligations.

Debt equity ratio = Outsider Funds (Total Debts)/Shareholder Funds or Equity

Table 5.4

Debt Equity Ratio

YEAR DEBT EQUITY DEBT-EQUITY
(Cr.) (Cr.) RATIO

2016-2017 1593.10 151 10.55

2017-2018 2170.70 151 14.37

2018-2019 2640.00 151 17.48

47
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 considered to be 2:1 .A high ratio shows that the claims of
creditors are greater those of owners. A very high ratio is unfavourable 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.

5.1.5 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

Table 5.5

Proprietary Ratio
YEAR SHAREHOLDERS TOTAL ASSET PROPRIETARY
FUND (Cr.) (Cr.)
RATIO

36431.10 51250.60 0.71

2016-2017
41757.30 59370.10 0.70
2017-2018
46141.50 62931.80 0.73
2018-2019
48437.00 62552.10 0.77
2019-2020

48
 51366.80 70067.40 0.73
2020-2021
Average 0.728

Interpretation:
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.

5.1.6 FIXED ASSET TO NET WORTH RATIO

This ratio shows the relationship between fixed assets and shareholders 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 5.6

Fixed Assets to Net worth Ratio

YEAR FIXED ASSET SHAREHOLDERS RATIO
(Cr.) FUND (Cr.)
2016-2017 14545.00 36431.10 0.39

2017-2018 15484.90 41757.30 0.37

2018-2019 17007.90 46141.50 0.36

49
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 have 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.

C) ACTIVITY RATIO
5.1.7 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 5.7

Fixed Asset Turnover Ratio

YEAR NET SALES FIXED ASSET RATIO
(Cr.) (Cr.)
66909.40 14545.00 4.60
2016-2017
78104.80 15484.90 5.04
2017-2018

50
 2018-2019 83026.50 17007.90 4.88

71690.40 17118.60 4.18

2019-2020
66562.10 16446.80 4.04
2020-2021
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

5.1.8 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 5.8

Working Capital Turnover Ratio

YEAR NET SALES WORKING RATIO
(Cr.) CAPITAL
(Cr.)
2016-2017 66909.40 -4450.20 -15.O3

78104.80 -7520.70 -10.38

2017-2018
2018-2019 83026.50 -1788.70 -46.41

51
 71690.40 -2867.4 -25.00
2019-2020
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.

5.1.9CAPITAL TURNOVER RATIO

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 5.9

Capital Turnover Ratio

YEAR NET SALES SHAREHOLDERS RATIO
FUND
(Cr.)
(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

52
 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.

D) PROFITABILITY RATIO

5.1.10 GROSS PROFIT RATIO

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 is able to
earn on its trading and manufacturing activity.

Gross Profit Ratio = Gross Profit / Net Sales * 100

Table 5.10

Gross Profit Ratio

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

53
 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 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 103.70

5.1.11. 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 5.11

Net Profit Ratio

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

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

54
 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 efficiency of 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.

A .The table showing the trend for net profit from 2016-17 to 2020-21

Table .5.12
Net Profit
YEAR X Y XY X2

2016-2017 1 9960.30 9960.30 1

2017-2018 2 11003.40 22006.8 4

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

Figure. 5.1

55
 Net profit
12000

10000

8000

6000
Net profit
4000

2000

0
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

Interpretation: the net profit shows a gradual decline from 2019-2020 and reaches the down
in the year 2020-2021.

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

= 5* 117420- 15* 8730.7

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)

56
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

• 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 5.13
Estimated profit from 2021-2022 to 2025-2026
YEAR PROFIT

2021-2022 29114.51

57
 2022-2023 38237.3

2023-2024 47360.09

2024-2025 56482.88

2025-2026 65605.67

Figure 5.2

Future Profit

PROFIT
70000

60000

50000

40000

30000 PROFIT

20000

10000

0
2021-2022 2023-2024 2024-2025 2025-2026

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.

B. The table showing the trend for net sales from 2016-2017 to 2020-2021

Table 5.14

58
 Net Sales
2
X X
YEAR
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

2019-2020 4 71690.40 286761.6 16

2020-2021 5 66562.10 332810.5 25

TOTAL 15 366293.2 1091770.6 55

Figure 5.3

Sales trend from 2016-2017 to 2020-2021

sales
90000
80000
70000
60000
50000
40000 sales
30000
20000
10000
0
2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

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

Y= a + bX

59
Where
b= N ∑XY - ∑X∑Y
N ∑X 2 - ∑(X) 2

= 5*1091770.6 – 15*366293.2
5*55- (15)2
= 5458853- 5494398
50
= -35545
50
= -710.9

a= ∑Y - b (∑X)

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)

60
 = 69708.64

• 2024-2025
=75388.64+ (-710)*9
= 75388.64+ (-6390)
= 68998.64
• 2025-2026
= 75388.64+ (-710)*10
= 75388.64+ (-7100)
= 82488.64

Table 5.15
Estimated sales for 2021-2022 to 2025-2026
YEAR SALES

2021 - 2022 71128.64

2022 - 2023 80358.64

2023 – 2024 69708.64

2024– 2025 68998.64

2025 - 2026 82488.64

Figure 4

Future Sales

61
 Net Sales
85000

80000

75000

Net Sales
70000

65000

60000
2021-2022 2022-2023 2023-2024 2024-2025 2025-2026

Interpretation: From the past data (2016-2017 to2020-2021) the trend of net sales is
estimated 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.
COMPARATIVE BALANCE SHEET Table 5. 16

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

62
Long term Loans & 0.40 0.30 -0.1 -25
Advances

Capital work in progress 1006.90 1252.30 245.4 24.37

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 %

63
 % Change
Table.5. 17 Comparative Balance Sheet of Maruthi Suzuki India Ltd, year ended
March 2016-2017 and 2017-2018
Particulars 2016-2017 2017-2018 Increase /
(Cr) Decrease
(Cr)

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

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 %.

64
Comparative Balance Sheet of Maruthi Suzuki India Ltd, year ended March

Increase / % Change

Table 5.18

2017-2018 and 2018-2019

Particulars 2017-2018 2018-2019 Decrease
(Cr) (Cr)

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

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 %.

65
Comparative Balance Sheet of Maruthi Suzuki India Ltd, year ended March

Increase / % Change

Table 5. 19

2018-2019 and 2019-2020

Particulars 2018-2019 2019-2020 Decrease
(Cr) (Cr)

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

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

66
Comparative Balance Sheet of Maruthi Suzuki India Ltd, year ended March

Increase / % Change
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 %.

Table .5. 20

2019-2020 and 2020-2021

Particulars 2019-2020 2020-2021 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

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

67
Comparative Balance Sheet of Maruthi Suzuki India Ltd, year ended March

Increase / % Change

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 %.

68
CHAPTER – 6

FINDINGS

69
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
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 are greater those of owners. A high debtequity 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.

70
CHAPTER – 7

CONCLUSION

71
CONCLUSION
The study has been undertaken to the objective of evaluating the financial performance of
Maruti Suzuki India Ltd as of Five Year Assessment and the connected Profit and Loss
Account. Specific objectives has been set for the study and secondary data for the period of 5
years from 2016-2017 to 2020-2021 were analysed.The findings of the study revealed that
liquidity position of the company is poor and the solvency position of the company is good.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 came to the conclusion that, the overall financial performance
of the company is average.

BIBLIOGRAPHY

Reports

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

Books of Reference

1. Chandra , P. “Financial Management”, Tata Me Graw-Hill Publishing Company Ltd.,

New Delhi,2014
2. Dr. Maheshwari, S.N. “Financial Management Principles and Practices”, Sultan
Chand and Sons, New Delhi, 2009
3. Jain and Narang. “Financial Accounting”, Kalyani Publishers, 2005
Websites and Journals

• wwwmoneycontrol.com
• www.marutisuzuki.com
• www.capitalmarket.com

• www.carandbike.com

72
BALANCE SHEET OF 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021
MARUTI SUZUKI INDIA (in
Rs. Cr.)

EQUITIES AND
LIABILITIES

SHAREHOLDER'S FUNDS

Equity Share Capital 151.00 151.00 151.00 151.00 151.00

TOTAL SHARE CAPITAL 151.00 151.00 151.00 151.00 151.00

Reserves and Surplus 36,280.10 41,606.30 45,990.50 51,215.80 48,286.00

TOTAL RESERVES AND 36,280.10 41,606.30 45,990.50 51,215.80 48,286.00

SURPLUS

TOTAL SHAREHOLDERS 36,431.10 41,757.30 46,141.50 51,366.80 48,437.00

FUNDS

NON-CURRENT
LIABILITIES

Long Term Borrowings 0.00 0.00 0.00 0.00 0.00

Deferred Tax Liabilities [Net] 466.20 558.90 564.00 384.70 598.40

Other Long Term Liabilities 1,105.00 1,585.30 2,036.50 2,164.50 2,170.30

Long Term Provisions 21.90 26.50 39.50 44.70 51.60

TOTAL NON-CURRENT 1,593.10 2,170.70 2,640.00 2,593.90 2,820.30

LIABILITIES
CURRENT LIABILITIES

Short Term Borrowings 483.60 110.80 149.60 488.80 106.30

Trade Payables 8,367.30 10,497.00 9,633.00 10,161.70 7,494.10

Other Current Liabilities 3,926.50 4,274.30 3,743.30 4,714.60 3,014.80

Short Term Provisions 449.00 560.00 624.40 741.60 679.60

TOTAL CURRENT 13,226.40 15,442.10 14,150.30 16,106.70 11,294.80

LIABILITIES

72

TOTAL CAPITAL AND 51,250.60 59,370.10 62,931.80 70,067.40 62,552.10

LIABILITIES

ASSETS

NON-CURRENT ASSETS

Tangible Assets 12,919.70 13,047.30 14,956.70 16,446.80 15,374.50

Intangible Assets 373.00 311.70 451.10 0.00 406.70

Capital Work-In-Progress 1,252.30 2,125.90 1,600.10 0.00 1,337.40

Other Assets 0.00 0.00 0.00 0.00 0.00

FIXED ASSETS 14,545.00 15,484.90 17,007.90 16,446.80 17,118.60

Non-Current Investments 26,302.20 34,072.90 31,469.50 33,371.00 35,248.80

Deferred Tax Assets [Net] 0.00 0.00 0.00 0.00 0.00

74
Long Term Loans And 0.30 0.20 0.20 0.20 0.20
Advances

Other Non-Current Assets 1,626.90 1,890.70 2,092.60 1,722.70 1,757.10

TOTAL NON-CURRENT 42,474.40 51,448.70 50,570.20 51,540.70 54,124.70

ASSETS

CURRENT ASSETS

Current Investments 2,178.80 1,217.30 5,045.50 8,415.70 1,218.80

Inventories 3,262.20 3,160.80 3,325.70 3,050.00 3,214.90

Trade Receivables 1,199.20 1,461.80 2,310.40 1,276.60 2,127.00

Cash And Cash Equivalents 13.80 71.10 178.90 3,036.40 21.10

Short Term Loans And 2.50 3.00 16.00 23.00 16.90

Advances

OtherCurrentAssets 2,119.70 2,007.40 1,485.10 2,725.00 1,828.70

TOTAL CURRENT ASSETS 8,776.20 7,921.40 12,361.60 18,526.70 8,427.40

TOTAL ASSETS 51,250.60 59,370.10 62,931.80 70,067.40 62,552.10

75
Profit and Loss Account of Maruti Suzuki India Limited from 2016-2017 to 2020-
2021
Particulars 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021

INCOME

REVENUE FROM OPERATIONS 76,140.80 80,336.50 83,026.50 71,690.40 66562.10

[GROSS]

Less: Excise/Sevice Tax/Other Levies 9,231.40 2,231.70 0.00 0.00 0.00

REVENUE FROM OPERATIONS 66,909.40 78,104.80 83,026.50 71690.40 66562.10

[NET]

TOTAL OPERATING REVENUES 68,034.80 79,762.70 86,020.30 75610.60 70332.50

Other Income 2,300.10 2,045.50 2,561.00 3420.80 3004.30

TOTAL REVENUE 70,334.90 81,808.20 88,581.30 79031.40 73336.80

EXPENSES

Cost Of Materials Consumed 42,629.60 44,941.30 45,023.90 34636.60 33296.90

Operating And Direct Expenses 0.00 0.00 0.00 0.00 0.00

Changes In Inventories Of FG,WIP -380.10 40.70 210.80 273.10 -238.10

And Stock-In Trade

Employee Benefit Expenses 2,331.00 2,833.80 3,254.90 3383.90 3402.90

76
Finance Costs 89.40 345.70 75.80 132.90 100.80

Depreciation And Amortisation 2,602.10 2,757.90 3,018.90 3525.70 3031.50

Expenses

Other Expenses 8,724.10 9,991.50 11,634.00 11889.20 10825.00

TOTAL EXPENSES 60,374.60 70,804.80 78,115.70 71966.60 68177.40

PROFIT/LOSS BEFORE 9,960.30 11,003.40 10,465.60 7064.80 5159.40

EXCEPTIONAL,
EXTRAORDINARY ITEMS AND
TAX

Exceptional Items 0.00 0.00 0.00 0.00 0.00

PROFIT/LOSS BEFORE TAX 9,960.30 11,003.40 10,465.60 7064.80 5159.40

TAX EXPENSES-CONTINUED
OPERATIONS

Current Tax 2,335.60 3,349.50 2,932.30 1374.80 929.70

Less: MAT Credit Entitlement 0.00 0.00 0.00 0.00 0.00

Deferred Tax 274.50 -67.90 32.70 39.40 0.00

Tax For Earlier Years 0.00 0.00 0.00 0.00 0.00

TOTAL TAX EXPENSES 2,610.10 3,281.60 2,965.00 1414.20 929.70

PROFIT/LOSS AFTER TAX AND 7,350.20 7,721.80 7,500.60 5650.60 4229.70

BEFORE EXTRAORDINARY
ITEMS

PROFIT/LOSS FROM 7,350.20 7,721.80 7,500.60 5650.60 4229.70

CONTINUING OPERATIONS

PROFIT/LOSS FOR THE PERIOD 7,350.20 7,721.80 7,500.60 5650.60 4229.70

77