30030753 balance sheet analysis of maruti suzuki

8/7/2019 30030753 Balance Sheet Analysis of Maruti Suzuki

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[TYPE THE

COMPANY

NAME]

BALANCESHEETANALYSISOF

MARUTISUZUKI

Submitted to:

Dr. Himani Joshi

Prepared By:

Dipa Shah

Krishna Rajput

Nikita Saghvi

Mitesh Shah

Bharat Maheshvari

Keyur Savalia


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ACKNOWLEDGEMENT

An acknowledgement is the expression of ones thanks giving to the people who have extended their help in

every possible way. Help is a voluntary fulfillment of duty, which, all the people mentioned below haveperformed it to their maximum possible, in a way giving us & our research the utmost important.

At the onset, we wish to express our gratitude to Dr. Himani Joshi, Academic Coordinator, and CA Ms. Neha

Saxena, faculty at Stevens Business School for their keen interest, constant support & help in completing this

report successfully.

We would also like to thanks to the authors, journals and websites for providing us the related information to

our projects subject.


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TABLE OF CONTENTS

Sr. No. Particular Page No.1 Acknowledgement 02

2 Executive Summary 05

3 Company profile 06

3.1 Introduction 06

3.2 Key Data 07

3.3 Vision 07

3.4 Mission 07

3.5 Market Scenario 08

3.6 Sales Analysis 09

3.7 Market Share 10

4 Financial Highlight 11

5 Meaning of Analysis and Objective of Study 15

5.1 Importance of Cash Profit Theory 15

5.2 Meaning and Importance Of Ratio 16

5.3 Utility Of Ratio Analysis 16

6 Classification Of Ratio 18

6.1 Profitability Ratio 18

6.1.1 Gross Profit Ratio 18

6.1.2 Net Profit Ratio 20

6.1.3 Expenses Ratio 22

6.1.4 Operating Ratio 23

6.1.5 Return on Investment 24

6.1.6 Return on Share Holders Fund 25

6.1.7 Return on Equity Share Capital 26

6.1.8 Return on Equity Share holders Fund 27

6.1.9 Earning per Share 28


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6.1.10 Dividend Per Share 29

6.1.11 Price Earning Ratio 30

6.1.12 Dividend Yield Ratio 31

6.1.13 Interest coverage Ratio 32

7 Activity/Turnover Ratio 33

7.1 Overall turnover Ratio 33

7.2 Fixed Assets Turnover Ratio 34

7.3 Debtor Turnover Ratio 35

7.4 Creditor Ratio 36

7.5 Creditor Turnover Ratio 37

7.6 Stock Turnover Ratio 38

8 Liquidity Ratio 39

8.1 Current Ratio 39

8.2 Liquid Ratio 40

8.3 Quick / Acid Test Ratio 41

9 Leverage Ratio 42

9.1 Proprietary Ratio 42

9.2 Debt Equity Ratio 43

10 Accounting Policy 2009 44

11 Notes To Account 48

12 Auditors Report 50

13 Conclusion 55

14 Appendix 1 56

Appendix 2 57

Appendix 3 58

Appendix 4 60


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Executive summary

In this report, we have tried to explain how one can find out financial result with the help of ratio analysis and

some more in portent graphs with the help of Ratio Analysis. We can easily understand the profitability of the

business, efficiency of business, useful in inter comparison. It is also useful for budgeting control and decision-

making. Ratio analysis helps interested parties like share holders, investors, creditors, government also and

analysis to make an evaluation of a certain aspect of a firms performances.

Financial analysis is essential for any business entity. It is the tool to communicate with creditors, debtors

suppliers and all those who are directly or indirectly associated with an organization.

Here in this project report we have discussed about various components of balance sheet and their significance.

We have done in depth analysis of ratios. Detailed analysis of creditors, debtors, equity share holders, debenture

holders of Maruti Suzuki are also described. The growth trend of Maruti Suzuki is also mentioned here. We

have also mentioned profit trends, dividend trends, revenue analysis, profit analysis, and analysis of companys

liquidity are discussed here.

In a nut shell this report gives the complete financial analysis of Maruti Suzuki for five years.


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INTRODUCTION

Maruti Udyog Limited (MUL) was established in Feb 1981 through an Act of Parliament, to meet the

growing demand of a personal mode of transport caused by the lack of an efficient public transport system. It

was established with the objectives of - modernizing the Indian automobile industry, producing fuel efficientvehicles to conserve scarce resources and producing indigenous utility cars for the growing needs of the Indian

population. A license and a Joint Venture agreement were signed with the Suzuki Motor Company of Japan in

Oct 1983, by which Suzuki acquired 26% of the equity and agreed to provide the latest technology as well as

Japanese management practices. Suzuki was preferred for the joint venture because of its track record in

manufacturing and selling small cars all over the world. There was an option in the agreement to raise Suzukis

equity to 40%, which it exercised in 1987.

Five years later, in 1992, Suzuki further increased its equity to 50% turning Maruti into a non-

government organization managed on the lines of Japanese management practices.

Maruti created history by going into production in a record 13 months. Maruti is the highest volume car

manufacturer in Asia, outside Japan and Korea, having produced over 5 million vehicles by May 2005. Maruti

is one of the most successful automobile joint ventures, and has made profits every year since inception til

2000- 01. In 2000-01, although Maruti generated operating profits on an income of Rs 92.5 billion, high

depreciation on new model launches resulted in a book loss.

REGISTEREDANDCORPORATEOFFICE:11th Floor, Jeevan Prakash Building,

25, Kasturba Ganghi Marg,

New Delhi 110001

First Indian automobile company to join the million clubs

Invests Rs 1,700 Crore in new facility to expand capacity by 2.5 lakh units

COMPANYPROFILE


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KEYDATA1. Country: INDIA2. BSE: 5325003. NSE: MARUTI4. Exchanges: BOM5. Major Industry: Automotive6. Sub Industry: Diversified Automotive Mfrs.7. 2009 Sales: 206,638,000,000

(Year Ending Jan 2010)

8. Employees: 7,1599. Currency: Indian Rupees10.Market Cap: 399,028,129,36911.FiscalYr Ends: March12.Shares Outstanding: 288,910,06013.Share Type: Ordinary14.Closely Held Shares: 156,618,440

VISIONThe leader in the India Automobile Industry, Creating Customer Delight and Shareholders Wealth; A pride of

India

MISSIONTo provide maximum value for money to their customers through continuous improvement of products and

services


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MARKETSCENERIO (2008 -09)

Maruti has a network of 681 sales outlets across 454 cities all over India. The service network covers 1,314

towns and cities, bolstered by 2,767 authorized service outlets. The company's change in strategy and emphasis

on developing effective marketing communications was their highlights.


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SALESANALYSIS

The company vouches for customer satisfaction. For its sincere efforts it has been rated (by customers)

first in customer satisfaction among all car makers in India for ten years in a row in annual survey. Maruti

Suzuki India Limited, a subsidiary of Suzuki Motor Corporation of Japan, has been the leader of the Indian car

market for over two decades.

During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024 were exported. In all, over six

million Maruti cars are on Indian roads since the first car was rolled out on 14 December 1983.

And finally in 2009-10, the nation's number one car manufacturer joined a select club of global automobile

makers, when it became the first automobile company in India to produce one million (10 lakh) cars in a year.


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MARKETSHARE


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MARUTISUZUKI FINANCIALS FOR2008-09

Total Income up 14.28 per cent; Premium compacts and sedan segment drive top line growth

Fiscal 2008-09

The company's Total Income (Net of Excise) (Income from Operations plus Other Income) for the financia

year 2008-09 climbed to Rs 21,453.8 Crore. This is the highest Total Income (Net of Excise) ever in the

company's history, and marks a growth of 14.28 per cent over 2007-08. The growth in Total Income (Net of

Excise) included higher realizations, largely contributed by the company's popular hatch-back Swift and

premium sedan Swift Dzire (Diesel and Petrol variants).

Net Profit during the year stood at Rs 1,218.7 Crore, down 29.6 per cent over 2007-08. The company's EBDITA

for the year stood at Rs 2,433.4 Crore, a fall of about 22 per cent over the previous year.

During the year, commodity prices went up sharply and remained high for most part of the year. Forexfluctuations were also adverse and impacted the bottom-line significantly.

In recent months, commodity prices have eased.

With regard to foreign currency exposure, the company's exports in 2009-10 are expected to be higher and

cover its imports.

Dividend

The Board of Directors recommended a dividend of 70 per cent for 2008-09. (Fiscal 2007-08: 100 per cent).

Quarter 4

The company registered Total Income (Net of Excise) (Income from Operations plus Other Income) of Rs

6,538.3 Crore during January-March 2009, a growth of 30.26 per cent compared to January-March 2008.

Net profit during January-March 2009 was Rs 243.1 Crore vis--vis Rs 297.7 Crore during January-March

2008.

While there was a 17 per cent growth in unit sales during the quarter, the adverse foreign exchange movements

during the year, impacted the bottom-line in Q4 as well.


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Highlights of 2008-09

FINANCIAL HIGHLIGHT:

FINANCIAL HIGHLIGHTS

Particulars 2009 2008 2007 2006 2005 2004 2003

Net Sales (In

x10M Rs)20530.1 17891.6 14696.3 12015.9 10923.8 9104.4 7180.1

Profit Before Tax

(In x10M Rs)1675.8 2503 2279.8 1750 1304.9 769.8 282.1

Reported Net

Profit (In x10M

Rs)

1218.7 1730.8 1562 1189.1 853.6 542.1 146.4

Earnings Per

Share-Unit Curr

( In Rs)

41.57 59.03 53.29 40.65 29.25 18.56 4.88

In the fiscal 2008-09 Maruti Suzuki sold a total of 792,167 vehicles. The annual sales in 2008-09 is the highest

ever by the company in its 25 year history. The previous highest annual sales were 764,842 units in 2007-08.

During the fiscal, Maruti Suzuki Swift crossed the 3 lakh-sales mark cumulative domestic sales since launch

and became the quickest vehicle model to do so. During the fiscal, Maruti Suzuki's Alto continued to be the

preferred vehicle for the great Indian middle class crossing the 1 million-mark in cumulative sales in domestic

market.

The company's sales included exports of 70,023 units in 2008-09, up by 32.1 per cent over sales of 53,024

recorded in 2007-08. The 2008-09 export numbers, the highest ever by the company, was led by A-star, the fuel

efficient compact car launched in Europe during the year as Suzuki Alto. The export tally includes around

19,000 units of A-star exported to Europe including United Kingdom, France, Germany, Italy, Netherlands,

Denmark and Switzerland.

Fiscal 2008-09 marked Maruti Suzuki's Silver Jubilee year in India. Over these 25 years the company has sold

over 7 million (70 lakh) cars in the domestic market. Additionally, over half a million cars made by Maruti

Suzuki have been exported world-over.

During the year, the company continued its focus on long term initiatives, despite the challenging market

situation. These include:

Focus on R&D: Manpower strength to 730 engineers from 460 in end March 2008. Company plans

1,000 engineers in R&D by 2010.

New technology engine: Brand new facility for K-series engine launched on schedule.

Launching new models: A-star launched. Introduced Maruti 800 Duo - an alternate fuel option that runs

on LPG and petrol.


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Annual capacity to manufacture expanded from 800,000 to one million units (Gurgaon plus Manesar

plants).

Reached out to new segments of customers - government employees and rural customers - through

innovative programs.

Export of A star (as Suzuki Alto) to Europe commenced as per schedule.

Dedicated export port facilities for cars at Mundra completed, used for A-star shipment.

Network expansion:

o Sales : From 600 sales outlets (in 393 cities) last year to 681 outlets (in 454 cities)o Service : From 2,628 service outlets (1220 cities) last year to 2,767 (in 1314 cities);o True Value : From 265 outlets (in 166 cities) last year to 315 outlets (181 cities)

Increased Pre-owned car sales from 1.01 lakh units in 2007-08 to 1.23 lakh units in 2008-09

National Road Safety Mission launched - a nation-wide Corporate Social Responsibility (CSR) initiative

to train 500,000 people in safe driving in three years. The network of Maruti Driving Schools further

expanded and crossed 50 schools.

Accolades

During the year, the company, its products and services received many awards and accolades instituted by

independent expert groups, media houses and research agencies.

These include:

A star as the "Car of the year"

A star as the "Best small car of the year"

K10B Engine as the "Automotive technology of the year"

Maruti Suzuki as the "Manufacturer of the year"

The company was rated No. 1 for a record 9th consecutive year in the JD Power Customer Satisfaction Index

Study.

Maruti Suzuki India Ltd has informed BSE that a meeting of the Board of Directors of the Company will be

held on April 26, 2010, inter alia, to consider and approve the audited financial results for the year ended on

March 31, 2010 and to recommend dividend if any, on equity shares of the Company for the financial year

2009-10.


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MEANING OF ANALYSISAND OBJECTIVE OF STUDY:Financial statement namely the statement of the profit & loss account and the balance sheet are indication of

two signify-cant factors profitability and financial soundness analysis of statements means such a treatment of

the information contained to afford a diagnosis of the profitability and financial statements analysis as the

process of methodical classification comparison with other co-rising question and then seeking answer for them

Finance is the very typical aspect in course of management. The main objective behind the study is to get

precisely. It also helps us to study the present finance scenario. The objective is such that company

profitability, liquidity and capacity by such analysis we can interpret the position of the company. So it is very

important to study.

Profit Trend for 7 years:

PROFIT COMPARISION (IN x10M Rs)

Particulars 2009 2008 2007 2006 2005 2004 2003

Operating Profit

(EBDIT)2433.3 3130.8 2588.8 2055.8 1797.7 1308.1 656.9

Gross Profit

(EBDT)2382.3 3071.2 2551.2 2035.4 1761.7 1264.7 604.2

Profit Before Tax

(EBT)1675.8 2503 2279.8 1750 1304.9 769.8 282.1

Adjusted Net

Profit (EAT)1072.63 1669.71 1535.29 1197.07 860.1 621.82 129.72

IMPORTANCEOFCASHPROFITTHEORY:

MEANING

Cash flow means inflows that is, sources of cash which are at the disposable at the firm and outflows of the fire

that is the use of the firm.

The difference between inflows and outflows iseither net inflow or net outflow. A cash outflow statement deals

with the cash fund flow, which excludes working capital movements. The Accounting standard (A53) classifies

cash flows as under:

1) Cash from operating activities

2) Cash from investing activities

3) Cash from financing activities

The operating activities include receipts from sale of goods or Rendering of services receipts from royalty,

fees, commission etc. Outflow is the resulting from payment to creditors for goods and services, payment for

expenses such as lighting, power, rent, wages salaries etc.

Only cash from operating activities is included in this report.


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IMPORTANCE OF CASH PROFIT:

The cash profit is an important measure of profitability as well as liquidity. When the cash profit differs from

the profit is shown in the profit and loss account or profit and loss statement. Adjusting depreciation arrives at

the cash profit; amortize action of capital expenses etc. The cash profit is much less or negative compared to the

profit declared in the profit and loss account. It indicates liquidity and signals for appropriate cash management.

The net cash from operations can be calculated through adjustment of non-cash items like depreciation, changes

in inventory and receivable and payables, and or other items for which cash offers the investing and financing

activities.

MEANING & IMPORTANCE OF RATIO:The Balance Sheet and the Statement of Income are essential, but they are only the starting point for successful

financial management. Apply Ratio Analysis to Financial Statements to analyze the success, failure, and

progress of your business.

Ratio Analysis enables the business owner/manager to spot trends in a business and to compare its performance

and condition with the average performance of similar businesses in the same industry. To do this compare your

ratios with the average of businesses similar to yours and compare your own ratios for several successive years,

watching especially for any unfavorable trends that may be starting. Ratio analysis may provide the all-

important early warning indications that allow you to solve your business problems before your business is

destroyed by them.

Ratio is a figure showing, logical relationship between any two items taken from financial statement as prepared

and presented annually are of little use for guidance of prospective investors, creditors and even management. Ifrelationships between various related items in these financial statements are established, they can provide useful

dues to garage accurately the financial health and ability of business to make profit. The relation between in two

related items of financial statements is known ratio.

UTILITY OF RATIO ANALYSIS:It is very important to find the ratio of liquidity, profitability etc. Because the ratio analysis provides useful data

to the management, important uses of it are given as below:

PROFITABLITY:Useful information about the trend of profitability is from profitability ratio. The gross profit ratio, net profit

ratio and ratio of return on investment give a good idea of the profitability of the business. On the basic of this

ratio, investors get an idea about overall efficiency of managers and bank as well as other creditors draw useful

conclusion about repaying capacity of the borrowers.


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LIQUIDITY :In fact the use of ratio was made initially to ascertain the Liquidity of business. The current ratio, acid test ratio

will tell whether the firm will be able to meet its current liabilities and when they nature. Banks and other

leaders will be able to conclude from these ratios whether the firm will be able to pay regularly the interest and

loan installments.

EFFCIENCY:The turnover ratios are excellent guide to measure the efficiency of managers. All such ratio related to sales

present a good picture of the success on the business.

INTERFIRM COMPARION :

The absolute ratios of a firm are not of much use, unless they are compared with similar ratios of other firms belonging to the same industry. This is a inter firm compared to other firms comparison, which shows the

strength and weakness of the firm as compared to other firms and will indicate corrective measures.

INDICATETREND :The ratio of the last 3 to 5 years will indicate the trend in the respective fields. A particular ratio of a company,

for one year may compare favorably with industry average, but its trend shows a deteriorating position, it is not

desirable only ratio analysis will provide this information.

USEFUL FORBUDGETARY CONTROL:Regular budgetary reports are prepared in a business where the system of budgetary control is in use. If various

ratios are presented these reports, it will give a fairly good idea about various aspects of financial position.

USEFUL FORDECISION MAKING:Ratio guide the management in making some of the important decision, suppose, the liquidity ratios shows an

unsatisfactory position, the management may decide to get additional liquid funds. Even for capital

expenditure decision, the ratio of investment. The efficiency of each department a thus be deter minded. Thus,

the ratio are the most useful I financial statement.


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6. Classification of ratio

6.1Profitability ratio

[6.1.1] Gross Profit Ratio:

Meaning:

It is expresses relationship between Gross Profit earned to net sales. It is a significant indicator of theprofitability of business.

It expresses in percent. For example, a ratio shows that for a sale of every Rs. 1000 a margin of 250rupees is available from which operating expenses of business are recovered.

The ratio shows whether the mark up obtained on cost of production is sufficient or not. There is nocalibration against reasonability of gross profit ratio. However it must be enough to cover its operating

expenses. In many industries, there are more or less recognized gross profit ratios and the business

should strive to maintain this standard.

If this ratio is low, it indicates that the cost of sales is high or that the purchasing is inefficient. Alternatively, it may also mean that due to depression, the selling price is reduced but there are may be

no corresponding reduction, the selling price is reduced but there may be no corresponding reduction in

cost of sales. In such a case, the management must investigate the causes and try to bring up this ratio.

Implementation:

Gross profit is result of the relation between price, sales volume and costs. A change in the gross margincan be brought about by changes in any of these factors.

The gross profit ratio can also be used in determining the extent of loss caused by theft, spoilage,damage and so on in the case of those firms which follow the policy of fixed gross profit margin in

pricing their product.

The gross margin represents the limit beyond which fall in sales price are outside the tolerance limit.

Formula:

Gross profit X 100

Sales


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FORGROSSPROFITRATIO

Particulars 2009 2008 2007 2006 2005 2004 2003

Gross Profit

(EBDT) (In x10M

Rs)

2382.3 3071.2 2551.2 1761.7 1264.7 604.2

Net Sales (In x10M

Rs) 20530.1 17891.6 14696.3 12015.9 10923.8 9104.4 7180.1

Gross Profit Ratio 11.603937 17.165597 17.359471 16.93922216.1271

719

13.891

0856

8.4149

2458

INTERPRETATION:

As mentioned above the gross profit ratio indicates the relationship between gross profit and net sales. Here

from the table we can judge the financial position of Maruti Suzuki year wise.

Here 6 consecutive years from 2004 to 2009 are taken into consideration. The changes in the gross profit ratio

in percent are as follows.

Here, negative sign indicates that the percent is decreased compare to immediate previous year, while positive

sign indicates that the percent is decreased in the gross profit compare to immediate previous year.

For consecutive four years the gross profit ratio is positive. It indicates better financial position of the company.


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[6.1.2] Net Profit Ratio:

Meaning:

Net profit ratio is valuable for the purpose of ascertaining the over-all profitability of business and shows the

efficiency of operating the business.

Implementation:

The net profit ratio is indicative of managements ability to operate the business with sufficient successnot only to recover from revenue of the period the cost of merchandise or services, the expenses of

operating the business and the cost of the borrowed funds, but also to leave a margin of reasonable

compensation to the owners for providing their capital at risk.

The ratio of net profit ratio to sales essentially expresses the cost price effectiveness of the operation. A high net profit margin would ensure adequate return to the owners as well as enable a firm to

withstand adverse economic conditions when selling price is declaiming, cost of production raising and

a low net profit margin has the opposite implication.

It indicates the portion of sales revenue is left to the proprietors after all operating expenses are paid. The higher the ratio, the better will be the profitability. In order to have a better idea of profitability, the

gross profit ratio and net profit ratio may be simultaneously considered. If the gross profitability

increases over the five years but net profit is declining, it indicates that administrative expenses are

slowly rising.

Formula:

FORNETPROFITRATIO

Particulars 2009 2008 2007 2006 2005 2004 2003

Net Profit (In x10M

Rs)

1072.63 1669.71 1535.29 1197.07 860.1 621.82 129.72

Net Sales (In x10M

Rs)20530.1 17891.6 14696.3 12015.9 10923.8 9104.4 7180.1

Net Profit Ratio 5.2246701 9.3323682 10.446779 9.96238317.87363

372

6.8298

8445

1.8066

6007

Net Profit X 100

Sales


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Interpretation:

Here 6 consecutive years from 2004 to 2009 are taken into consideration. The changes in the net profitratio in percent are as follows.

Higher the net profit ratio shows better financial position of the company. Due to various reasons this ratio goes down. If the administration department is not sufficient then net

profit ratio goes down or the control mechanism is not efficient at all check points then also it affects net

profit of the company.

Net profit is the profit that is available to the proprietors of the firm after clearing all outstanding andexpenses. Thus, higher the ratio yields higher profit.


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[6.1.3] Expenses Ratio:

Meaning:

This ratio shows relationship between expanses to sales. Above table shows that for the year 2004 05 it was 88.64 % the increase in 2005 06 up to 89.23%

that indicates there is increase in operating expenses for the year 2006 07 it is 92.03% and it is higher

than previous year which shows increase in operating expenses.

For the year 2008-09 there is 2.43 increases in the net profit ratio which gives signal of better financialposition of the company.

This operating expense may be due to growth in the organization or it may reflect inefficacy ofadministrative control on expenses.

Here negative sign shows decrease in operating expenses.Implementation:

Some accountants calculate expenses ratio in respected of raw material consumed, direct wages andfactory expenses.

It is closely related to the profit margin, gross as well as net.Formula:

FOREXPENSESRATIO

Particulars 2009 2008 2007 2006 2005 2004 2003

TotalExpenditure

(In x10M Rs)18738.7 15934.2 12462.8 10625.3 9671 8177.1 6704.8

Net Sales (In x10M

Rs)20530.1 17891.6 14696.3 12015.9 10923.8 9104.4 7180.1

Net Profit Ratio 91.274275 89.059670 84.802297 88.42700088.5314

634

89.814

8148

93.380

315

INTERPRETATION:

This ratio shows relationship between expanses to sales. Above table shows that for the year 2004 05 it was 88.64 % the increase in 2005 06 up to 89.23%

that indicates there is increase in operating expenses for the year 2006 07 it is 92.03% and it is higher


This operating expense may be due to growth in the organization or it may reflect inefficacy ofadministrative control on expenses.

Here negative sign shows decrease in operating expenses.

Expenses X 100

Sales


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[6.1.4] OPERATINGRATIO:

Meaning:

Operating Ratio is computed by dividing expenses by sales. The term operating ratio includes (1) COGS (2) administrative expenses (3) selling expenses and (4)

financial expenses but excludes taxes, dividends and extraordinary losses due to theft of goods, good

destroyed by fire and so on.

Implementation:

Some accountants calculate expenses ratio in respected of raw material consumed, direct wages andfactory expenses.

It is closely related to the profit margin, gross as well as net.

Formula:

OPERATION RATIO

Particulars 2009 2008 2007 2006 2005 2004 2003

Operating Expense 2114.8 1510.4 1244.21 900.15 801.54 786.54 840.88

COGS 3498.6 3744.5 3197.01 2506.35 2160.04 1673.64 1168.58

Net Sales 20530.1 17891.6 14696.3 12015.9 10923.8 9104.4 7180.1

Operating Ratio 27.3423 29.3708 30.22 28.3499 27.1113 27.0219 27.9865

INTERPRETATION:

This ratio shows relationship between COGS + operating expanses to sales. Above table shows that for the year 2004 05 it was 87.33 % the increase in 2005 06 up to 86.90 %

that indicates there is increase in operating expenses for the year 2006 07 it is 83.89 % and it is lower


In the year 2008-09 there is 28% increase in the operating expenses. This is may be due to inefficientoperation management and also there may be some other expenses for sales or promotion may incur

during this year.

C O G S + Operating expenses X 100

Net sales


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[6.1.5] Return on investment / Capital employed:

Meaning:

The profitability ratio can be computed by relating the profits of a firm to its investment.Implementation:

Return on investment indicates the profitability of business and is very much in use among financialanalysis.

The ratio is an indicator of the measure of the success of a business from the owners point of view. Theultimate interest of any business is the rate of return on invested capital. It may be measured by the ratio

of income to equality capital.

It determines whether a certain goal has been achieved or whether an alternative use of capital isjustified.

It is an index of profitability of business and is obtained by comparing net profit with capital employed.Capital includes share capital, reserves and long term loans such as debentures.Formula:

FORRETURN ON INVESTMENT / CAPITALEMPLOYED

Particulars 2009 2008 2007 2006 2005 2004 2003

Gross Profit (EBIT) (In

x10M Rs)2382.3 3071.2 2551.2 2035.4 1761.7 1264.7 604.2

CapitalEmployed (

Share capital + Reserves

and surplus) (In x10M

Rs)

9344.9 8415.4 6853.9 5452.6 4378.8 3591.2 3098

Return on Investment 25.493049736.49499

73

37.222

6032

37.3289

807

40.232

4838

35.216

6407

19.502

9051

INTERPRETATION:

This ratio shows relationship between E B I T to CAPITAL EMPLOYED. Higher the ratio, it is better for the company. In the year 2008- 09 there is decrease of 43.15 percent in the gross profit of the company. This show

slow- down in companys sale. It is due to recession during that period where an overall sale was

affected.

E B I T X 100

Capital employed


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[6.1.6] Return on shareholders fund:

Meaning:

It is carries the relationship of return to the sources of funds yet another step further. In order to judge the efficiency with which the proprietors funds are employed in business, this ratio isascertained. Proprietors equity or Proprietors funds include share capital and reserves. It is of great practical importance to the perspective of investors, as it enables the profitability of a

company to be compared with that of other.

It also indicates whether the return on proprietors fund is enough in relation to the risk that theyundertake.

This ratio shows what amount of dividend is likely to be received on shares.Implementation:

It expresses the profitability of a firm in relation to the funds supplied by the creditors and owners takento gather, the return on shareholders equity measures exclusively the return on the owners funds.

Formula:

FORRETURN ON SHAREHOLDER'S FUND

Particulars 2009 2008 2007 2006 2005 2004 2003

Net Profit (In x10M Rs) 1072.63 1669.71 1535.29 1197.07 860.1 621.82 129.72

CapitalEmployed ( Share

capital + Reserves and

surplus) (In x10M Rs)

9344.9 8415.4 6853.9 5452.6 4378.8 3591.2 3098

Return on Investment11.4782

395

19.84112

46

22.4002

393

21.9541

136

19.642

3678

17.315

1036

4.18721

756

INTERPRETATION:

The ratio indicates relationship between Net profits to share holders fund therefore higher the returns toshareholders. For the year 2004 05 it is 21.90 % that increase in the year 2005 06 up to 23.70. This ratio shows downward trend in the ratio in return on shareholders fund for this company. During the year 2008-09 there is 72.97% decrease in the ROI. This ratio shows upward trend for that

financial year for the company.

Net profit X 100

Share holders fund


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[6.1.7] Return on Equity share capital:

Meaning:

It is obtained by dividing net profit after tax deduction of performance dividing by his amount ofordinary share capital plus free reserve.

Implementation:

This is probably the single most important ratio to judge whether the firm has earned a satisfactoryreturn for its equity holders or not.

Its adequacy can be judge by: (1) comparing it with the past record of the same form, (2) comparisonswith the overall industry average.

Formula:

FORRETURN ON EQUITYSHARE CAPITAL

Particulars 2009 2008 2007 2006 2005 2004 2003


Preference Dividend (In

Rs)0 0 0 0 0 0 0

Share Capital (In x10M

Rs)144.5 144.5 144.5 144.5 144.5 144.5 144.5

Return on Equity Share

Capital (In Rs)55.73 8.13 22.03 28.14 27.73 79.12 11.46

INTERPRETATION:

The ratio indicates relationship between Net profits to share holders fund therefore higher the returns toshareholders.

For the year 2004 05 it is 19.49 % that increase in the year 2005 06 up to 21.81 %. This ratio shows downward trend in the ratio in return on shareholders fund for this company. For the financial year 2008-09 there is 85% increase in the ratio in return on shareholders fund

Here, year 2008-09 shows marked improvement that is why it is taken into consideration.

Net profit after tax Preference dividend X 100Equity capital


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[6.1.8] Return on Equity share holders fund:

Meaning:

It is obtained by dividing net profit after tax deduction of performance dividing by his amount ofordinary share capital plus free reserve.

Implementation:

This is probably the single most important ratio to judge whether the firm has earned a satisfactoryreturn for its equity holders or not.

Its adequacy can be judge by: (1) comparing it with the past record of the same form, (2) comparisonswith the overall industry average.

Formula:

FORRETURN ON EQUITYSHARE HOLDERS FUND

Particulars 2009 2008 2007 2006 2005 2004 2003


CapitalEmployed ( Share

capital + Reserves and

surplus) (In x10M Rs)

9344.9 8415.4 6853.9 5452.6 4378.8 3591.2 3098


Rs)0 0 0 0 0 0 0

Return on Investment (In

Rs)

11.4782

395

19.8411

246

22.4002

393

21.9541

136

19.6423

678

17.315

1036

4.18721

756

INTERPRETATION:

For the year 2004 05 it is 19.64 % that increase in the year 2005 06 up to 21.95%.

These ratios shows downward trend in the ratio in return on shareholders fund for this company. Here in the year 2008-09 there is decrease of 69% compared to previous year in the ROI which shows

upward trend in the company.

Net profit after tax Preference dividend X 100Equity share holders funds


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[6.1.9] Earning per share:

Meaning:

EPS measures the profit available to the equity shareholders on a per share basis, that is, the amount thatthey can get on every share head.

This ratio shows the profitability of the firm from the owners point of view. By comparing EPS of thecurrent year with past years the path of the trend of profitability can be ascertained.

It is essential that EPS of the company should be compared with the other companies and also averageof the company before giving final opinion.

The limitation of EPS is that it does not show how much dividend is actually paid to shareholders andhow much profit is retained in business.

Implementation:

Earning per share is a widely used ratio. EPS s a measure of profitability

Formula:

FORRETURN ON EARNINGPERSHAREParticulars 2009 2008 2007 2006 2005 2004 2003


No. ofEquity Shares2889100

60

2889100

60

2889100

60

2889100

60

2889100

60

288910

060

2889100

60


Rs)0 0 0 0 0 0 0

Return on Investment ( In

Rs)

37.1267

792

57.7934

185

53.1407

594

41.4340

02

29.7705

106

21.522

9612

44.8997

865

INTERPRETATION:

This ratio indicates the earning per share for shareholders of company.

In the year 2004 05 ratio is 29.77 % and 2005 06 it is 41.43 % and its increase on 2006-07 is 53.14

%.therefore it is good for company as well as shareholders.

Profit after tax preference dividend X 100

No. of equity shareholders fund


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[6.1.10] Dividend per share:

Meaning:

DPS is the dividend paid to shareholders on a per share basis. In the other words, DPS is the Net distributed profit belonging to the shareholders divided by the No. of

ordinary shares outstanding.

Implementation:

The DPS would be a better indicator than EPS as the former shows what exactly is received by theowners.

Like the EPS, the DPS is also should not be taken at its face value as the increase DPS may not be areliable measure of profitability as the equality base may have increase due to increase relation without

any change in the number of outstanding shares.

Formula:

FORDIVIDEND PERSHARE

Particulars 2009 2008 2007 2006 2005 2004 2003

No. ofEquity Shares 288910060

288910060

288910060

288910060

288910060

288910060

288910060

Total Dividend (In x10M

Rs)101.1 144.5 130 101.1 57.8 43.3 42.7

Dividend per Share ( In

Rs)

3.49935

894

5.00155

654

4.49967

024

3.49935

894

2.00062

262

1.4987

3632

1.47796

861

INTERPRETATION:

This ratio indicates the total dividend declared to no. of shares. For the year 2004 05 it is 2 % and 2005 06 is3.50 % and increase on 4.50 % in the year 2006 07.

For the year 2007-08 is 96% increased compared to previous year while for the year 2008-09 it isdecreased to 26.84%. Thus for the current year it is decreased. It indicates slow-down in the financia

position of the company.

Total dividend declared

No. of equity shares


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[6.1.11] Price earning ratio:

Meaning:

It is closely related to the earning yield leanings price ratio. It is actually the reciprocal of the latter.Thus ratio is computed by dividing the market price of the shares by the EPS.

Implementation:

The price earning ratio reflects the price currently being paid by the market for each Rupee of currentlyreported EPS. In other words, the PIE ratio measures investors expectations and the market appraisal of

the earnings. Therefore, only normally sustainable earning associated with the assets are taken into

account.

Formula:

FORPRICEEARNINGRATIO

Particulars 2009 2008 2007 2006 2005 2004 2003

Market Value ofShare (In

Rs)1559.65 520.1 990.05 927.35 636.5 461.25 376.3

Earning Per Share (In Rs) 41.57 59.03 53.29 40.65 29.25 18.56 4.88

Price Earning Ration37.5186

433

8.81077

418

18.5785

326

22.8130

381

21.7606

838

24.851

8319

77.1106

557

INTERPRETATION:

This ratio indicates the earning per share forshareholders of company. In the year 2004 05 ratio is 17.58% and 2005 06 it is 21.95% and its increase on 29.55%. Therefore it is good for company as well as shareholders.

Market value per share

Earning per share


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[6.1.12] Dividend yield ratio:

Meaning:

Dividend yield ratio is closely related to the EPS and DPS. While the EPS and DPS are based on the book value per share, the yield is expressed in terms of the

market value per share.

The earnings yield may be defined as the ratio of earnings per share to the market value per ordinaryshare.

Implementation:

The dividend yield ratio is calculated by dividing the cash dividends per share by the market value pershare.

Formula:

FORDIVIDEND YIELD RATIO

Particulars 2009 2008 2007 2006 2005 2004 2003

Market Value ofShare (InRs)

1559.65 520.1 990.05 927.35 636.5 461.25 376.3

Dividend Per Share (In Rs)3.4993589

4

5.001555

65

4.49967

024

3.499358

94

2.00062

262

1.4987

3632

1.4779

6861

Dividend Yield Ratio0.0022436

8

0.009616

53

0.00454

489

0.003773

5

0.00314

316

0.0032

4929

0.0039

2763

INTERPRETATION:

This ratio indicates the earning per share forshareholders of company. In the year 2004 05 ratio is 17.58% and 2005 06 it is 21.95%. For the year 2007-08 the ratio is decreased by 109.9% and for 2008-09 it is increased by 76.51%. So for

current situation is good for company as well as shareholders.

Dividend per share

Market value share


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[6.1.13] Interest coverage ratio:

Meaning:

It is also known as time interest earned ratio. This ratio measures the debt servicing capacity of a firm insofar as fixed interest on long term loan isconcerned. It is determined by dividing the operating profit or earning before interest and taxes (EBIT)

by the fixed interest changes on loans.

Implementation:

This ratio uses the concept of net profits before taxes because tax is calculated after paying interest onlong term loan.

This ratio as the name suggests, show how many times the interest changes are covered by EBIT out ofwhich they will be paid.

Formula:

FORINTEREST COVERINGRATIO

Particulars 2009 2008 2007 2006 2005 2004 2003

Operating Profit (EBDIT)

(In x10M Rs)

2433.

33130.8 2588.8 2055.8 1797.7 1308.1 656.9

Interest (In x10M Rs) 51 59.6 37.6 20.4 36 43.4 52.7

Interest Covering Ratio

47.71

1764

7

52.53020

13

68.85106

38

100.774

51

49.9361

111

30.1405

53

12.464

8956

INTERPRETATION:

This ratio indicates the EBDIT to interest. In the year 2004 05 ratio is 49.93 and 2005 06 it is 100.8and its decrease on 68.85.therefore it is good for company as well as shareholders.

For the year 2008-09 the interest covering ratio is 47.71 while for the year 2007-08 it is 52.53.It isdecreasing for the last 2 financial years due to the fluctuation in for-ex.

EBITD

Interest


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7. Activity / Turn over Ratio:

[7.1] Overall turnover ratio:

Meaning:

The amount invested in business is invested in all capital employed and sales are affected through themto earn profits so in order to find relation between net sales to capital employed.

Implementation:

The usefulness of the Du Pont analysis lies in the fact that it presents the overall picture of theperformance of a firm as also enables the management to identify the factors which have a bearing on

profitability.

Formula:

FOROVERALLTURNOVERRATIO

Particulars 2009 2008 2007 2006 2005 2004 2003

Net Sales (In x10MRs)

20530.1 17891.6 14696.3 12015.9 10923.8 9104.4 7180.1

CapitalEmployed (

Share capital +

Reserves and surplus)

(In x10M Rs)

9344.9 8415.4 6853.9 5452.6 4378.8 3591.2 3098

OVERALL

TURNOVERRATIO

2.19693

0946

2.126054

614

2.1442244

56

2.203700

987

2.49470

174

2.5351

97149

2.31765

6553

INTERPRETATION:

This ratio indicates net sales to capital employed. In the year 2004 05 ratio is 2.49 and 2005 06 it is2.20 and its decrease on 2.14 in the year 2006 07. Therefore it is bad for company.

In the year 2008-09 the ratio is 2.19 while in the year 2007-08 the ratio is decreased to 2.12 whichshows slow down in the company.

Net sales

Capital employed


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[7.2] fixed assets turn over ratio:

Meaning:

It is based on the relationship between the sales and assets of the firm. A reference to this was made while working out the overall profitability of a form as reflected in itsearning power.

Implementation:

To ascertain efficiency and profitability of the business. The higher the turnover ratio, the moreefficiency is the management and utilization of the assets while low turnover ratios are indicative of

underutilization of available resources.

Formula:

FORFIXED ASSETSTURNOVERRATIO

Particulars 2009 2008 2007 2006 2005 2004 2003

Net Sales (In x10M

Rs)20530.1 17891.6 14696.3 12015.9 10923.8 9104.4 7180.1

Total Fixed Asset (In

x10M Rs)

7079.34

4828

5716.166

134

4740.7419

35

4073.186

441

3943.61

011

3746.6

6667

3554.50

495

Fixed Asset Turnover

Ratio2.9 3.13 3.1 2.95 2.77

2.4299

999982.02

INTERPRETATION:

Fixed turn over ratio indicates the turnover of the company in one year. In the year 2004 05 ratio is 2.77 and 2005 06 it is 2.95 and it increase on 3.1 in the year 2006 - 07.

Therefore, it is good for company. In the year 2008-09 there is decrease of 7% in the fixed turnover ratio compare to last year while during

year 2007-08 there is very minor change in the ratio. Year 2007-08 and 2006-07 shows almost similar

financial position of the company while year 2008-09 shows slight slow down in the financial position

of the company

Sales

Fixed assets


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[7.3] Debtor turn over ratio:

Meaning:

It is allied and closely related to this is the average collection period. It is the test of the liquidity of thedebtors of a firm.

Implementation:

This figure should be measured, as in the case of average inventory, on the basis of the monthlyaverage. It suggests that number of times the amount of credit sale is collected during the year.

Formula:

FORDEBTORTURN OVERRATIO

Particulars 2009 2008 2007 2006 2005 2004 2003

Net Sales (In x10M

Rs)20530.1 17891.6 14696.3 12015.9 10923.8 9104.4 7180.1

Sundry Debtors (In

x10M Rs)

697.117

1477

596.9836

503

595.23288

78

507.2140

144

527.974

867

560.61

57635

603.877

2077

Debtor Turnover

Ratio 29.45 29.97 24.69 23.69 20.69 16.24 11.89

INTERPRETATION:

Debtor turnover ratio indicates credit sales to avg. debtors. In the year 2004 05 ratio is 20.69 and 2005 06 it is 23.69 and its increase on 24.69 in the year 2006

07. Therefore, it is good position for company.

In the year 2008-09 there is 1% decrease in the Debtors turnover ratio compare to previous year and2007-08 there is 17.91% increase in the debtors turn over ratio.

How efficiently the amount is collected from the customers from the credit sales. As compare to previous year the no. of days collection period increase which indicate inefficiency of

collection department.

Lower the collection period and higher debtor turnover ratio is advisable.

Credit sales

Avg. Debtors


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[7.4] Creditor ratio:

Meaning:

It is the no. of days within which we make payment to our creditors for credit purchases it obtained fromcreditor ratio.

Implementation:

The generally the longer credit period achieved means the operation of the payment being financialinterest feels by supper funds.

Formula:

FOR CREDITOR RATIO

Particulars 2008 2007 2006 2005

Creditor (In x10M Rs) 854.9 909.6 555.1 463.7

Bills Payable (In x10M Rs) 0 0 0 0

Credit Purchase (In x10M

Rs)13938.8 10836.4 9392.8 8621.3

Creditor Ratio 22.3863245 30.63785021 21.57093731 19.6316681

INTERPRETATION:

Creditor ratio indicates creditor to credit purchase.

In the year 2004 05 ratio is 19.63 and 2005 06 it is 21.57 and its increase on 30.63 in the year 2006 07.

In the year 2007-08 there is decrease on 22.38 times i.e. decrease of 36.36% in the creditor ratio compare to

previous year.

Thus it indicates slight slow down in the financial condition of the company.

Creditor + B / P X 365

Credit Purchases


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[7.5] creditor turns over ratio:

Meaning:

It is the no. of days within which we make payment to our creditors for credit purchases it obtainedfrom creditor ratio.

Implementation:

The generally the longer credit period achieved means the operation of the payment being financialinterest feels by supper funds.

Formula:

FOR CREDITOR TURN OVER RATIO

Particulars 2008 2007 2006 2005

NO. Of Days

in Year365 365 365 365

Creditor's

Ratio22.3863245 30.63785021 21.57093731 19.6316681

Creditors

Turnover

Ratio

16.30459703 11.91336851 16.92091515 18.5924089

INTERPRETATION:

Creditor ratio indicates creditor to credit purchase. In the year 2004 05 ratio is 18.59 and 2005 06 itis 16.92 and its increase on 11.91 in the year 2006 07. Therefore, it is good position for company.

During the year 2007-08 ratio is 16.30. It increases in compare to previous financial year thus itindicates good position of the company.

No. of days in a year

Creditors ratio


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[7.6] StockTurnover Ratio:

Meaning:

It is the no. of times the average stock is turned over during the year is known as stock turnover ratio. Itmeasures the relationship between COGS and inventory level.

Higher the turnover ratio, the more profitable business would be. Such firms will be able to trade on asmaller margin of a gross profit.

Lower stock turn over ratio indicates accumulation of slow moving, obsolete and low quality goodswhich is a danger signal for management.

Implementation:

This approach has the advantage of being free from bias as it smoothens out the fluctuations in theinventory level at different period.

It is measures how quickly inventory is sold. It is a test of efficient inventory management. To judge whether the ratio of a firm is satisfactory or not.

Formula:

FORSTOCKTURN OVERRATIO

Particulars 2009 2008 2007 2006 2005 2004 2003

Sales Turnover (In

x10M Rs)23182.2 21025.2 17205.9 14753.1 13335.7 11047.4 8981.5

Gross Profit (EBDT)

(In x10M Rs)2382.3 3071.2 2551.2 2035.4 1761.7 1264.7 604.2

Cost OfGood Sold

(COGS) (In x10M Rs)20799.9 17954 14654.7 12717.7 11574 9782.7 8377.3

Inventories (In x10M

Rs)902.3 1038 701.4 881.2 666.6 439.8 487

StockTurn over Ratio23.052089

11

17.29672

447

20.893498

72

14.4322514

8

17.362736

3

22.243519

78

17.201848

05

INTERPRETATION:

Stock turnover ratio indicates cost of goods sold to average stock. In the year 2004 05 ratio is 17.36 times and 2005 06 it is 14.43 times and its increase on 20.80 times

in the year 2006 07.

For the year 2008-09 and 2007-08 the ratio are 23.05 times and 17.3 times respectively. It is more in2008-09 compare to 2007-08. It indicates better position of the company.

Therefore, it is good for company. How efficiently stock rate in the year Higher the ratio, better positionof the company as well as efficiency.

Cost of good sold

Average stock


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8. Liquidity Ratio:

[8.1] Current Ratio:

Meaning:

The current ratio is the ratio of total current assets to total current liability. It is calculated by dividingcurrent assets by current liability.

It is also known as a working capital ratio, as it is measure of working capital available at a particulartime. It is a measure of short term financial strength of the business and shows whether the business will

be able to meet its current liabilities, as and when they mature.

Implementation:

The current ratio of a firm measures its short term solvency. That is a measure of margin of safety to thecreditors. The fact that a firm can rarely count on such an even flow requires that the size of the C.A.

should be sufficiently larger than C.L. so that the firm would be assured of being able to pay its currentmaturing debts as and when it becomes due.

Formula:

FORCURRENTRATIO

Particulars 2009 2008 2007 2006 2005 2004 2003

Total Current

Assets (In x10M

Rs)

5491.1 3097.9 4405 3740.9 2972 2018.9 2782.8

Total Current

Liabilities (In

x10M Rs)

3397.6 2825.7 3072.4 1977.1 1608 1531.8 1478.6

Current Ratio 1.6162 1.096330 1.433732 1.892114 1.848258 1.31799 1.882050

INTERPRETATION:

Current ratio indicates current assets to current liability. In the year 2004 05 ratio is 1.84: 1 and 2005 06 it is 1.89: 1 and its decrease on 1.43: 1 in the year 2006 07.

Therefore, it is good for company. For the year 2008-09 the ratio is 1.61:1 and for the year 2007-08 it is 1.61:1. So for the year 2008-09 it

is good as ideal is 2:1 and 1.61:1 closer to ideal one.

Mainly 2: 1 is good. It indicates, repaying condition of the company to the current liabilities. Thestandard current ratio must be 2:1.

Current Assets

Current liability


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[8.2] Liquid Ratio:

Meaning:

It is obtained by dividing the liquid assets by liquid liabilities. It liquid ratio is designed to show the amount of cash available to meet immediate payments. If the liquid assets are equal to or more than liquid liabilities, the condition may be considered as

satisfactory.

Implementation:

The importance of adequate liquidity in the sense of the ability of a firm to meet short term obligationswhen they become due for payment can hardly be overstressed.

In fact liquidity is a prerequisite for the very survival of a firm. It measures ability of a firm to meet itsshort term obligations and reflect the short term finance strength of a firm.

Formula:

FORLIQUIDITYRATIO

Particulars 2009 2008 2007 2006 2005 2004 2003

Total CurrentAssets (In

x10M Rs)

5491.1 3097.9 4405 3740.9 2972 2018.9 2782.8

Inventories

(In x10M Rs)902.3 1038 701.4 881.2 666.6 439.8 487

Prepaid

Expenses (In

x10M Rs)

0 0 0 0 0 0 0

QuickAsset

(In x10M Rs)4588.8 2059.9 3703.6 2859.7 2305.4 1579.1 2295.8

Total CurrentLiabilities (In

x10M Rs)

3397.6 2825.7 3072.4 1977.1 1608 1531.8 1478.6

Bank Over

Draff (In

x10M Rs)

0 0 0 0 0 0 0

Liquidity

Ratio1.35060042 0.72898751 1.205442 1.44641141 1.43370647 1.0308787 1.55268497

Liquid assets

Liquid liability


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41

INTERPRETATION:

Liquid ratio indicates liquid assets to liquid liability. In the year 2004 05 ratio is 1.43: 1 and 2005 06 it is

1.44: 1 and its decrease on 1.21: 1 in the year 2006 07. Therefore, it is good for company. How effectively the

liability paid off.

For the year 2008-09 the ratio is 1.35:1 which shows slight better condition compare to FY 2004-05.

The standard liquidation must be 1:1.


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42

[8.3] Quick / acid test ratio:

Meaning:

The measure of absolute liquidity may be obtain by comparing only cash and bank balance as well asreadily marketable securities with liquid liabilities.

This is exacting standard of liquidity and it is satisfactory if the ratio is 0.5:1. Quick assets here do not include both stock and debtors, because payment from debtors would not

generally be received immediately when liquid liabilities are to be paid.

Implementation:

This ratio is the most rigorous and conservative test of a firms liquidity position. Further, it is suggestedthat it would be useful for the management.

Formula:

FOR QUICKACID TESTRATIO

Particulars 2009 2008 2007 2006 2005 2004 2003

QuickAssets

(In x10M Rs)5491.1 3097.9 4405 3740.9 2972 2018.9 2782.8

Current

Liability (In

x10M Rs)

3397.6 2825.7 3072.4 1977.1 1608 1531.8 1478.6

QuickAcid

Test Ratio1.61617024 1.09633011 1.43373259 1.89211471 1.84825871 1.3179919 1.88205059

INTERPRETATION:

Quick acid test ratio is indicates quick assets and liquid liability. In the year 2004 05 ratio is 1.84: 1and 2005 06 it is 1.89: 1 and its decrease on 1.4: 1 in the year 2006 07. Therefore, it is good forcompany.

Quick assets

Liquid liability


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9. Leverage Ratio:

[9.1] Proprietary ratio:

Meaning:

The ratio shows the proportion of proprietors funds to the total assets employed in known in the proprietary

ratio.

Implementation:

Proprietary ratio helps to known how many proprietary funds to total assets. The higher the ratio, the stronger the financial position of the enterprise, as it signifies that the

proprietors have provided larger funds to purchase assets. This ratio can not exceed 100%; it means that

the business does not use any outside funds. There are no outside liabilities. Purchases are made for cashonly and firm carries business entirely from own funs only. A very high ratio therefore is not desired as

it shows insufficient use of out side fund is made.

Generally it is said that proprietors fund should be enough to cover fixed assets. And also reasonableproportion must be maintained between owned funds and borrowed funds, so the benefit of trading on

equity is obtained. Which inture increase the rate of equity dividend.

Formula:

FOR PROPEIETARYRATIO

Particulars 2009 2008 2007 2006 2005 2004 2003

TotalProprietary

Funds (In x10M Rs)9344.9 8415.4 6853.9 5452.6 4378.8 3591.2 3098

TotalAssets (In

x10M Rs)10043.8 9315.6 7484.7 5524.3 4686.4 3903.1 3554

Proprietary Ratio

93.041478

32

90.3366

3962

91.57214

05 98.702098

93.43632

639

92.0089

1599

87.169

38661

INTERPRETATION:

This ratio indicates the proprietary funds to total assets. For the year 2006 07 it is 91.57 % and 2007 08 is

90.33 % and increase in 2008 09 it is 93.04 %. This is a good for company.

Proprietary fund

Net asset


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44

[9.2] Debt equity ratio:

Meaning:

The relationship between borrowed funds and owners capital is a popular measure of the long termfinancial solvency of a firm. This relationship is shown by the debt equity ratio.

Implementation:

This ratio reflects the relative claims of creditors and shareholders against the assets of the firm.Alternatively this ratio indicates the relative proportions of debts and equity in financing the assets of a

firm.

The D/E ratio is an important tool of financial analysis to appraise the financial structure of a firm. Ithas important implication from view point of the creditors, owners and the firm itself.

A higher ratio means that outside creditors have a larger claim than the owners of business. Thepressure from creditors would increase and their interference will also increase. The company with high

debt position will have to accept strict conditions from the lenders, while borrowing money.

A lower ratio is not profitable from the view point of equity share holders, as benefit of trading onequity is not availed of and the rate of equity dividend will be comparatively lower.

FOR DEBTEQUITYRATIO

Particulars 2009 2008 2007 2006 2005 2004 2003

Long term

Liabilities (In x10M

Rs)

841.041 841.54 411.234 218.104 350.304 395.032 588.62

TotalShareholders

Funds (In x10M Rs)

9344.9 8415.4 6853.9 5452.6 4378.8 3591.2 3098

Debt-Equity Ratio 9% 10% 6% 4% 8% 11% 19%

INTERPRETATION:

This ratio indicates the debt to equity ratio. For the year 2004 05 it is 8 %and 2005 06 is 4 % andincrease in 2006 07 it is 6%.

This is a bad for company as compare to 2005-06 year is more debt ratio which indicate the more realizeon debt fund rather owned fund. The good impact is interest burden will be more indirectly.

For the year 2008-09 and 2007-08 the debt equity ratio is 9% and 10% respectively. As the higher debtequity ratio it shows the weaker financial condition of the company. But, still it again varies for

company to company.


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Accounting Policy 2009

1) BASIS FOR PREPARATION OF ACCOUNTS

These financial statements have been prepared to comply in all material respects with all the applicable

accounting principles in India, the applicable accounting standards notified under section 211(3C) of theCompanies Act, 1956 and the relevant provisions of the Companies Act, 1956.

2) REVENUE RECOGNITION

Domestic and export sales are recognized on transfer of significant risks and rewards to the customer which

takes place on dispatch of goods from the factory / stockyard / storage area and port respectively.

3) FIXED ASSETS

Fixed assets (except freehold land which is carried at cost) are carried at cost of acquisition or construction or at

manufacturing cost (in case of own manufactured assets) in the year of capitalization less accumulated

depreciation.

Assets acquired under finance lease are capitalized at the lower of their fair value and the present value of

minimum lease payments.

4) BORROWING COSTS

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assetsare capitalized till the month in which each asset is put to use as part of the cost of that asset.

5) DEPRECIATION

a) Fixed assets except leasehold assets viz land and vehicles are depreciated on the straight line method on a

pro-rata basis from the month in which each asset is put to use.

Depreciation has been provided at the rates prescribed in Schedule XIV to the Companies Act, 1956 except for

certain fixed assets where, based on the managements estimate of the useful life of the assets, higher

depreciation has been provided on the straight line method over the following useful lives:

Plant and Machinery 8 - 11 Years Dies and Jigs 4 Years Electronic Data Processing Equipments 3 Years

In respect of assets whose useful life has been revised, the unamortized depreciable amount is charged over the

revised remaining useful life of the assets.

b) Leasehold assets viz land & vehicles are amortized over the period of lease.


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c) All assets, the individual written down value of which at the beginning of the year is Rs. 5,000 or less, are

depreciated at the rate of 100%. Assets purchased during the year costing Rs 5,000 or less are depreciated at the

rate of 100%.

6) INVENTORIES

a) Inventories are valued at the lower of cost, determined on the weighted average basis, and net realizable

value.

b) Tools are written off over a period of three years except for tools valued at Rs. 5,000 or less individually

which are charged off to revenue in the year of purchase.

c) Machinery spares (other than those supplied along with main plant and machinery, which are capitalized and

depreciated accordingly) are charged to revenue on consumption except those valued at Rs. 5,000 or less

individually, which are charged off to revenue in the year of purchase.

7) INVESTMENTS

Current investments are valued at the lower of cost and fair value. Long-term investments are valued at cost

except in the case of a permanent diminution in their value, in which case the necessary provision is made.

8) RESEARCH AND DEVELOPMENT

Revenue expenditure on research and development is charged off against the profit of the year in which it is

incurred. Capital expenditure on research and development is shown as an addition to fixed assets and

depreciated accordingly.

9) EMPLOYEE BENEFIT COSTS

The Company has Defined Contribution Plans for post employment benefits namely Provident Fund and

Superannuation Fund which are recognized by the income tax authorities. These Funds are administered

through Trusts and the Companies contributions thereto are charged to revenue every year. The Company also

maintains an insurance policy to fund a post-employment medical assistance scheme, which is a Defined

Contribution plan administered by The New India Insurance Company Limited.

The Companies contribution to State Plans namely Employees State Insurance Fund and Employees Pension

Scheme are charged to revenue every year.

The Company has Defined Benefit Plans namely leave encashment/ compensated absence, Gratuity, Interest on

Provident Fund and Retirement Allowance for employees, the liability for which is determined on the basis of

an actuarial valuation at the end of the year. The

Gratuity Fund is recognized by the income tax authorities and is administered through a Trust.


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Termination benefits are recognized as an expense immediately.

Gains and losses arising out of actuarial valuations are recognized immediately in the Profit and Loss Account

as income or expense.

10) CUSTOMS DUTY

Custom duty available as drawback is initially recognized as purchase cost and is credited to consumption on

export of vehicles.

11) GOVERNMENT GRANTS

Government grants are recognized in the profit and loss account in accordance with the related scheme and in

the period in which these are accrued.

12) TAXES

Tax expense for the period, comprising current tax, fringe benefit tax and deferred tax, is included in

determining the net profit/ (loss) for the year.

Current tax is recognized based on assessable profit computed in accordance with the Income Tax Act and at

the prevailing tax rate.

Deferred tax is recognized for all timing differences. Deferred tax assets are carried forward to the extent it is

reasonably / virtually certain that future taxable profit will be available against which such deferred tax assets

can be realized. Deferred tax assets are reviewed at each balance sheet date and written down/ written up to

reflect the Amount that is reasonably/ virtually certain (as the case may be) to be realized.

Deferred tax assets and liabilities are measured at the tax rates that have been enacted or substantively enacted

at the balance sheet date.

13) DIVIDEND INCOME

Dividend from investments is recognized when the right to receive the payment is established and when no

significant uncertainty as to measurability or collectability exits.

14) INTEREST INCOME

Interest income is recognized on the time basis determined by the amount outstanding and the rate applicable

and where no significant uncertainty as to measurability or collectability exists.

15) IMPAIRMENT OF ASSETS


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At each balance sheet date, the Company assesses whether there is any indication that an asset may be impaired

If any such indication exists, the Company estimates the recoverable amount. If the carrying amount of the asset

exceeds its recoverable amount, an impairment loss is recognized in the profit and loss account to the extent the

carrying amount exceeds the recoverable amount.

16) PROVISIONS AND CONTINGENCIES

The Company creates a provision when there is a present obligation as a result of a past event that probably

requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A

disclosure of contingent liability is made when there is a possible obligation or a present obligation that wil

probably not require

Outflow of resources or where a reliable estimate of the obligation cannot be made.


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Notes to Accounts Year End: Mar '09

1) Contingent Liabilities:

a) Claims against the Company disputed and not acknowledged as debts:

i. Sales-tax demands of Rs.50 million (Previous year Rs.50 million). Against this, the Company has deposited a

sum of Rs. 2 million (Previous year Rs. 2 million) under protest.

ii. Excise duty demands/show-cause notices of Rs. 4,799 million (Previous year Rs. 3,130 million). Agains

this, the Company has deposited a sum of Rs. 23 million (Previous year Rs. 27 million) under protest.

iii. Customs duty demands of Rs. 118 million (Previous year Rs. 118 million). Against this, the Company has

deposited a sum of Rs. 22 million (Previous year Rs. 22 million) under protest.

iv. Income-tax demands of Rs. 4,466 million (Previous year Rs. 9,905 million). Against this, the Company has

deposited a sum of Rs. 3,802 million under protest (Previous year Rs. 4,745 million).

v. Service-tax demands of Rs. 1234 million (Previous year Rs. 253 million).

vi. Claims against the Company for recovery of Rs 606 million (Previous year Rs. 639 million) lodged by

various parties.

b) As co-lessee in agreements entered into between various vendors of the Company, as lessee, and banks as

lessors for leasing of dies and moulds of certain models aggregating Rs.2 million (Previous year Rs. 2 million).

c) A guarantee given to HDFC Bank Limited against Non-Fund based facilities granted by the bank to a group

company Suzuki Powertrain India Limited of Rs. Nil (Previous year Rs. 2,000 million). Against this, the

balance outstanding as at the year-end is Rs. Nil (Previous year Rs. 194 million).

d) A guarantee given to HSBC Limited against Non-Fund based facilitiesgranted by the bank to a group

company Suzuki Powertrain India Limited of Rs. Nil (Previous year Rs. 3,000 million). Against this, the

balance outstanding as at the year-end is Rs. Nil (Previous year Rs. 1,543

Million).

e) The amounts shown in the item (a) represent the best possible estimates arrived at on the basis of available

information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal

processes which have been invoked by the Company or the claimants as the case may be and therefore cannot

be predicted accurately. The Company engages reputed professional advisors to protect its interests and has

been advised that it has strong legal positions against such disputes.


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The amount shown in items (b) to (d) represent guarantees given in the normal course of the Companies

operations and are not expected to result in any loss to the Company on the basis of the beneficiaries fulfilling

their ordinary commercial obligations.

2) Outstanding commitments under Letters of Credit established by the Company aggregate to Rs 2,255 million

(Previous year Rs. 2,764 million).

3) Estimated value of contracts on capital account, excluding capital advances, remaining to be executed and

not provided for, amount to Rs.11,593 million (Previous year Rs. 12,692 million).

4) a) Consumption of raw materials and components has been computed by adding purchases to the opening

stock and deducting closing stock verified physically by the management. b) Consumption of raw material and

components includes a provision of Rs. 9 million (Previous year Rs. 26 million) on account of estimated

reversal of tax benefit on quantity differences on inputs.

2) The Company was granted sales tax benefit in accordance with the provisions of Rule 28C of HaryanaGeneral Sales Tax Rules, 1975 for the period from 1st August, 2001 to 31st July, 2015. The ceiling amount of

concession to be availed of during entitlement period is Rs.5, 644 million. Till 31st March 2009, the Company

has availed of sales tax benefit amounting to Rs. 1,675 million (Previous year Rs. 1,605 million).

3) With effect from April 1, 2008, the company has adopted Accounting Standard 30 - Financial Instruments -

Recognition and Measurement issued by The Institute of Chartered Accountants of India to the extent it does

not contradict with any other Accounting Standard notified u/s

211(3C) of the Companies Act. Accordingly, during the current year, in respect of derivative instruments which

qualify for hedge accounting, the net unrealized loss aggregating Rs. 1,709 million has been accounted for as a

Hedging Reserve to be ultimately recognized in the profit and loss account when the underlying transaction

arises, as against the earlier practice of recognizing the same in the profit and loss account, on valuation at the

end of each period. Other derivative instruments that do not qualify for hedge accounting have been recorded at

fair value at the reporting date and the resultant loss/ gain has been accounted in the profit and loss account.

4) Previous Years figures have been recast regrouped where considered necessary to make them comparable

with the current years figures.


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Auditor's Report Year End: Mar '09

1. We have audited the attached Balance Sheet of Maruti Suzuki India Limited, as at 31st March, 2009, and the

related Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto

which we have signed under reference to this report. These

Financial statements are the responsibility of the Companies management. Our responsibility is to express anopinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those

Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financia

statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting

the amounts and disclosures in the financial statements. An audit also includes assessing the accounting

principles used and significant estimates made by management, as well as evaluating the overall financia

statement

Presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors

Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of

Section 227 of The Companies Act, 1956 of India (the Act) and on

The basis of such checks of the books and records of the Company as we considered appropriate and according

to the information and explanations given to us, we further report that:

i) (a) The Company is maintaining proper records showing full particulars including quantitative details and

situation of fixed assets.

(b) The fixed assets are physically verified by the management according to a phased programmed designed to

cover all the items, except furniture and fixtures, office appliances and certain other assets having an aggregate

net book value of Rs. 367 million, over a period of

Three years, which in our opinion, is reasonable having regard to the size of the Company and the nature of its

assets? Pursuant to the programmed, a portion of the fixed assets have been physically verified by the

management during the year and no material discrepancies between the book records and the physical inventory

have been noticed.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed

assets has not been disposed off by the Company during the year.

ii) (A) the inventory (excluding materials lying with vendors) has been physically verified by the management

during the year. In respect of inventory lying with the vendors, these have substantially been confirmed by

them. In our opinion, the frequency of verification is reasonable.

(b) In our opinion, the procedures of physical verification of inventory followed by the management are

reasonable and adequate in relation to the size of the Company and the nature of its business.


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(c) On the basis of our examination of the inventory records, in our opinion, the Company is maintaining proper

records of inventory. The discrepancies noticed on physical verification of inventory as compared to book

records were not material.

iii) The Company has not taken or granted any loans, secured or unsecured, from / to companies, firms or other

parties covered in the register maintained under Section 301 of the Act.

iv) In our opinion and according to the information and explanations given to us, having regard to the

explanation that certain items purchased are of special nature for which suitable alternative sources do not exist

for obtaining comparative quotations, there is an adequate internal control system commensurate with the size

of the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of

goods and services. Further, on the basis of our examination of the books and records of the Company, and

according to the information and explanations given to us, we have neither come across nor have been informed

of any continuing failure to correct major weaknesses in the aforesaid internal control system.

v) (a) In our opinion and according to the information and explanations given to us, the particulars of contractsor arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained

under that section.

(b) In our opinion and according to the information and explanations given to us, there are no transactions made

in pursuance of such contracts or arrangements and exceeding the value of Rupees Five Lakhs in respect of any

party during the year, which have been made at prices

Which are not reasonable having regard to the prevailing market prices at the relevant time. In respect of

purchase of goods and materials including components from the holding company, the prices paid for these

items are not comparable as these are of special nature.

vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA

or any other relevant provisions of the Act and the rules framed there under.

vii) In our opinion, the Company has an internal audit system commensurate with its size and nature of its

business.

viii) We have broadly reviewed the books of account maintained by the Company in respect of products where

pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been

prescribed under clause (d) of sub-section (1) of Section 209 of the Act and are of the opinion that prima facie,the prescribed accounts and records have been made and maintained. We have not, however, made a detailed

examination of the records with a view to determine whether they are accurate or complete.

ix) (a) According to the information and explanations given to us and the records of the Company examined by

us, in our opinion, the Company is regular in depositing undisputed statutory dues in respect of provident fund,

investor education and protection fund, employees

State insurance, income tax, sales-tax, wealth tax, service tax, customs duty, excise duty, cess and other material

statutory dues as applicable with the appropriate authorities.


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(b) According to the information and explanations given to us and the records of the Company examined by us

the particulars of dues of income-tax, sales-tax, wealth tax, service tax, customs duty, excise duty and cuss as at

March 31, 2009 which have not been deposited on Account of any dispute are as follows:

(Rs. in Million)

Name of the

statute (Nature

of Dues)

Amount Amount deposited

under protest amount

Period to which the

amount is pending

Forum where the

dispute is pending

Income Tax Act,

1961 (Tax &

Interest)

5,271 3,799 1992 to 2006 Income Tax

Tribunal/ High Court

Appellate

Commissioner Income

Tax (Appeals) 1 1 1998 to 1999 High Court

Wealth Tax Act,

1957 (Tax)

Haryana General

Sales Tax Act

(Tax & Interest)

3 1984 to 1989 Assessing Authority

Dlhi Sales TaxAct (Tax)

47 2 1988 to 1992 AdditionalCommissioner

The Central

Excise Act, 1944

(Duty, Interest &

Penalty)

1774 51 April 1986 to January

2008

Customs Excise &

Service

Tax Appellate

Tribunal/ High Court/

Supreme Court/

Commissioner Appeals

The Finance Act,

1994 (Service

Tax, Interest &

Service Penalty)

370 July 1997 to

September 2004

Tax Appellate Tribunal

Customs Excise &

Service


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Customs Act,

1962 (Duty &

Interest)

27 22 February 2003 to

August 2003

Customs Excise &

Service

Tax Appellate Tribunal

Or detailed listing refer Note 30 on Schedule 23

x) The Company has no accumulated losses as at March 31, 2009 and it has not incurred any cash losses in the

financial year ended on that date or in the immediately preceding financial year.

xi) According to the records of the Company examined by us and the information and explanations given to us

the Company has not defaulted in repayment of dues to any bank or debenture holders as at the balance sheet

date.

xii) The Company has not granted any loans and advances on the basis of security by way of pledge of sharesdebentures and other securities.

xiii) The provisions of any special statute applicable to chit fund /

30030753 balance sheet analysis of maruti suzuki

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