a comparative study on financial performance of select automobile industries in india” (four...

CHAPTER-1

INTRODUCTION

INTRODUCTION

Meaning of Finance

Finance may be defined as the provision of money at the time when it is required. Finance

refers to management of flows of money through an organization. It concerns with the

application of skills in the manipulation, use and control of money. Different authorities have

interpreted the term ‘Finance’ differently. However, there are three main approaches to

finance.

1) The first approach views finance to providing of funds needed by a business on

most suitable terms. This approach confines finance to the raising of funds and to

the study of financial institutions and instruments from where funds can be

procured.

2) The second approach relates to finance cash requirements.

3) The third approach views finance as being concerned with raising of funds and

their effective utilization.

Definition of Finance

According to Guthmann and Dougall, Business finance can be broadly difined as the activity

concerned with the planning, raising, controlling, and administering the funds used in

business.

In the words of panther and wert, “Business finance deals primarily with raising,

administering and disbursing funds by privately owned business units operation in

nonfinancial fields of Industry”.

According to the encyclopedia of social Sciences, “Corporation finance deals with the

financial problems of corporate enterprises. These problems include the financial aspects

According to the encyclopedia of Social Sciences, “Corporation finance deals with the financial

problems of corporate enterprises. These problems include the financial aspects of the

promotion of new enterprises and their administration during early development, the accounting

problems connected with the distinction between capital and income, the administrative

questions created by growing and expansion of a corporation which has come into financial

difficulties”.

Importance of Finance

Finance is the lifeblood and never center of business, just a circulation of blood is essential in

the human body for maintaining life, finance is a very essential to smooth running of the

business. It has been rightly termed as universal lubricant, which keeps the enterprise dynamic.

No business, whether big, medium or small can be started without an adequate amount of

finance. Right from the very beginning, i.e. conceiving an idea to business, finance is needed to

promoter or establish the business, acquire fixed assets, make investigations such as market

surveys, etc., develop product, keep men and machine at work, encourage management to make

progress and create values. Even an existing concern may require further finance for making

improvements or expanding the business. Thus the importance of finance cannot be over-

emphasized and the subject of business finance has become utmost both to the academicians

and practicing managers.

The importance of corporation finance (which is a constituent of business finance) has arisen

because of the fact that present day business activities are predominantly carried on company or

corporate form of organization. The advent of corporate enterprises has resulted into:

i. The increase in size and influenced of the business enterprises.

ii. Wide distribution of corporate ownership, and

iii. Separation of ownership and management.

Finance management is applicable to every type or organization, irrespective of its size, kind or

nature. It is as useful to a small concern as to a big unit. A trading concern gets the same utility

from its application as a manufacturing unit may expect. There is a use of finance, financial

management is helpful. Every management aims to utilize its funds in a best possible and

profitable way. So this subject is acquiring a universal applicability.

It is indispensable in any organization as it helps in:

i. Financial planning and successful promotion of an enterprise:

ii. Acquisition of funds as and when required at the minimum possible cost:

iii. Proper use and allocation of funds:

iv. Taking sound financial decisions:

v. Improving the profitability through financial controls:

vi. Increasing the wealth of the investors and the nation: and

vii. Promoting and mobilizing individual and corporate savings.

Scope of Finance

The main objective of financial management is to arrange sufficient finance for meeting short-

term and long term needs. These funds are procured at minimum costs so that profitability of

business is maximized.

Different Types of Financial Statements

Income statement:

The income statement or profit and loss Account is considered as a very useful statement of all

financial statements. It depicts the expenses incurred on production, sales and distribution and

sales revenue and the net profit or loss for a particular period. It shows whether the operations

of the firm resulted in profit or loss at the end of a particular period.

Balance Sheet:

Balance sheet is a statement which shows the financial position of a business as on a particular

date. It represents the assets owned by the business and the claims of the owners and creditors

against the assets in the form of liabilities as on the date of the statement.

Statement of Retained Earnings:

The statements of retained earnings is also called the profit and loss approbation account. It is a

link between the income statement and the balance sheet. Retained earnings are the

accumulated excess of earnings over losses and dividends. The balance shown by the income

statement is transferred to the balance sheet through this statement after making the necessary

appropriations.

Funds Flow Statement:

According to Anthony, “The funds flow statement described the sources from which additional

funds were derived and the use to which these funds were put”. Funds flow statement helps the

financial analyst in having a more detailed analysis and understanding the changes in the

distribution of resources between two balance sheet periods. The statement reveals the sources

of funds and their application for different purposes.

Cash flow Statement:

A Cash flow statement depicts the changes in cash position from one period to another. It shows

the inflow and outflow of cash and helps the management in making plans for immediate

futures. An estimated cash flow statement enables the management to ascertain the availability

of cash to meet business obligations. This statement is useful for short-term planning by the

management.

Schedules:

These are the statements which explain the items given in income statement and balance sheet.

Schedules are a part of financial statements which give detailed information about the financial

position of a business organization.

Limitations of Financial Statements

In profit and loss account net profit is ascertained on the basis of historical costs.

Profit arrived at by the profit and loss account is of interim nature. Actual profit can be

ascertained only after the firm achieves its maximum capacity.

The net income disclosed by the profit and loss account is not absolute but only relative.

The profit and loss account does not disclose factors like quality of product, efficiency

of the management etc.

The net income is the result of personal judgment and bias of accountants cannot be

removed in the matters of depreciation, stock valuation, etc.

There are certain asset and liabilities which are not disclosed by the balance sheet. For

example, the most tangible asset of a company is its managements force and a

dissatisfaction labour force is its liability which are not disclosed by the balance sheet.

The book value of assets us shown as original cost less depreciation. But in practice, the

value of the assets may differ depending upon the technological and economic changes.

The assets are valued in a balance sheet on a going concern basis. Some of the assets

may not realize their value on wining up.

The accounting year may be fixed to show a favourable picture of the business, in case

of sugar industry the balance sheet prepared in off-season depicts a better liquidity

position than in the crushing season.

An investor likes to analyse the present and future prospects of the business, while the

balance sheet shows past positions. As such the use of a balance sheet is only limited.

Due to flexibility of a accounting principles, certain liabilities like provisions for

gratuity etc. are not show in the balance sheet, giving the outsiders a misleading picture.

The financial statements are generally prepared from the point of view of shareholders

and their use in limited in decision making by the management, investors and creditors.

Even the audited financial statements does not provide complete accuracy.

Financial statements do not disclose the changes in management, loss of markets, etc.

which have a vital impact on the profitability of the concern.

The financial statements are based on accounting policies which may vary from

company to company and as such cannot be formed as a reliable basis of judgment.

Methods of analyzing Financial Statements

For analysis of financial statements, they should be re-arranged to reveal the relative

significance and effect of various items of data in relation to time period and for making inter-

firm comparisons. While re-arrangement the data, logical relationship and sequence should be

given consideration. The analysis of financial statements will help in interpretation should

logical conclusions. The important methods used in analysis of statements are as follows:

Comparative financial statements

Comparative financial statement are statements of financial position of a business designed to

provide time perspective to the consideration of various elements of financial position

embodied in such statements. Comparative financial statements reveal the following:

1. Absolute data (money value or rupee amounts)

2. Increase or reduction in absolute data in terms of money values

3. Increase or reduction in absolute data in terms of percentages

4. Comparison in term of ratios

5. Percentage of totals

Common size statements

The financial statements viz. profit and loss account and balance sheet are converted to

percentages so as to establish each element to the total figure of the statement and these

statement are called ‘common size statements’. These statements are useful in analysis of the

performance of the company by analyzing each individual element to the total figure of the

statement. These statement will also assist in analyzing the performance over years and also

with the figures of the competitive firm in the industry for making analysis of relative

efficiency. The following statement show the method of presentation of the data.

Common size Income Statement

Common size Balance sheet

Trend ratios

The trend ratios of different items are calculated for various periods for comparison purpose.

The trend ratios are the index numbers of the movements of reported financial items in the

financial statements which are calculated for more than one financial year. The calculation of

trend ratios are based on statistical technique called ‘index numbers’ the trend ratios help in

making horizontal analysis of comparative statements. It reflects the behavior of items over a

period of time. the accounting principles and policies should be consistently followed

throughout the period for which the trend ratios are calculated.

Ratio analysis

According to J. Batty “the term accounting ratio is used to describe significant relationships

which exist between figures shown in a balance sheet, in a profit and loss account, in a

budgetary control system or in any other part of the accounting organization”. the accounting

ratios indicate a quantitative relationship which is used for analysis and decision making. It

provides basis for inter-firm as well as intra-firm comparison. The ratios will be effective only

when they are compared with ratios of base period or with standards or with the industry ratios.

The financial statement viz. income statement, and Balance sheet report what has actually

happened to earnings during a specific period and presents a summary of financial position of

the company at a given point of time. the statement of retained earnings reconciles income

earned during the year and any dividends distributed with the change in retained earnings

between the start and end of the financial year under study.

Funds flow analysis

The profit and loss account and Balance sheet statement are the common important accounting

statements of a business organization. The profit and loss account provides financial

information relating to only a limited range of financial transactions entered into during an

accounting period and its impact on the profits to be reported. The Balance sheet contains

information relating to capital or debt raised or assets purchased. But both the above two

statements do not contain sufficiently wide range of information to make assessment of

organization by the end user of the information. In view of recognized importance of capital

inflows and outflows, which often involves large amounts of money should be reported to the

stakeholders, the funds flow statement is devised. In a funds flow analysis, the details of

financial resources availed and the ways in which such resources are used during a particular

accounting period, are given in a statement from called ‘Funds Flow Statement’ the sources of

funds also include the funds generated from operations internally. The funds flow statement can

explain the reasons for liquidity problems of the firm even through it is earning profits.

Cash flow analysis

Cash flow statement provides information about the cash receipts and payments of a firm for a

given period. It provides important information that compliments the profit and loss accounting

and balance sheet. The information about the cash flow of a firm is useful in providing users or

financial statements with a basis to assess the ability of the enterprise to generate cash and cash

equivalents and the needs of the enterprise to utilize these cash flow. The economic decisions

that are taken by users require an evaluation of the ability of an enterprise to generation. The

statement deals with the provision of information about the historical changes in cash

equivalents of an enterprise by means of a cash flow statement which classifies cash flows

during the period from operating, investing and financing activities.

Break-even and cost-volume profit analysis

Break – even analysis to ‘ascertainment of level of operations where total revenue equals to

total costs’. It is an analysis is a determine the probable profit or loss at any level of operations.

Break – even analysis is a method of studying the relationship among sales revenue, variable

cost and fixed cost to determine the level of operation at which all the costs are equal to its

sales revenue and it is the no profit no loss situation. This is an important made through

graphical charts. Break – even chart indicates approximate profit or loss at different levels of

sales volume within limited range. The break – even charts show fixed and variable costs and

sales revenue so that profit or loss at any given level of production or sales can be ascertained.

Value added analysis

‘Value added’ is described as “the wealth created by the reporting entity by its own and its

employees’ efforts and comprises salaries and wages, fringe benefits, interest, dividend, tax,

depreciation and net profit (retained)”.

It is also defined as “ the increase in market value resulting from an alteration in the from,

location or availability of a product or service excluded the cost of goods and services

purchased from outside’.

Chapter-2

Research design

Research design

“A COMPARATIVE STUDY OF FINANCIAL PERFORMANCE OF SELECT

AUTOMOBILE INDUSTRIES IN INDIA” (four wheelers)

Introduction:-

A well developed transport network indicates a well developed economy. For rapid

development a well-developed and well-knit transportation system is essential. As India's

transport network is developing at a fast pace, Indian Automobile Industry is growing too.

Also, the Automobile industry has strong backward and forward linkages and hence

provides employment to a large section of the population. Thus the role of Automobile

Industry cannot be overlooked in Indian Economy. All kinds of vehicles are produced by the

Automobile Industry. India Automobile Industry includes the manufacture of trucks, buses,

passenger cars, defense vehicles, two-wheelers, etc. The industry can be broadly divided into

the Car manufacturing, two-wheeler manufacturing and heavy vehicle manufacturing units.

The major Car manufacturer are Hindustan Motors, Maruti Udyog, Fiat India Private Ltd.,

Ford India Ltd ., General Motors India Pvt. Ltd., Honda Siel Cars India Ltd., Hyundai Motors

India Ltd., Skoda India Private Ltd., Toyota Kirloskar Motor Ltd., to name a few.

The two-wheeler manufacturing is dominated by companies like TVS, Honda Motorcycle &

Scooter India (Pvt.) Ltd., Hero Honda, Yamaha, Bajaj, etc. The heavy motors like buses,

trucks, defense vehicles, auto rickshaws and other multi-utility vehicles are manufactured by

Tata-Telco, Ashok Leyland, Eicher Motors, Bajaj, Mahindra and Mahindra, etc.

Statement of problem:-

The study is focused on analysis and interpretation with respect to growth of Automobile

industry. The various factors affecting the automobile industry. The Profitability,

competition, market condition, future prospective market condition for this industry. This

study will also deals with reviewing the performance of domestic automobile companies

against foreign automobile companies.

Objectives:-

1) To study the growth of Automobile industry

2) To examine profitability status.

3) To know the strengths of financial ratios in identifying financial efficiency of the

Industry.

4) To make comparative study on financial performance of Automobile Industries.

Scope of the study:-

The study will be done in Automobile Industry order to analyze the current position of

profitability of Industry. The study helps to know liquidity position as well as maintain the

profitability of the Industry. This study is confined to only the branch and it can be further

extended to other centers. The study is based on the annual reports of the company Balance

sheets, Profit and loss accounts for a period of 5 years. And performance rate of selected

Automobile Industries.

Research Methodology:-

Survey method is proposed to use for studying the samples.

Detailed study is used for studying the behavior of risk and return.

Statistical method.

Data collection:-

Data collection is a key in marketing research. The design of the data collection method

is the back bone of the research design. Normally the sources of data are classified in 2 types:

Primary data.

Secondary data

Primary data:-

The primary data has been collected from the Manager’s Dealers of popular cars.

through direct interview

Secondary data:-

The required secondary data has been collected from the published books, hand

bills, journals, project reports, internet Databanks, Internet, capital line software, etc.

Chapter scheme

Introduction

Research design

Industry profile and company profile

Analysing and interpretation of data

Summary of finding and recommendation

Bibliography

Annexure

Expectation of the study

Proper management of Automobile Industry is very essential for ensuring growth

business.

The following can be stated as the need for the study

1) To get more knowledge of the study.

2) To analyse the financial market condition.

3) To find out different Industry of the firm related to financial position and check

their effects.

CHAPTER-3

Industry profile

Introduction of Automobile Industry

The automobile History dates back to the late 18th century. Nicolas Joseph Cugnot, a French

engineer is credited with investing the first self-propelled automobile.

Cugnot’s vehicle used steam power for locomotion. The vehicle found military application in

the French army. Cugnot’s Automobile was never commercially sold.

In the beginning automobile industry was dominated by steam-powered vehicle. The vehicles

were expensive and difficult to maintain. The incidence of frequent boiler expansions also

kept potential purchasers away. Commercial history of automobiles started with the invention

of gasoline powered internal combustion engines. The German inventor, Karl Benz

constructed his first gasoline powered vehicle in 1885. At Mannheim, Germany. Commercial

production of Benz cars stated in 1888. Panhard et Levassor of France was the first company

to exclusively build and sell motor cars from 1889.

The early 1900 s saw many automobile manufacturing companies coming into existence in a

number of European countries and the United States. The first mass production automobile in

the United States was the curved-dash Oldsmobile. It was a three-horsepower machine and

sold 5,000 units by 1904. The economies of the US car market was disrupted by the arrival of

Henry Ford and his Model T car. The Model T was the world’s first mass produced vehicle-a

million units were sold by 1902- a space of 10 years.

Automobile History

Horses had dreams of them since time immemorial, but it was only in the 18 th century that the

first horseless carriage actually hit the roads. That’s not to say that the idea never struck anyone.

Seeds of the idea, in fact, originated long before the first contraption was rolled.

The History of the automobile actually began 4,000 years ago when the first wheel was used for

transportation in India. Several Italians recorded designs for wind-driven cars. The first was

Guido da Vigevano in 1335. It was a windmill-type drive to gears and thus to wheels. Vaturio

designed a similar car that was also never built. Later Leonardo da vinci designed clockwork-

driven tricycle with tiller steering and a differential mechanism between the rear wheels.

In the early 15th century, the Portuguese arrived in china and the interaction of the two cultures

led to a variety of new technologies, including the creation of a wheel that turned under its own

power. By the 1600s, small steam-powered engine models were developed, but it was another

century before a full-sized engine- powered automobile was created.

A Catholic priest named Father Ferdinan Verbiest is credited to have built a steam-powered car

for the Chinese Emperor Chien Lung in about 1678. There is no information about the

automobile. Only the event. Since James watt didn’t invent the steam engine until 1705, we can

guess that this was possibly a model automobile powered by a mechanism like Hero’s steam

engine-a spinning wheel with jets on the periphery.

Although by the mid-15th century the idea of a self-propelled automobile had been put into

practice with the development of experimental car is powered by means of springs, clockworks,

and the wind, Nicolas-Joseph Cugnot of France in considered to have built the first true

automobile in 1769. Designed by Cugnot and constructed by M. Berzin it is also the first

automobile to move under its own power for which there is a record. Cugnot’s three- wheeled

steam-powered automobile carried four persons and was meant to move artillery pieces. It had a

top speed of a little more than 3.2km/h (2mph) and had to stop every 20 minutes to build up a

fresh head of steam.

Evens was the first American who obtained a patent for” a self-propelled carriage.” He, in

fact, attempted to create a two-in-one combination of a steam wagon and a flat-bottomed

boat, which didn’t receive any attention in those days. During the 1830’s, the steam car had

made great advances. But stiff competition from railway companies and crude legislations in

Britain forced the poor steam automobile gradually out of use on roads. The early steam-

powered automobile s were so heavy that they were only practical on a perfectly flat surface

as strong as iron. A road thus made out of iron rails became the norm for the next hundred

and twenty-five years. The automobile s got bigger and heavier and more powerful and as

such they were eventually capable of pulling a train of many car s filled with freight and

passengers

Changing Faces of the Car

Mass production of cars led to cheaper vehicles. This made cars more affordable to the common

American and European citizen. The British automobile manufacturing history was

revolutionized by assembly line production methods employed by two separate car makers-

William Morris and Herbert Austin. Austin Seven was the world's first compact car. The Morris

manufactured vehicles had engine mounted on front.

The 1960s saw rapid developments in automobile manufacturing technology. A milestone in the

history of automobiles was achieved by the invention of efficient fuel injection processes,

independent suspensions and turbochargers. Pontiac Trans Am was the best selling car from

1969 to 1980. Computer Aided Design (CAD) was introduced for designing vehicles from the

1980s. Ford Taurus was the first vehicle to be built using CAD.

Company profile

Tata Motors

Tata Motors launches its first truck in collaboration with Mercedes-Benz

Tata Motors is a part of the Tata and Sons Group, founded by Jamshedji Nussarwanji Tata and

J. Baker. The company was established in 1945 as a locomotive manufacturing unit and later

expanded its operations to commercial vehicle sector in 1954 after forming a joint venture with

Daimler-Cars.

After years of dominating the commercial vehicle market in India, Tata Motors entered the

passenger vehicle market in 1992 by launching the Tata Sierra, a multi utility vehicle. After the

launch of three more vehicles, namely, Tata Estate (1992, a station wagon design based on the

earlier 'TataMobile' [1989] a light commercial vehicle which some people may still think of as

Tata's first passenger car), Tata Sumo (LCV, 1994) and Tata Safari (1998, India's first sports

utility vehicle); In 1998 Tata launched the Indica, the first fully indigenous passenger car of

India. Though the car was initially panned by auto-analysts, the car's excellent fuel economy,

powerful engine and aggressive marketing strategy made it one of the best selling cars in the

history of the Indian automobile industry. A newer version of the car, named Indica V2, was a

major improvement over the previous version and quickly became a mass-favorite. A badge

engineered version of the car was sold in the United Kingdom as the Rover City Rover. Tata

Motors also successfully exported large quantities of the car to South Africa. The success of

Indica in many ways marked the rise of Tata Motors. Note: In 1996-97 Tata launched the Tata

Sumo Deluxe and the Tata Sierra Turbo variants respectively.

Tata Pick Up, unveiled in 2007, is expected to enter European and American market by 2009.In

2007, Tata Motors generated revenues of Rs 31,884.69 crore.

In 2007, Tata Motors launched several concept models and future designs of existing models. It

also formed joint ventures with various local companies in several countries to assemble Tata

cars. Tata Motors launched a re-designed version of Tata Xenon TL during Motor Show

Bologna which would be assembled in Thailand and Argentina. A pick-up variant of Tata Sumo

was also launched under the program 'Global Pick-Up'. The company plans to launch the new

pick-up model in India, Southeast Asia, Europe, South Africa, Turkey and Saudi Arabia. Tata

Motors also unveiled newer model of Tata Indigo and Tata Elegante concept-car during the

Geneva Auto Show.

Tata Motors also formed a joint venture with Fiat and gained access to Fiat’s diesel engine

technology. Tata Motors is looking to extend its relationship with Fiat and Iveco to other

segments like the 'Global Pick-Up' program. The launch of the 'Global Pick-Up' will mark the

entry of the company into developed markets like Europe and the United States. The project

was initially a collaboration between Tata Motors and its subsidiary Tata Daewoo Commercial

Vehicles, but later Tata Motors decided to work with Iveco as Daewoo’s design was not in sync

with the needs of sophisticated European customers. The company has formed a joint venture

with Thailand’s Thonburi Company, an independent auto assembler, in which Tata Motors will

hold a 70% stake.

Tata motors

Type Public BSE: 500570 (NYSE: TTM)

Founded 1945

Founder(s) JRD Tata

Headquarters Mumbai, India

Key people Ratan Tata, Chairman

Products Automobiles and Engines

Revenue ▲ USD $9.07 billion (2006)

Net income ▲ USD $474.0 million (2006)

Parent Tata Group

Subsidiaries Jaguar Cars , Land Rover ,

Tata Daewoo Commercial Vehicle

Website TataMotors.com

Tata Motors have some distinct advantages in comparison to other multi-national competitors.

There is definite cost advantage as labor cost is 8-9 percent of sales as against 30-35 percent of

sales in developed economies. Tata motors have extensive backward and forward linkages and

it is strongly interwoven with machine tools and metals sectors. Tata Group's strong expertise in

the IT based engineering solution for products and process integration has helped Tata Motors.

India has a large auto component industry noted for its world class capabilities. There is huge

demand in domestic markets due to infrastructure developments and Tata Motors is able to

leverage its knowledge of Indian market. There are favorable Government polices and

regulations to boost the auto industry.

Maruti udyog Limited

Maruti Udyog Ltd – Profile

Office Address #11th Floor, Jeevan Prakash

25 Kasturba Gandhi Marg

New Delhi Delhi 110001

Phone 011-23316831

Business Summary

Maruti Udyog Ltd., (MUL) incorporated in 1981, is a private foreign company primarily

engaged in the manufacture of passenger cars. Formed by a joint venture between the

Indian Government and Suzuki Motor Company of Japan, the company has established

itself amongst the leaders in the Indian Auto market. Its plant located in Gurgaon, has a

capacity of manufacturing 350000 units per annum.

MUL's product range includes 10 basic models with over 50 variants, of which nine

models are manufactured by the company inhouse and one is imported from Suzuki. Over

the last decade, MUL has launched various models such as Omni, 1000, Zen, Esteem,

WagonR, Gypsy, Alto, Baleno, Vitara etc. targeting all segments of customers. In addition

to domestic sales, Maruti also exports to many European markets.

Through it's subsidiaries, the company also provides allied services like sale and purchase

of pre-owned cars, lease and fleet management service for corporates, insurance and

finance services,etc.

The company functions through a network of 303 sales outlets across 189 Indian cities,

owned and managed by its channel partners. The 1923 authorised service outlets cover a

network of over 1000 towns and cities in the country. The company is headed by Mr

Shinzo Nakanishi, the chairman and director. As on June 2005, the President of India owns

18.28% of the company while Suzuki Motor Corporation and the Indian Public own

54.21% and 2.85% respectively.

Around 1970, Sanjay Gandhi, the then Prime Minister of India Indira Gandhi's younger son,

envisioned the manufacture of an indigenous, cost-effective, low maintenance compact car

for the Indian middle-class. Indira Gandhi's cabinet passed a unanimous resolution for the

development and production of a "People's Car". Sanjay Gandhi's company was christened

Maruti Limited. The name of the car was chosen as "Maruti", after a Hindu deity named

Maruti.

At that time Hindustan Motors' Ambassador was the chief car, and the company had come

out with a new entrant, the Premier Padmini which was slowly gaining a part of the market

share dominated by the Ambassador. For the next ten years, the Indian car market had

stagnated at a volume of 30,000 to 40,000 cars for the decade ending 1983.

Sanjay Gandhi was awarded the exclusive contract and licence to design, develop and

manufacture the "People's Car". This exclusive rights of production generated some

criticism in certain quarters, which was directly targeted at Indira Gandhi. Over the next few

years, the company was sidelined due to the Bangladesh Liberation War and emergency.

In the early days under the powerful patronage of Sanjay Gandhi, the company was provided

with free land, tax breaks and funds. Till the end of 1970s, the company had not started the

production and a prototype test model was welcomed with criticism and skepticism. The

company went into liquidation in 1977. The media perceived it to be another area of

growing corruption. Unfortunately, Maruti started to fly only after the death of Sanjay

Gandhi, when Suzuki Motors joined the Government of India as a joint venture partner with

50% share.

After his death, Indira Gandhi decided that the project should not be allowed to die. Maruti

entered into this collaboration with Suzuki Motors, The collaboration heralded a revolution

in the Indian car industry by producing the Maruti 800. The car went on sale on December

14, 1983. It created a record by taking 13 months time to go from design to rolling out cars

from a production line.

1980’s

The introduction of the Maruti 800 in 1983, marked the beginning of a revolution in the

Indian automobile industry. Maruti Udyog brought in the latest technology then available,

more fuel-efficient cars, and brought down the prices of cars in India. This led to the

creation of a huge market for all car segments as the Indian middle class grew in size. This

in-turn brought in more players to this segment. A number of auxiliary car parts making

units were setup as most car manufacturers realised it was more cost effective to make their

car parts in India rather than import them. Maruti's most major influence was in helping the

component industry in the country because of its emphasis on localization and

indegenisation. As in the beginning that sector hadn't grown much, Maruti had to start a

dozen joint ventures with Indian entrepreneurs. It got them foreign collaborations, that led to

collaborations for other manufacturers so that over a period of time the whole component

industry was able to upgrade itself and improve its quality. Leading to a major existing

export potential in vehicle components. It also brought in better methods of financing that

allowed more people, who given their income levels could not afford to buy a car on their

own, to buy cars. It still remains the leader not only in terms of market share but also in

customer satisfaction surveys - it has consistently topped J. D. Power quality surveys,

including 2005.

1990's

By the year 1993 the company had sold up to 1,96,820 cars, mostly by selling its chief product

the Maruti 800s. By March 1994, it produced one million vehicles, becoming the first Indian

company to cross this milestone. It reached the two million mark in October, 1997 and rolled

out its 4 millionth vehicle, an Alto-LX, on April 19, 2003.

Mahindra & Mahindra

Mahindra Group is one of the largest corporate groups of India. It is a US $4.5 billion conglomerate with employee strength of over 40,000. The group has diverse business interests such as automotive, farm equipments, infrastructure, information technology, hospitality, and financial services. Mahindra Group has global presence and it is ranked amongst Forbes Top 200 list of the World's Most Reputable Companies and in the Top 10 list of Most Reputable Indian companies.

The origins of Mahindra Group can be traced back to October 2, 1945 when Mahindra brothers J.C. Mahindra & K.C. Mahindra joined hands with Ghulam Mohammad, and Mahindra & Mohammad was set up as a franchise for assembling jeeps from Willys, USA. After India's independence in 1947, Mahindra & Mohammad changed its name to Mahindra & Mahindra. Ghulam Mohammad migrated to Pakistan post-partition and became the first Finance Minister of Pakistan. Since then, Mahindra Group has gone from strength to strength and today it has evolved Into a giant group.

Business Interests of Mahindra Group

Automotive Sector: Mahindra Group is the market leader in utility vehicles in India since

inception. Mahindra also manufactures and markets utility vehicles and light commercial

vehicles, including three-wheelers. Some of the famous automobile brands of Mahindra are:

Scorpio and Bolero. Recently, Mahindra joined hands with French automobile major Renault

to enter passenger car segment. It has launched a car called Mahindra

Farm Equipment Sector: Mahindra is the largest producer of tractors in India and is among

the top five tractor brands in the world. It has its own state-of-the-art plants in India, USA,

China and Australia, and a capacity to producr 1,50,000 tractors a year.

Trade & Financial Services: Mahindra Intertrade Limited and its subsidiaries have specialized domain knowledge in imports and exports of commodities, domestic trading, marketing and distribution services. Mahindra Finance is one of the largest Non Banking Finance Companies in India with an asset base of about Rs. 5000 crores. Mahindra Insurance Brokers offer Life and Non-life Insurance plans to retail and corporate customers. Mahindra Steel Service Centre is the first steel service centre in the organized sector in India.

Infrastructure Development: Mahindra Group has interests in real estate, special economic zones, hospitality industry, infrastructure development, project engineering consultancy and design. Mahindra Holidays & Resorts is the leader in the lifetime holiday market in India. Mahindra Gesco is fastest growing Construction Company in India. Mahindra World City is developing and promoting India's first Integrated Business City. Mahindra Acres Consulting Engineers is a multidisciplinary engineering consultancy organisation.

Information Technology: Mahindra Group entered into IT sector in 1986 when it formed a

joint venture with British Telecommunications plc. The company was called Mahindra-

British Telecom. The Company has recently changed its name to Tech Mahindra. Tech

Mahindra is a leading provider of telecommunication solution and service industry world-

wide. It is India's 8th largest software exporter.

Speciality Businesses: Mahindra Group companies such as Mahindra AshTech, Mahindra

Defence, Spares Business Unit and Mahindra Logistics are into Speciality Businesses.

Mahindra AshTech undertakes turnkey contract execution for Ash Slurry System and

Travelling Water Screens. Mahindra Defence Systems looks after the requirements of India's

defence and security forces. Mahindra Logistics provide complete logistics solutions to

complex transportation needs of clients across the world.

Major Achievements of Mahindra Group

Mahindra & Mahindra made the first indigenous Jeep in the country in 1949.

Fourth largest tractor company in the world.

Largest manufacturer of tractors in India.

Largest manufacturer of MUVs, offering over 20 models

Note: The above information was last updated on 21-07-2007

or limited

Financial ratios are tools for interpreting financial statements to provide a basis for valuing

securities and appraising financial and management performance.

A good financial analyst will build in financial ratio calculations extensively in a financial

modeling exercise to enable robust analysis. Financial ratios allow a financial analyst to:

Standardize information from financial statements across multiple financial years to

allow comparison of a firm’s performance over time in a financial model.

Standardize information from financial statements from different companies to allow

an apples to apples comparison between firms of differing size in a financial model.

Measure key relationships by relating inputs (costs) with outputs (benefits) and

facilitates comparison of these relationships over time and across firms in a financial

model.

In general, there are 4 kinds of financial ratios that a financial analyst will use most

frequently, these are:

Performance ratios

Working capital ratios

Liquidity ratios

Solvency ratios

http://www.financialmodelingguide.com/

http://www.financialmodelingguide.com/

These 4 financial ratios allow a good financial analyst to quickly and efficiently address the

following questions or concerns:

Performance ratios

What return is the company making on its capital investment?

What are its profit margins?

Working capital ratios

How quickly are debts paid?

How many times is inventory turned?

Liquidity ratios

Can the company continue to pay its liabilities and debts?

Solvency ratios (Longer term)

What is the level of debt in relation to other assets and to equity?

Is the level of interest payable out of profits?

There is also an excellent financial ratio analysis template available in the Finance 3.0 forums,

that allows you to calculate, analyze and compare a set of business & financial ratios to assess

& measure the operating performance of your own business or businesses / stocks that you

intend to invest in.

http://www.finance30.com/forum/topic/show?id=1987892%3ATopic%3A28746

Hindustan Motors

Hindustan Motors (HM) is the flagship company of the C.K. Birla Group, established by Mr. B.M. Birla.

Ambassador, Contessa and Mitsubishi Lancer are the most successful brands in the Indian market. In

MUV segment the company has given Trekker, Porter and Pushpak. RTV is also one of the

remarkable brand of HM.

Quick Facts

Founder B.M. Birla

Country India

Year of Establishment 1942

Business Group CK Birla Group

Listings & its codes NSE: HINDMOTOR; BSE: 500500

Work Station Uttarpara (West Bengal), Thiruvallar (Tamil Nadu),

Pithampur (Madhya Pradesh)

Website www.hindmotor.com

Hindustan Motors Limited (HML), was established by Mr. B.M. Birla of the industrious Birla family in

1942. It is the pioneering automobile manufacturing company and Flagship Company of the C.K. Birla

Group. The company commenced its operations in a small assembly plant in Port Okha near Gujarat.

Later the manufacturing facilities moved to Uttarpara in West Bengal in 1948, where it began the

production of - the Ambassador.

In addition to passenger cars (Ambassador, Contessa), Multi Utility Vehicles (Trekker, Porter, and

Pushpak) and the RTV, the company also manufactures passenger cars in the mid size premium

segment (Mitsubishi Lancer) and has brought in Sports Utility Vehicle (Mitsubishi Pajero) into the

Indian market in collaboration with Mitsubishi Motors of Japan.

Contributing significantly for over five decades to the Indian Automotive industry, Hindustan Motors

manufacturing facilities are situated in the states of Madhya Pradesh, Tamil Nadu and West Bengal. It

functions with a commitment to core values such as quality, safety, and environmental care, in

combination with customer-oriented total solutions.

Hindustan Motors Ltd (Hindustan Motors) was established in 1942 as a small assembly plant

for passenger cars. In 1986, the company began manufacturing HCVs. The company is

primarily engaged in the manufacture and sale of passenger cars, UVs and trucks, and

components & accessories.

Hindustan Motors manufactures passenger cars in the mid-size premium segment - namely,

Mitsubishi Lancer, Lancer Select, and Lancer Cedia and has brought the SUV Mitsubishi

Pajero into the Indian market in collaboration with Mitsubishi Motors, Japan. Hindustan

Motors has a remote services division engaged in engineering services. The company

operates with three manufacturing units at Uttarpara in WB; Chennai in TN; and a road-

trusted vehicle plant in MP. The Uttarpara plant focuses on auto components and supplies

castings, forgings, and stampings to other manufacturers. The Chennai car plant only

manufactures Mitsubishi Lancer cars and spare parts, while the plant in MP manufactures the

RTV brand of MUVs and spare parts in technical collaboration with OKA Motor Company,

Australia. The plants have a cumulative installed capacity of 63,000 vehicles p.a.

During FY07, the company sold 13,775 vehicles. During FY07, it also entered the African

market with an export order of 25 vehicles. In 2007, the company tied up with Shriram

Properties Ltd of Bangalore for the development of an integrated IT township and auto park

in Uttarpara.

1942 Incorporation at Port Okha in Gujarat as a small assembly plant for passenger cars.

1948 Shifted its activities to Uttarpara in West Bengal (close to Howrah) and set up facilities for manufacture of cars.

1971 The company further diversified its activities by setting up an Earthmoving Equipment Division at Tiruvallur, near Chennai, Tamil Nadu for the manufacture of Earthmoving equipment such as dumpers, front-end loaders, crawler tractors and so on.

1985 The company commenced a Power Products Division at Hosur (Karnataka) for manufacture of heavy duty transmission required for Earth moving Equipments.

1986 Commencement of the manufacture of Heavy Commercial Vehicles at Commercial Vehicle Division, Vadodara (Gujarat).

1987 Commenced production of petrol engines and transmissions at Pithampur (Madhya Pradesh) in collaboration with Isuzu Motor Company, Japan.

1996 The company modernized, upgraded and expanded its three existing divisions Earthmoving Equipment Division, Power Plant Division and the Uttarpara Plant.

1997 Began the production of the Road Trusted Vehicle.

1998 Commenced the Mitsubishi Lancer Car project.

2001 Earthmoving Equipment Division plant was sold off to Caterpillar (USA).

2002 Launched Mitsubishi Pajero, collaboration with Mitsubishi Motors (Japan), in India.

2004 Components Business (PUP-Pithampur and PPD - Hosur) transferred to AVTEC, a company jointly held by HM, Actis and CK Birla Group.

TOYOTA KIRLOSKAR MOTOR LTD.

As a joint venture between Kirloskar Group and Toyota Motor Corporation, Toyota

Kirloskar Motor Private Limited (TKM) aims to play a major role in the development of the

automotive industry and the creation of employment opportunities, not only through its

dealer network, but also through ancillary industries.

TKM's growth since inception can be attributed to one simple, yet important aspect of its

business philosophy - "Putting Customer First". While managing growth, TKM has

maintained its commitment to provide quality products at a reasonable price and has made

every effort to meet changes in customer needs..

TKM firmly believes that the success of this venture depends on providing high quality

products and services to all valued customers through the efforts of its team members.

TKM, along with its dedicated dealers and suppliers, has adopted the "Growing Together"

philosophy of its parent company TMC to create long-term business growth. In this way,

TKM aims to further contribute to progress in the Indian automotive industry, realise greater

employement opportunities for local citizens, improve the quality of life of the team

members and promote robust economic activity in India.

All Toyota employees are expected to embody these values in their daily work, including

environmental protection activities. To "respect" the environment, we go to the source to

identify and analyse problems ("Genchi Genbutsu"), move forward to "challenge"

conventional ideas and old habits, to improve further ("kaizen") through "teamwork."

The framework provided by The Toyota Way enables our company to respond to, among

other things, the environmental challenges at various stages of the life-cycle of a vehicle.

These include greenhouse gas emissions, waste reduction, increased recycling and the

banning of hazardous substance use in parts and components. These challenges will have

inevitable consequences for Toyota's organisation and employees, and we must balance them

with our desire for future growth. In 1992, the Toyota Guiding Principles were established in

direct response to the international initiatives agreed to at the Rio 'Earth Summit.' This

summit focussed on the potential for a clash between trade and environmental rules, and

resulted in a statement of principles about forest management, conservation and sustainable

development.

The Toyota Guiding Principles are a cornerstone of our corporate management philosophy.

These principles were updated in 1997, to ensure they continue to provide Toyota with a

clear path towards achieving sustainable development.

These principles have been explored and developed in Toyota's Global Vision 2010, adopted

in April 2002, which proposes a series of long-term policies on the theme of "Innovation into

the Future." Toyota's Global Vision 2010 guides management in its response to long-term

social changes, combining consideration for the environment, the benefit to our customers of

value-added products and the encouragement of our employees through shared prosperity

and social involvement.

Based on the Guiding Principles, which codify Toyota's business spirit, the Toyota Earth

Charter (adopted in 1992 and revised in 1997) embodies a comprehensive approach to global

environmental issues. It outlines Toyota's basic policy and action guidelines towards

effective environmental management and improvements. The Toyota Earth Charter

underlines a commitment to environmental excellence, not only through broad principles, but

in concrete examples of what can be done through action guidelines. In connection with the

Toyota Guiding Principles and the Toyota Earth Charter, a European Environmental Policy

was developed as a means of linking principles, goals, targets and action plans with

management structures and systems.

Recognition

At TKM, we look to continuously improve not only our products but also our processes and

service. Our obsession with perfection has been recognised by various institutions such as JD

Power and TNS Automotive, as well as automotive publications like Overdrive, as the reason

for the success of Toyota products in India and across the globe

Chapter-4

Data analysis

Data Analysing and Interpretation

Ratio Analysis

According to J. Batty “the term accounting ratio is used to describe significant relationships

which exist between figures shown in a balance sheet, in a profit and loss account, in a

budgetary control system or in any other part of the accounting organization”. the accounting

ratios indicate a quantitative relationship which is used for analysis and decision making. It

provides basis for inter-firm as well as intra-firm comparison. The ratios will be effective only

when they are compared with ratios of base period or with standards or with the industry ratios.

The financial statement viz. income statement, and Balance sheet report what has actually

happened to earnings during a specific period and presents a summary of financial position of

the company at a given point of time. the statement of retained earnings reconciles income

earned during the year and any dividends distributed with the change in retained earnings

between the start and end of the financial year under study.

1) Liquidity Ratio

The liquidity Ratios measures the liquidity of the firms and its ability to meet its maturing

short term obligations. Liquidity is defined as the realise value in money, the most liquid of

assets. It refers to the ability to pay in cash, the that are due. The corporate liquidity has two

dimensions viz., quantitative and qualitative concepts. The qualitative aspects includes the

quantum, structure and utilization of liquid assets and in the qualitative aspect, it is the ability

to meet all present and potential demands on cash from any source in a manner that

minimizes cost and maximises the value of the firm. Thus, corporate liquidity is a vital factor

in business.

a) Current Ratio

b) Quick Ratio

c) Absolute Liquid Ratio

d) Defensive- Interval Ratio.

4.1) Current Ratio:

This ratio measure the solvency of the company in short-term. Current assets are those assets

which can be converted into cash within a year. Current liabilities and provisions are those

liabilities that are payable within a year.

Current Ratio= Current AssetsCurrent Liabilities

Table no: 4.1

The table showing comparative current ratio:

Company Current assets Current liabilities Ratios

Tata Motors 10383.78 8667.2 1.198

Maruti Udyog Ltd 3837.9 2449.2 1.567

Mahindra & Mahindra 3655.37 2307.55 1.584

Hindustan Motors 192.16 173.93 1.104

Toyota Kirloskar 6.09 0.83 7.337

The current ratio revels the ability of the firm to meet all the obligations maturing within a

year. Conventionally it is said that the current ratio should be 2:1. It means that for every one

rupee for current liability the firm must have two rupees worth of current assets. The reasons

for this conventional norm is that, all the current assets con not be converted into cash

immediately.

Chart no: 4.1

The chart showing comparative current ratio:

Tata

Motors

Maruti Udyo

g Ltd

Mahindra

& Mah

indra

Hindustan M

otors

Toyo

ta Kirlo

skar

1.19800000000001

1.56699999999999 1.584 1.104

7.337

current Ratios current Ratios

Interpretation:

A current ratio of 2:1 indicates a highly solved position. A current ratio of 1.33:1 is

considered by banks as the minimum acceptable level for providing working capital finance.

The constituents of the current asset are as important as the current assets themselves for

evaluation of a company’s solvency position. Toyota kirloskar Ltd very high current ratio

(7.337) will have adverse impact on the profitability of the organization. A high current ratio

may be due to the piling up of inventory, inefficiency in collection of debtors, high balance in

cash and bank accounts without proper investment etc. Hindustan Motors is low current

ratio(1.104) current assets are highly liquid. When the compare to the other companies.

4.2) Quick Liquid / Acid Test Ratio:-

Quick ratio is used as a measure of the company’s ability to meet its current obligations.

Since bank over draft is secured by the inventories, the other current assets must be sufficient

to meet other current liabilities. This ratio is also called quick ratio or acid test ratio. It

establishes the relationship between Liquid assets are those which can be converted in to cash

without any loss or delay. All current assets, expecting stock and prepaid expenses, are

considered to be liquid assets. Liquid liabilities are those liabilities which are payable

immediately. All current liabilities, excepting Bank over draft, are considered to be liquid

liabilities.

Liquid Ratio= Liquid AssetsLiquid Liabilities

Table no: 4.2

Table showing Comparative Liquid ratio:

company Liquid assets Liquid liabilities Ratios

Tata Motors 10383.78 8667.2 1.198

Maruti Udyog Ltd 3837.9 2449.2 1.567




A quick ratio of 1:1 is considered to be satisfactory, it takes in to account only liquid assets

whose realized value is almost certain. A firm 1:1 quick ratio is expected to be able discharge

all its current obligations.

Chart no: 4.2

The chart showing Comparative Liquid ratio:

Tata

Motors

Maruti Udyo

g Ltd

Mahindra

& Mah

indra

Hindustan M

otors

Toyo

ta Kirlo

skar

1.19800000000001

1.56699999999999 1.585 1.105

7.337

Liquid Ratios Liquid Ratios

Interpretation:

This chart showing quick ratio of 1:1 indicates highly solvent position. 2.78:1. this ratio

serves as a supplement to the current ratio in analysing liquidity. Toyota kirloskar Ltd quick

ratio 7.337:1 it indicates highly solvent position when the compare to the other companies.

Hindustan Motors it indicates 1.105 low liquidity ratio when the compare to the other

companies.

4.3) Absolute Liquid / Super Quick Ratio:-

It is the ratio of absolute liquid assets to quick liabilities. However, for calculation purposes,

it is taken as ratio of absolute liquid assets to current liabilities. Absolute liquid assets include

cash in hand, cash at bank and short-term or temporary investments.

Absolute Liquid assets

Current Liabilities

Absolute Liquid assets = cash in hand + cash at bank + short-term investments

Table No: 4.3

Table showing Comparative absolute liquid ratio

Company Cash and Bank Short-term

investment

Current Liabilities Ratio

Tata motors 2397.31 4910.27 8667.2 0.843

Maruti Udyog 324 5180.7 2449.2 2.247

Mahindra & Mahindra

861.23 4215.06 2307.55 2.199

Hindustan Motors 13.78 71.79 173.93 0.492

Toyota Kirloskar motors Ltd

0.33 1 0.83 1.602

The company’s absolute liquid ratio is 0.64:1 and an ideal ratio is 0.5:1 it means that more

than 50% of current assets are highly liquid. Hence the company’s liquidity position can be

able to meet uncertainties in payment obligations of short-term liabilities.

Chart No: 4.3

Chart showing comparative Absolute liquid ratio

Tata

motors

Maruti Udyo

g

Mahindra

& Mah

indra

Hindustan M

otors

Toyo

ta Kirlo

skar m

otors Lt

d

0.843000000000001

2.247 2.199

0.4921.602

Absolute liquid RatioAbsolute liquid Ratio

Interpretation:

This chart showing Maruti Udyog Ltd is more than the liquid liabilities (2.247) when the

company showing good performance when the compare to the other companies that is 2.2:1

hence the company liquidity position can be able to meet full payment obligations of short-

term liabilities. Hindustan Motors low liquid ratio shows 0.492:1 it means that more than

50% of current assets are highly liquid. Hence the company liquidity position can be able to

meet Uncertainties in payment obligations of short-term liabilities, when the compare to the

other companies.

Profitability Ratios

The profitability ratios are to help assessing the adequacy of profit earned by the company

and also to discover whether profitability is increasing or declining. The profitability of the

firm is the net result of a large number of policies and decisions. The profitability ratios show

the combined effects of liquidity, asset management and debt management on operating

results. Profitability ratios are measured with reference to sales, capital employed, total asset

employed, shareholders funds etc.

4.4) Gross profit margin:-

The ratio measures the gross profit margin on the total net sales made by the company. The

gross profit represents the excess of sales proceeds during the period under observation over

their cost, before taking into account administration, selling and distribution and financing

changes. The ratio measures the efficiency of the company’s operations and this can also be

compared with the previous years results to ascertain to ascertain the efficiency.

sales−Cost of Goods sold

sales×100 ( or )

Gross Profitsales

×100

Table No: 4.4

The table showing Comparative Gross Profit Ratio

company Gross profit Sales Ratios

Tata Motors 3228.78 28529.4 11.317

Maruti Udyog Ltd 3071.2 17891.6 17.165

Mahindra &

Mahindra

1645.43 11281.73 14.58



Chart No: 4.4

Chart shows comparative Gross Profit Ratio

Tata

Motors

Maruti Udyo

g Ltd

Mahindra

& Mah

indra

Hindustan M

otors

Toyo

ta Kirlo

skar

11.317 17.165 14.58 9.502

63.468

Gross profit Ratios Gross profit Ratios

Interpretation:

A high margin enables all operating expenses to be covered and provides a reasonable return

to the shareholders. In order to keep the ratio high, management has to minimize cost of

goods sold and improve sale performance.

From the above table it clearly shows that the gross profit ratio of Toyota kirloskar is 63.468

has been increased when compared to other companies.

Selling and distribution and financing changes. The ratio measures the efficiency of the

company’s operations and this can also be compared to the other company results to ascertain

to ascertain the efficiency.

4.5) Net profit margin ratio

The ratio is designed to focus-attention on the net profit margin arising from business

operations before intrest and tax is deducted. The convention is to express profit after tax and

intrest as percentage of sales. A drawback is that the percentage which results varies

depending on the sources employed to finance business activity. Intrest is charged above the

line while dividends are deducted below the line. It is for this reason that net profit i.e.,

earning before intrest and tax (EBIT) is used this ratio reflects net profit margin on the total

sales after deducting all expenses but before deducting intrest and taxation. This ratio

measures the efficiency of operation of the company. The net profit is arrived at form gross

profit after deducting administration, selling and distribution expenses. The non-operating

incomes and expenses are ignored in computation of net profit before tax, depreciation and

intrest. This ratio could be compared with that of the previous years and with that of

competitors to determine the trend in net profit margins of the company and its performance

in the industry.

Net Profit before Intrest∧Tax

sales×100

Table No: 4.5

The table showing Comparative Net profit margin ratio:

Company Net profit before intrest and Tax Sales Ratio’s

Tata Motors 3654.39 28529.4 12.81

Maruti Udyog Ltd 3130.8 17891.6 17.499



Toyota Kirloskar Ltd 3.77 5.94 63.468

Chart No: 4.5

Chart shows comparative Net Profit Ratio

Tata

Motors

Maruti Udyo

g Ltd

Mahindra

& Mah

indra

Hindustan M

otors

Toyo

ta Kirlo

skar L

td

12.8117.49899999999

99 15.36 12.34

63.468

Net Profit Margin Ratio Net Profit Margin Ratio

Interpretation:

It is a measure of overall profitability of the firm. The higher ratio. The greater would be the

return to the shareholders and vice versa. A net profit margin of 10% is considered normal

this ratio is very useful to control cost and to increase the sales.

The Toyota kirloskar Ltd 63.468 the higher ratio the greater would be the return to the

shareholders, Hindustan motors (12.34) shows the lower net profit margin when the compare

to the other companies.

4.6) Cash Profit Ratio

The cash profit ratio is a more reliable indicator of performance where there are sharp

fluctuation in the profit before tax and net profit from year to year owing to difference in

depreciation changed. Cash profit ratio evaluates the efficiency of operations in terms of cash

generation and is not affected by the method of depreciation charged. It also facilitate inter-

firm comparison of performance since different methods of depreciations may be adopted by

different companies.

CashProfitsales

×100

Cash profit = Net profit + Depreciation

Table No: 4.6

The Table showing Comparative Cash profit ratio:

company Net Profit Depreciation Sales Ratios

Tata Motors 2028.92 652.31 28529.4 9.4

Maruti Udyog

Ltd

1730.8 568.2 17891.6 12.85

Mahindra &

Mahindra

1103.37 238.66 11281.73 11.90

Hindustan

Motors

30.84 21.15 704.66 7.38

Toyota Kirloskar 2.48 0.09 5.94 43.26

Chart No: 4.6

Chart shows comparative Cash Profit ratio.

Tata

Motors

Maruti Udyo

g Ltd

Mahindra

& Mah

indra

Hindustan M

otors

Toyo

ta Kirlo

skar

9.4 12.85 11.9 7.38

43.26

Cash Profit RatiosCash Profit Ratios

Interpretation:

Cash profit ratio the Toyota kirloskar company (43.26) will show the higher cash profit

margin when compare to the other companies. It is better position, Hindustan Motors low

cash profit margin when compare to the other companies. that is (7.38) when increase cash

sales comes in better position.

Cash profit ratio evaluates the efficiency of operations in terms of cash generation and is not

affected by the method of depreciation charged. It also facilitate inter-firm comparison of

performance since different methods of depreciations may be adopted by different

companies.

4.7) Return on Total Asset:-

The profitability of the firm is measured by establishing relation of net profit with the total

assets of the organization. This ratio indicates the efficiency of utilization of assets in

generating revenue.

Net Profit after TaxTotal assets

×100

Table No: 4.7

The Table showing Comparative Return on Total Asset Ratio:

Company Net profit after Tax Total assets Ratio’s

Tata Motors 2028.92 14120.02 14.37

Maruti Udyog Ltd 1730.8 9315.6 18.58



Toyota Kirloskar Ltd 2.48 5.28 46.97

Chart No: 4.7

Chart shows comparative Return on Total Assets ratio.

Tata

Motors

Maruti Udyo

g Ltd

Mahindra

& Mah

indra

Hindustan M

otors

Toyo

ta Kirlo

skar L

td

14.37 18.58 15.9 11.84

46.97

Return on Total AssetsReturn on Total Assets

Interpretation:

Return on total assets the Toyota kirloskar Ltd is higher Return46.97 and then compare to the

other companies Hindustan motors is low return (11.84). when the compare to the other

companies.

The profitability of the firm is measured by establishing relation of net profit with the total

assets of the organization. This ratio indicates the efficiency of utilization of assets in

generating revenue.

4.8) Return on Shareholders’ Funds (or) Funds on Net worth:-

This ratio expresses the net profit in terms of the equity shareholders funds. This ratios is an

important yardstick of performance for equity shareholders since it indicates the return on the

fund employed by them. However, this measures is based on the historical net worth and will

be high for old plants and low for new plants.

Net Profit after Intrest∧TaxNet worth

×100

Net worth = Equity capital + Reserves and Surplus

Table No: 4.8

The Table showing Comparative Funds on Net worth Ratio:

company Net Profit after

intrest and tax

Equity capital Reserves &

surplus

Ratios

Tata Motors 1879.43 385.54 7453.96 23.97

Maruti Udyog

Ltd

1705.01 144.5 8270.9 20.26

Mahindra &

Mahindra

935.31 239.07 4111 21.50

Hindustan

Motors

30.84 161.26 -29.08 23.33


Chart No: 4.8

Chart shows comparative Funds on net worth ratio.

Tata

Motors

Maruti Udyo

g Ltd

Mahindra

& Mah

indra

Hindustan M

otors

Toyo

ta Kirlo

skar

23.97 20.26 21.5 23.3342.04

Funds on Net worth RatiosFunds on Net worth Ratios

Interpretation:

This cart showing Funds on net worth ratio shows Toyota kirloskar is high ratio (42.04)

compare to the other companies Maruti Udyog company is low( 20.26) Funds on net worth.

This ratio is an important yardstick of performance for equity shareholders since it indicates

the return on the fund employed by them. This measures is based on the historical net worth

and will be high for old plants and low for new plants.

4.9) Operating Ratio

This ratio establishes the relationship between operating cost and sales

Operating Ratio=OperatingCostSales

×100

Operating cost = Cost of Goods Sold + Operating Expenses

Table No: 4.9

The Table showing Comparative operating Ratio:

company Sales Cost of Goods

sold

Operating

Expenses

Ratios

Tata Motors 28529.4 29461.85 25807.46 193.73

Maruti Udyog

Ltd

17891.6 19115.5 15984.7 196.18

Mahindra &

Mahindra

11281.73 12069.38 10336.36 198.60

Hindustan

Motors

704.66 822.16 735.17 221.00


Chart No: 4.9

Chart shows comparative Operating ratio:

Tata

Motors

Maruti Udyo

g Ltd

Mahindra

& Mah

indra

Hindustan M

otors

Toyo

ta Kirlo

skar

193.73 196.18 198.6 221159.09

Operating Ratios Operating Ratios

Interpretation:

This chart shows the operating ratio the overall operating efficiency of the business.

Hindustan Motors High operating ratio 221% is undesirable as it leaves a small portion of

income to meet other non- operating expenses like interest on loans when the compare to the

other companies. A low ratio is better and reflects the efficiency of the management. The

Toyota kirloskar Ltd 159.09 % lower the ratio, the higher would be the profitability. When

the compare to the other companies.

4.10) Operating Profit Ratio

Operating profit ratio studies the relationship between operating profit (EBIT – Earning

Before Intrest and Tax) and sales. The purpose of this ratio is to find out the amount of

operating profit for each rupee of sales.

Operating Profit Ratio=OperatingProfitSales

×100

Operating profit = Gross profit - Operating Expenses

Table No: 4.10

The Table showing Comparative operating Profit Ratio:

Company Sales Operating Profit Ratios

Tata Motors 28529.4 3654.39 12.81

Maruti Udyog Ltd 17891.6 3130.8 17.50

Mahindra &

Mahindra

11281.73 1733.02 15.36



Chart No: 4.10

Chart shows comparative Operating Profit ratio:

Tata

Motors

Maruti Udyo

g Ltd

Mahindra

& Mah

indra

Hindustan M

otors

Toyo

ta Kirlo

skar

12.81 17.5 15.36 12.34

63.46

Operating Profit RatioOperating Profit Ratio

Interpretation:

A high ratio is an indicator of the operational efficiency of the Toyota kirloskar (63.46) and

Hindustan Motors (12.34) a low ratio stands for operational inefficiency of the firm, when

the compare to the other companies. The purpose of this ratio is to find out the amount of

operating profit for each rupee of sales.

4.11) Expenses Ratio:-

This ratio studies the relationship between factory expenses and sales. this ratio shows the

manufacturing efficiency of the organization.

Factory Expenses Ratio=Factory ExpensesSales

×100

Table No: 4.11

The Table showing Comparative Expenses Ratio

company Factory Expenses Sales Ratios

Tata Motors 25807.46 28529.4 90.46

Maruti Udyog

Ltd

15984.7 17891.6 89.34

Mahindra &

Mahindra

10336.36 11281.73 91.62

Hindustan

Motors

735.17 704.66 104.32


Chart No: 4.11

Chart shows comparative Factory Expenses ratio:

Tata

Motors

Maruti Udyo

g Ltd

Mahindra

& Mah

indra

Hindustan M

otors

Toyo

ta Kirlo

skar

90.46 89.34 91.62 104.3247.81

Factory Expenses Ratio Factory Expenses Ratio

Interpretation:

Factory expenses ratio pay the highest expenses Hindustan Motors (104.32) and then

compare to the other companies. the lowest expenses pay Toyota kirloskar (47.81) company

when compare to the other companies.

The manufacturing efficiency of the organization high expenses is low profit earn, low

expenses will give you the higher profit.

4.12) Stock Turnover Ratio:

This ratio establishes the relationship between cost of goods sold and average value of

inventory of stock. The purpose of this ratio is to show the number of times the inventory of

a firm is rotated in a year. It gives an indication of the efficiency of inventory management.

StockTurnover Ratio= SalesInventory

×100

Table No: 4.12

The Table showing Comparative Stock Turnover Ratio:

company Sales Inventories Ratios

Tata Motors 28529.4 2421.83 1178.01

Maruti Udyog Ltd 17891.6 1038.00 1723.66



Toyota Kirloskar 5.94 0 0

Chart No: 4.12

Chart shows comparative Stock Turnover ratio:

Tata

Motors

Maruti Udyo

g Ltd

Mahindra

& Mah

indra

Hindustan M

otors

Toyo

ta Kirlo

skar

1178.011723.66

1040.64 858.820

Stock Turnover RatioStock Turnover Ratio

Interpretation:

This chart showing A high inventory turnover ratio Maruti Udyog Ltd (1723.66) is an index

of efficient inventory management and a low ratio Toyota kirloskar Ltd (0) stands for

inefficient inventory management. A low ratio also implies that the firm has excess stock in

relation to production and sales, When the compare to the other companies.

Combined Ratios

The ratio which is calculated by taking one item or one group of item from Trading Profit

and Loss account and another item or the group of another item is taken from Balance sheet

is called mixed ratio.

4.13) Return on Shareholder’s Equity:

This ratio shows the relationship between net profit after taxes and shareholder’s equity. It

reveals the rate of return on owner’s funds. This ratio is also known ‘Return on Net worth’.

Returnon Shareholders Eqity= Ner profit afterTaxShareholdr ' s Equity

¿×100¿

Table No: 4.13

The Table showing Comparative Return on share holder’s equity ratio

company Net profit after tax Shareholder’s Equity Ratios

Tata Motors 2028.92 150 13.526

Maruti Udyog Ltd 1730.8 100 17.308

Mahindra &

Mahindra

1103.37 115 9.59

Hindustan Motors 30.84 0 0


Chart No: 4.13

Chart shows comparative Return on share holders’ equity ratio:

Tata

Motors

Maruti Udyo

g Ltd

Mahindra

& Mah

indra

Hindustan M

otors

Toyo

ta Kirlo

skar

13.52617.308

9.59

0 0

Return on Shareholders Eqity Return on Shareholders Eqity

Interpretation:

This chart showing Return on share holder’s equity ratio maximum return on Maruti Udyog

Ltd (17.308) will give you the equity share holders it is improve the company reputation and

intrest to invest this company. But Hindustan Motors and Toyota kirloskar Ltd Return on

equity shareholders is (0) the future market condition shareholders cannot intrest to invest

this companies. It is affect on company growth rate, When the compare to the other

companies.

4.14) Return on Total Resources:

This ratio shows the relationship between net profit after taxes and total assets. It reveals the

rate of return on total assets. This ratio is also known ‘Net profit to total assets’.

Return on Total Resources¿Net profit after tax

Total assets×100

Table No: 4.14

The Table showing Comparative Return on Total Resources ratio:

company Net profit after tax Total assets Ratios

Tata Motors 2028.92 14120.02 14.369

Maruti Udyog Ltd 1730.8 9315.6 18.579




Chart No: 4.14

Chart shows comparative Return on Total Resources ratio:

Tata

Motors

Maruti Udyo

g Ltd

Mahindra

& Mah

indra

Hindustan M

otors

Toyo

ta Kirlo

skar

14.369 18.579 16.294 11.844

46.969

Return on Total Resources RatioReturn on Total Resources Ratios

Interpretation:

This chart shows Return on total asset ratio the highest return Toyota kirloskar (46.969) and

then compare to the other companies. the lowest return Hindustan Motors (11.844).

It reveals the rate of return on total assets. This ratio shows the relationship between net

profit after taxes and total assets.

4.15) Intrest coverage ratio:

This ratio shows the relationship between net profit before intrest and tax and intrest.

Intrest coverage Ratio=Net profit (before intrest tax)

Intrest×100

Table No: 4.15

The Table showing Comparative Intrest coverage Ratio:

company Net profit before

intrest and Tax

Intrest Ratios

Tata Motors 3654.39 425.61 858.62

Maruti Udyog Ltd 3130.8 59.6 5253.02




Chart No: 4.15

Chart shows comparative Intrest coverage ratio:

Tata

Motors

Maruti Udyo

g Ltd

Mahindra

& Mah

indra

Hindustan M

otors

Toyo

ta Kirlo

skar

858.62

5253.02

1978.55 434.289999999999 0

Intrest coverage Ratio Intrest coverage Ratio

Interpretation:

This chart shows Intrest coverage ratio Maruti Udyog Ltd (5253.02) pay the highest intrest

rate to the current liabilities is high because profitability position is low, when the compare

to the other companies. Toyota kirloskar Ltd doesn’t pay any intrest because the current

liabilities is low (0) the company more profit earn, when the compare to the other companies.

4.16) Dividend payout ratio:

This ratio shows the relationship between dividend per equity share and earning per share.

Dividend payout ratio ¿Dividend per equity share

Earning per share×100

Table No: 4.16

The Table showing Comparative Dividend Payout Ratio:

company Dividend per equity

share

Earnings per share Ratio

Tata Motors 578.43 50.52 1144.9

Maruti Udyog Ltd 144.5 59.03 244.79

Mahindra &

Mahindra

282.61 44.54 634.51

Hindustan Motors 0 1.91 0

Toyota Kirloskar 0 4960 0

Chart No: 4.16

Chart shows comparative Dividend Payout ratio:

Tata

Motors

Maruti Udyo

g Ltd

Mahindra

& Mah

indra

Hindustan M

otors

Toyo

ta Kirlo

skar

1144.9

244.79634.51

0 0

Dividend payout ratio Dividend payout ratio

Interpretation:

This chart shows Dividend payout ratio Tata Motors pay maximum Dividend (1144.9) pay to

the equity shareholders equity share holders computation to invest this company the company

growth rate is stabilize, Hindustan Motors and Toyota kirloskar didn’t pay any dividend it is

earn more profit but equity shareholders con not intrest to invest this companies. When the

compare to the other companies.

4.17) Earnings per share:

This ratio shows the relationship between net profit after taxes and preference dividend and

number of equity shares. This ratio is also known ‘earning per share’.

Earning per share= Net profit after taxes−preferencedividendNO.of equity shares

×100

Table No: 4.17

The Table showing Comparative Earnings per Share ratio:

Company Earnings per share

Tata Motors 50.52

Maruti Udyog Ltd 59.03

Mahindra & Mahindra 44.54

Hindustan Motors 1.91

Toyota Kirloskar 4960

Chart No: 4.17

Chart shows comparative Earnings Per share ratio:

Tata

Motors

Maruti Udyo

g Ltd

Mahindra

& Mah

indra

Hindustan M

otors

Toyo

ta Kirlo

skar

50.52 59.03 44.54 1.91

4960

Earning per shareEarning per share

Interpretation:

This chart shows Earnings per share for the Toyota kirloskar (4960) shareholders will earn

maximum earning per share, it is share holders benefit the future market basis easy to invest

this company. Hindustan Motors is only 1.91 % earn the shareholders it is low. But the future

market investor not easy to invest this company, it is difficult to collect the money. When the

compare to other companies

4.18) Debt equity ratio

Debt equity ratio shows the relationship between borrower funds and owners fund the

purpose of this ratio is to shown the extent of the firms dependences on external liabilities. In

order to calculate its ratio. The required components are external liabilities and owners

equity. External liability includes both long-term as well as short-term borrowings. The term

owners funds includes equity share capital, preference share capital. Reserves and surplus,

but excludes past accumulated losses such preliminary expenses, discount on issue of share

or debentures, underwriting commission and profit and loss account debt balanced etc. since

there are two approaches to work out this ratio.

Debt equity Ratio=Total debtEquity

Table No: 4.18

The Table showing Comparative debt equity ratio:

Company Total debt Equity Ratio

Tata Motors 6280.52 7839.5 0.80

Maruti Udyog Ltd 900.2 8415.4 0.107



Toyota Kirloskar 0 5.28 0

Chart No: 4.18

Chart shows comparative Debt equity ratio:

Tata

Motors

Maruti Udyo

g Ltd

Mahindra

& Mah

indra

Hindustan M

otors

Toyo

ta Kirlo

skar

0.8

0.1070.59

0.970000000000001

0

Debt equity Ratio Debt equity Ratio

Interpretation:

From the above chart showing For analysing the capital structure, debt-equity ratio gives an

idea about the relative share of funds of outside and owners invested in the business. The

ratio of long term debt of equity is generally regarded as safe if it is 2:1.

Debt is the easy to sources of fund equity and debt is equal proportion Hindustan motors is

0.97:1 is debt portion, Toyota kirloskar debt is zero 0:1 only equity is there in this company.

When the compare to the other companies.

Chapter - 5

Findings

FINDINGS

This study has been undertaken at Automobile Companies to analyze the financial

performance of the company by using Ratio analysis technique where the last five years

Balance sheet and Profit and loss account were considered for analyzing various financial

ratios. The major findings with respect to the study are stated below:

Though the current ratio of Toyota kirloskar Motors is highly solved position. And

then compare to the other companies, the Tata motors current ratio is low when the

Compare to the other companies.

A quick ratio of 1:1 indicates highly solvent position. Maruti Udyog Ltd is low liquid

solvent position this ratio serves as a supplement to the current ratio in analysing

liquidity, compare to the other companies Toyota kirloskar is highly liquid solvent

position when compare to the other companies.

The company’s absolute liquid ratio Maruti Udyog Ltd is high and Hindustan Motors

is Low ratio shows when the compare to the other companies.

Gross profit margin ratio A high margin enables the Toyota kirloskar is high and

Hindustan Motors is low ratio shows when the compare to the other companies.

Net profit margin ratio It is a measure of overall profitability of the firm. The higher

ratio. The greater would be the return to the shareholders and vice versa. A net profit

margin of 10% is considered normal this ratio is very useful to control cost and to

increase the sales. The Toyota kirloskar Ltd the higher ratio the greater would be the

return to the shareholders, Hindustan motors shows the lower ratio.

Return on total assets the Toyota kirloskar Ltd is higher Return and then compare to

the other companies Hindustan motors is low return.

Funds on net worth ratio shows Toyota kirloskar is high ratio compare to the other

companies Maruti Udyog company is low Funds on net worth.

The operating ratio shows the overall operating efficiency of the business. High

operating ratio is undesirable as it leaves a small portion of income to meet other non-

operating expenses like interest on loans. A low ratio is better and reflects the

efficiency of the management. The lower the ratio, the higher would be the

profitability.

Operating profit ratio a high ratio is an indicator of the operational efficiency of the

Toyota kirloskar and Hindustan Motors a low ratio stands for operational

inefficiency of the firm.

Factory expenses ratio pay the highest expenses Hindustan Motors. and then compare

to the other companies. The lowest expenses pay Toyota kirloskar company when

compare to the other companies.

A high inventory turnover ratio is an index of efficient inventory management and a

low ratio stands for inefficient inventory management. A low ratio also implies that

the firm has excess stock in relation to production and sales.

Return on share holder’s equity ratio maximum return on Maruti Udyog Ltd. And

then compare to the other companies

Intrest coverage ratio Maruti Udyog Ltd pay the highest intrest and compare to the

other companies Toyota kirloskar (0) cannot pay in any intrest.

Dividend payout ratio Tata Motors pay maximum Dividend when compare to the

other companies.

Earnings per share for shareholders Toyota kirloskar will give you the maximum

earning per share when compare to other company and Hindustan Motors. will give

low earning per share.

Debt-equity ratio equal proportion of the company Hindustan Motors. Toyota

kirloskar is no debt when the compare to the other companies.

SUGGESTIONs

SUGGESTIONS




ratios.

Necessary steps should be taken by the Toyota kirloskar Ltd Company to increase operating

ratio, stock turnover ratio, Return on shareholders’ ratio and Dividend payout ratio to improve

company reputation and future market growth and equity share holders easy to invest this

company. When the compare to the other companies.

The Toyota kirloskar Ltd Should Decrease the Factory Expenses ratio, Intrest coverage ratio

and Debt equity ratio, the expenses reduce the profitability will be increase, Intrest coverage

ratio will be decrease the barrowing money and total debt reduce or taken the secured loan is

better, because the intrest rate is low when Increase the profitability. Debt equity ratio should

be decreased the equal proportion of debt and equity is preferable. When compare to the other

companies.

Necessary steps should be taken by the Maruti Udyog Ltd company to increase Quick ratio

is used as a measure of the company’s ability to meet its current obligations. The other

current assets must be sufficient to meet other current liabilities. It establishes the

relationship between Liquid assets are those which can be converted in to cash without any

loss or delay. Liquid liabilities are those liabilities which are payable immediately. The

company should be decreased Funds on net worth ratio This ratio is an important yardstick of

performance for equity shareholders since it indicates the return on the fund employed by

them. This measures is based on the historical net worth and will be high for old plants and

low for new plants. When compare to the other companies.

Necessary steps should be taken by the Mahindra and Mahindra company to we have any

ratios increase or decrease is not necessary when compare to the other companies it is medium

position should be increase the profit position in future market computation.

Necessary steps should be taken by the Hindustan Motor company to increase Net profit

ratio, cash profit ratio, Return on total asset ratio, operating ratio and dividend payout ratio the

company sales increase the profit also increase and it is increase the cash sales when come the

cash profit, operating profit increase the sales also increase. Dividend payout ratio increased

by the equity share holders invest to the company

The company Should Decrease by Absolute liquid ratio, return on total Resources and Earning

per share the company take the debt proportion must and should be increased, it is comes

better position . When compare to the other companies

Necessary steps should be taken by the Tata Motors company to increase current ratio and

gross profit ratio, the current assets are more than the current liabilities is better position the

company must do to increase the current assets, the Gross profit ratio will be increased by

sales are also maximum level to sell the products and company Gross profit ratio increased.

This company only increases these two ratio the company reputation and profitability position

is increase. And it comes in a better position and computation to the other companies. When

compare to the other companies

CONCLUSION

CONCLUSION




ratios.

Automobile companies is a very reputed company for manufacturing world renowned Toyota

kirloskar Ltd net profit ratio is higher than the compare to the other companies Innovation of

new products, maintaining the good quality of the products and active involvement of the

company personnel with the entire activities made it reputed across the country as well as

around the world.

During the project work the office staffs have been found very co-operative in providing

necessary information related to the project.

From the entire study it is found that the company should take necessary measures to improve

few areas like- Cost management, cash and inventory management and investment decisions.

In order to improve the overall performance, the management must take all possible steps,

review and modify various policies, cash budgets and inventory status by using sound

information management system to enable management to have a close control over the

various operations.

The automobile Industry day by day face the competitiveness. And other country manufacturer

new technology and low cost will face in future market condition.

BIBLIOGRAPHY

BIBLIOGRAPHY

1. Reference Books:

RAVI M. KISHORE

Financial Management

(6th Edition)

Khan Jain

Financial Management Accounting

(4th Edition)

SHASHI K. GUPTA

R.K. SHARMA

NEETI GUPTA

Financial Management

(Second Edition)

2. Websites:

www.Automobli Industry.com

www.Tatamotor.com

www.Maruti Udyog.com

www.M&M.com

www.Hindmotor.com

www.Tayotamotor india.com

www.google.com

www.yahoo.com

3. Annual Reports:

Financial assessment year 2004, 2005, 2006, 2007, 2008.Balance sheet and profit and

loss account.

http://www.M&M.com

http://www.google.com/

http://www.Tayotamotor/

http://www.Hindmotor.com/

http://www.Maruti/

http://www.Tatamotor.com/

Annexure

Mahindra and Mahindra Balance sheet SOURCES OF FUNDS : 2008 2007 2006 2005 2004 Share Capital 239.07 238.03 233.4 111.65 116.01 Reserves Total 4111 3314.88 2675.47 1874.88 1659.02 Total Shareholders Funds 4350.07 3552.91 2908.87 1986.53 1775.03 Secured Loans 617.26 106.65 216.67 336.82 485.23 Unsecured Loans 1969.8 1529.35 666.71 715.8 244.58 Total Debt 2587.06 1636 883.38 1052.62 729.81

Total Liabilities 6937.13 5188.91 3792.25 3039.15 2504.84

APPLICATION OF FUNDS : Gross Block 3656.13 3229.69 2885.52 2699.71 2520.86 Less : Accumulated Depreciation 1841.68 1639.12 1510.26 1335.56 1167.67

Less:Impairment of Assets 0 0 0 0 0 Net Block 1814.45 1590.57 1375.26 1364.15 1353.19 Lease Adjustment 0 0 0 0 0 Capital Work in Progress 546.45 280.6 179.19 110.73 38.41 Investments 4215.06 2237.46 1669.08 1189.79 1111.15 Current Assets, Loans & Advances Inventories 1084.11 878.48 878.74 759.97 500.13 Sundry Debtors 1004.88 700.89 637.97 511.53 400.48 Cash and Bank 861.23 1326.07 730.31 623.98 233.32 Loans and Advances 705.15 842.73 502.04 404.08 391.01 Total Current Assets 3655.37 3748.17 2749.06 2299.56 1524.94 Less : Current Liabilities and Provisions Current Liabilities 2307.55 1950.22 1520.84 1260.01 1009.86 Provisions 943.46 715.43 530.8 499.7 319.38 Total Current Liabilities 3251.01 2665.65 2051.64 1759.71 1329.24 Net Current Assets 404.36 1082.52 697.42 539.85 195.7 Miscellaneous Expenses not written

off 13.53 17.55 18.05 24.38 9.64 Deferred Tax Assets 161.04 168.77 43.64 39.03 29.48 Deferred Tax Liability 217.76 188.56 190.39 228.78 232.73 Net Deferred Tax -56.72 -19.79 -146.75 -189.75 -203.25

Total Assets 6937.13 5188.91 3792.25 3039.15 2504.84

Contingent Liabilities 479.04 367.6 454.33 386.31 407.21

profit and loss account2008 2007 2006 2005 2004

INCOME : Sales Turnover 12866.3 11183.5 9241.73 7647.8 5886.31 Excise Duty 1584.57 1334.64 1136.5 1054.82 955.43

Net Sales11281.7

3 9848.86 8105.23 6592.98 4930.88 Other Income 638.54 590.13 493.22 226.55 205.2 Stock Adjustments 149.11 6.41 103.2 174.05 21.43

Total Income12069.3

8 10445.4 8701.65 6993.58 5157.51

EXPENDITURE : Raw Materials 7875.02 6834.34 5816.97 4776.69 3374.3 Power & Fuel Cost 91.33 65.19 57.46 52.64 45.64 Employee Cost 845.77 660.1 544.99 457.41 412.43 Other Manufacturing Expenses 208.61 186.86 156.65 134.45 99.95 Selling and Administration Expenses 1076.73 844.28 633.83 417.6 332.63 Miscellaneous Expenses 285.39 253.85 191.81 258.17 228.02 Less: Pre-operative Expenses Capitalised 46.49 47.1 26.53 31.84 15.78

Total Expenditure10336.3

6 8797.52 7375.18 6065.12 4477.19

Operating Profit 1733.02 1647.88 1326.47 928.46 680.32 Interest 87.59 19.8 26.96 30.24 76.93 Gross Profit 1645.43 1628.08 1299.51 898.22 603.39 Depreciation 238.66 209.59 200.01 184.05 165.2 Profit Before Tax 1406.77 1418.49 1099.5 714.17 438.19 Tax 278.75 365.73 285.4 215 63.5 Fringe Benefit tax 0 0 0 0 0 Deferred Tax 24.65 -15.63 -43 -13.5 26.15 Reported Net Profit 1103.37 1068.39 857.1 512.67 348.54 Extraordinary Items 150.06 93.42 174.87 8.96 24.39 Adjusted Net Profit 953.31 974.97 682.23 503.71 324.15

P & L Balance brought forward 2125.08 1475.75 996.4 742.84 423.94

Appropriations 452.97 419.06 377.75 259.11 29.64 P & L Balance carried down 2775.48 2125.08 1475.75 996.4 742.84

Dividend 282.61 282.23 243.97 150.81 104.41 Preference Dividend 0 0 0 0 0 Equity Dividend % 115 115 100 130 90

Earnings Per Share-Unit Curr 44.54 43.1 35.26 44.02 28.89 Earnings Per Share(Adj)-Unit Curr 44.54 43.1 35.26 22.01 14.45 Book Value-Unit Curr 181.44 148.72 124.06 176.64 151.72

Maruti udyog Ltd Balance sheet

SOURCES OF FUNDS : 2008 2007 2006 2005 2004 Share Capital 144.5 144.5 144.5 144.5 144.5 Reserves Total 8270.9 6709.4 5308.1 4234.3 3446.7 Total Shareholders Funds 8415.4 6853.9 5452.6 4378.8 3591.2 Secured Loans 0.1 63.5 71.7 307.6 311.9 Unsecured Loans 900.1 567.3 0 0 0

Total Debt 900.2 630.8 71.7 307.6 311.9


APPLICATION OF FUNDS : Gross Block 7285.3 6146.8 4954.6 5053.1 4566.7 Less : Accumulated Depreciation 3988.8 3487.1 3259.4 3179.4 2735.9 Less:Impairment of Assets 0 0 0 0 0 Net Block 3296.5 2659.7 1695.2 1873.7 1830.8 Lease Adjustment 0 0 0 0 0 Capital Work in Progress 736.3 250.7 92 42.1 74.9 Investments 5180.7 3409.2 2051.2 1516.6 1677.3 Current Assets, Loans & Advances Inventories 1038 701.4 881.2 666.6 439.8 Sundry Debtors 655.5 747.4 646.1 599.5 689.4 Cash and Bank 324 1422.8 1401.6 1029.4 240.2 Loans and Advances 1820.4 1533.4 812 676.5 649.5 Total Current Assets 3837.9 4405 3740.9 2972 2018.9 Less : Current Liabilities and Provisions Current Liabilities 2449.2 2011 1505.8 1218.8 1211.4 Provisions 1116.5 1061.4 471.3 389.2 320.4 Total Current Liabilities 3565.7 3072.4 1977.1 1608 1531.8 Net Current Assets 272.2 1332.6 1763.8 1364 487.1 Miscellaneous Expenses not written off 0 0 0 0 16.3 Deferred Tax Assets 99.6 110.1 121.1 125.4 125.5 Deferred Tax Liability 269.7 277.6 199 235.4 308.8 Net Deferred Tax -170.1 -167.5 -77.9 -110 -183.3

Total Assets 9315.6 7484.7 5524.3 4686.4 3903.1


profit and loss account

INCOME : 2008 2007 2006 2005 2004 Sales Turnover 21025.2 17205.9 14753.1 13335.7 11047.4 Excise Duty 3133.6 2509.6 2737.2 2411.9 1943 Net Sales 17891.6 14696.3 12015.9 10923.8 9104.4 Other Income 887.6 598.4 429.2 403.2 377.6 Stock Adjustments 336.3 -243.1 236 141.7 3.2

Total Income 19115.5 15051.6 12681.1 11468.7 9485.2

EXPENDITURE : Raw Materials 13791.5 10739 9335.6 8563.2 6973.3 Power & Fuel Cost 147.3 97.4 57.2 58.1 95.8 Employee Cost 346.83 266.29 211.45 191.46 293.76 Other Manufacturing Expenses 197.8 153.5 141.3 92.7 71.1 Selling and Administration Expenses 1145.35 941.67 668.56 580.01 536.44 Miscellaneous Expenses 355.92 264.94 211.19 185.53 206.7 Less: Pre-operative Expenses Capitalised 0 0 0 0 0

Total Expenditure 15984.7 12462.8 10625.3 9671 8177.1

Operating Profit 3130.8 2588.8 2055.8 1797.7 1308.1 Interest 59.6 37.6 20.4 36 43.4 Gross Profit 3071.2 2551.2 2035.4 1761.7 1264.7 Depreciation 568.2 271.4 285.4 456.8 494.9 Profit Before Tax 2503 2279.8 1750 1304.9 769.8 Tax 759.8 621.4 587.3 524.6 251.5 Fringe Benefit tax 9.8 6.7 5.7 0 0 Deferred Tax 2.6 89.7 -32.1 -73.3 -23.8 Reported Net Profit 1730.8 1562 1189.1 853.6 542.1 Extraordinary Items 25.79 26.71 -7.97 -6.5 -79.72 Adjusted Net Profit 1705.01 1535.29 1197.07 860.1 621.82

Adjst. below Net Profit 0 -8.8 0 0 0 P & L Balance brought forward 5637.3 4393.9 3442.1 2757.4 2335.9 Statutory Appropriations 0 0 0 0 0 Appropriations 342.4 309.8 237.3 168.9 120.6 P & L Balance carried down 7025.7 5637.3 4393.9 3442.1 2757.4

Dividend 144.5 130 101.1 57.8 43.3 Preference Dividend 0 0 0 0 0 Equity Dividend % 100 90 70 40 30

Earnings Per Share-Unit Curr 59.03 53.29 40.65 29.25 18.56 Earnings Per Share(Adj)-Unit Curr 59.03 53.29 40.65 29.25 18.56

Book Value-Unit Curr 291.19 237.16 188.67 151.52 124.26

Tata motors Balance sheet

SOURCES OF FUNDS : 2008 2007 2006 2005 2004 Share Capital 385.54 385.41 382.87 361.79 353 Reserves Total 7453.96 6484.34 5154.2 3749.6 3236.77 Total Shareholders Funds 7839.5 6869.75 5537.07 4111.39 3589.77 Secured Loans 2461.99 2022.04 822.76 489.81 942.65

Unsecured Loans 3818.53 1987.1 2114.08 2005.61 317.12 Total Debt 6280.52 4009.14 2936.84 2495.42 1259.77


APPLICATION OF FUNDS : Gross Block 10830.83 8775.8 7971.55 6611.95 5985.4 Less : Accumulated Depreciation 5443.52 4894.54 4401.51 3454.28 3023.69 Less:Impairment of Assets 0 0 0 0 0 Net Block 5387.31 3881.26 3570.04 3157.67 2961.71 Lease Adjustment 0 0 0 0 0 Capital Work in Progress 5064.96 2513.32 951.19 538.84 286.09 Investments 4910.27 2477 2015.15 2912.06 3056.77 Current Assets, Loans & Advances Inventories 2421.83 2500.95 2012.24 1601.36 1147.44 Sundry Debtors 1130.73 782.18 716.6 798.58 614.99 Cash and Bank 2397.31 826.76 1119.43 2005.04 770.49 Loans and Advances 4433.91 6402.16 5639.54 2681.05 1162.78 Total Current Assets 10383.78 10512.05 9487.81 7086.03 3695.7 Less : Current Liabilities and Provisions Current Liabilities 8667.2 6363.68 5726.82 5414.61 4228.13 Provisions 1989.43 1364.32 1215.04 1126.06 430.64 Total Current Liabilities 10656.63 7728 6941.86 6540.67 4658.77 Net Current Assets -272.85 2784.05 2545.95 545.36 -963.07 Miscellaneous Expenses not written off 6.05 10.09 14.12 18.16 22.19 Deferred Tax Assets 397.45 176.6 150.75 102.69 135.06 Deferred Tax Liability 1373.17 963.43 773.29 667.97 649.21 Net Deferred Tax -975.72 -786.83 -622.54 -565.28 -514.15

Total Assets 14120.02 10878.89 8473.91 6606.81 4849.54



INCOME : Sales Turnover 32885.03 31611.21 23673.43 20152.03 15165.85 Excise Duty 4355.63 4425.44 3380.13 3063.44 2270.3 Net Sales 28529.4 27185.77 20293.3 17088.59 12895.55 Other Income 972.93 574.11 693.92 560.29 427.79

Stock Adjustments -40.48 349.68 256.91 144 -141.98

Total Income 29461.85 28109.56 21244.13 17792.88 13181.36


Total Expenditure 25807.46 24581.58 18376.32 15473.01 11303.94

Operating Profit 3654.39 3527.98 2867.81 2319.87 1877.42 Interest 425.61 368.51 293.49 217.81 202.48 Gross Profit 3228.78 3159.47 2574.32 2102.06 1674.94 Depreciation 652.31 586.29 520.94 450.16 382.6 Profit Before Tax 2576.47 2573.18 2053.38 1651.9 1292.34 Tax 139.01 476 363.35 363.82 96 Fringe Benefit tax 7 6.5 19 0 0 Deferred Tax 401.54 177.22 142.15 51.13 386 Reported Net Profit 2028.92 1913.46 1528.88 1236.95 810.34 Extraordinary Items 149.49 37.4 145.42 24.77 -29.95 Adjusted Net Profit 1879.43 1876.06 1383.46 1212.18 840.29

Adjst. below Net Profit 0 0 0 0 0 P & L Balance brought forward 1013.83 776.76 585.6 365.8 123.71 Statutory Appropriations 0 0 0 0 0 Appropriations 1659.68 1676.39 1337.72 1017.15 568.25 P & L Balance carried down 1383.07 1013.83 776.76 585.6 365.8

Dividend 578.43 578.07 497.94 452.19 282.11 Preference Dividend 0 0 19.94 0 0 Equity Dividend % 150 150 130 125 80

Earnings Per Share-Unit Curr 50.52 47.1 37.59 32.44 21.93 Earnings Per Share(Adj)-Unit Curr 48.93 45.61 36.4 31.42 21.24


Hindustan Motors Balance sheet

SOURCES OF FUNDS : Share Capital 161.26 161.26 161.26 161.26 161.26 Reserves Total -29.08 -57.87 -70.02 -26.24 -87.4 Total Shareholders Funds 132.18 103.39 91.24 135.02 73.86 Secured Loans 63.07 123.21 116.02 97.29 309.94 Unsecured Loans 65.12 72.58 44.98 68.89 63.46 Total Debt 128.19 195.79 161 166.18 373.4


APPLICATION OF FUNDS : Gross Block 486.02 487.29 479.53 470.21 749.95 Less : Accumulated Depreciation 321.78 301.62 280.28 265.55 431.13 Less:Impairment of Assets 0 0 0 0 0 Net Block 164.24 185.67 199.25 204.66 318.82 Lease Adjustment 0 0 0 0 0 Capital Work in Progress 5.58 1.81 0.33 0.32 0.28 Investments 71.79 70.61 70.25 70.57 1.5 Current Assets, Loans & Advances Inventories 82.05 102.76 85.87 79.52 158.34 Sundry Debtors 45.62 38.66 51.33 42.6 97.84 Cash and Bank 13.78 63.27 8.87 57.23 15.68 Loans and Advances 50.71 50.86 50.71 56.43 54.13 Total Current Assets 192.16 255.55 196.78 235.78 325.99 Less : Current Liabilities and Provisions Current Liabilities 173.93 204.97 209.37 211.28 244.89 Provisions 8.68 9.69 7.34 6.21 0 Total Current Liabilities 182.61 214.66 216.71 217.49 244.89 Net Current Assets 9.55 40.89 -19.93 18.29 81.1 Miscellaneous Expenses not written off 9.21 0.2 2.34 7.36 4.27 Deferred Tax Assets 0 0 0 0 41.29 Deferred Tax Liability 0 0 0 0 0 Net Deferred Tax 0 0 0 0 41.29

Total Assets 260.37 299.18 252.24 301.2 447.26



INCOME : Sales Turnover 853.01 806.37 553.05 1352.13 858.88 Excise Duty 148.35 139.86 97.03 237.3 81.07 Net Sales 704.66 666.51 456.02 1114.83 777.81 Other Income 118.98 81.96 14.21 206.5 9.83 Stock Adjustments -1.48 9.45 -1.03 -17.79 -18.02

Total Income 822.16 757.92 469.2 1303.54 769.62


Total Expenditure 735.17 705.17 479.4 1101.38 773.07

Operating Profit 86.99 52.75 -10.2 202.16 -3.45 Interest 20.03 16.73 8.84 48.34 55.35 Gross Profit 66.96 36.02 -19.04 153.82 -58.8 Depreciation 21.15 23.23 18 51.06 41.2 Profit Before Tax 45.81 12.79 -37.04 102.76 -100 Tax 14.32 -1.1 5.82 -0.03 -0.01 Fringe Benefit tax 0.65 0.59 0.83 0.3 0 Deferred Tax 0 0 0 41.29 -19.05 Reported Net Profit 30.84 13.3 -43.69 61.2 -80.94 Extraordinary Items 85.29 70.57 7.2 126.49 1.75 Adjusted Net Profit -54.45 -57.27 -50.89 -65.29 -82.69

Adjst. below Net Profit 0 0 0 0 0 P & L Balance brought forward -73.15 -86.45 -43.88 -105.08 -24.14 Statutory Appropriations 0 0 0 0 0 Appropriations 0 0 -1.12 0 0 P & L Balance carried down -42.31 -73.15 -86.45 -43.88 -105.08

Dividend 0 0 0 0 0 Preference Dividend 0 0 0 0 0 Equity Dividend % 0 0 0 0 0

Earnings Per Share-Unit Curr 1.91 0.82 0 3.04 0 Earnings Per Share(Adj)-Unit Curr 1.91 0.82 0 3.04 0


Toyota kirloskar balance sheet

SOURCES OF FUNDS : Share Capital 0.05 0.05 0.05 Reserves Total 5.23 2.75 2.64 Total Shareholders Funds 5.28 2.8 2.69 Secured Loans 0 0 0 Unsecured Loans 0 0 0

Total Debt 0 0 0

Total Liabilities 5.28 2.8 2.69

APPLICATION OF FUNDS : Gross Block 0.57 0.42 0.18 Less : Accumulated Depreciation 0.21 0.12 0.09 Less:Impairment of Assets 0 0 0 Net Block 0.36 0.3 0.09 Lease Adjustment 0 0 0 Capital Work in Progress 0 0 0 Investments 1 2.5 2.5 Current Assets, Loans & Advances Inventories 0 0 0 Sundry Debtors 3.85 0.58 0.65 Cash and Bank 0.33 0.12 0.07 Loans and Advances 1.91 0.18 0.09 Total Current Assets 6.09 0.88 0.81 Less : Current Liabilities and Provisions Current Liabilities 0.83 0.73 0.64 Provisions 1.36 0.15 0.07 Total Current Liabilities 2.19 0.88 0.71 Net Current Assets 3.9 0 0.1 Miscellaneous Expenses not written off 0 0 0 Deferred Tax Assets 0.02 0.01 0.01 Deferred Tax Liability 0 0.01 0.01 Net Deferred Tax 0.02 0 0

Total Assets 5.28 2.8 2.69

Contingent Liabilities 0.07 0 0

profit and loss account2008 2007 2006

INCOME : Sales Turnover 5.94 0.75 0.23 Excise Duty 0 0 0 Net Sales 5.94 0.75 0.23

Other Income 0.67 0.39 0.44 Stock Adjustments 0 0 0

Total Income 6.61 1.14 0.67

EXPENDITURE : Raw Materials 0 0 0 Power & Fuel Cost 0.03 0.04 0.03 Employee Cost 0.71 0.6 0.33 Other Manufacturing Expenses 0.02 0.03 0.02 Selling and Administration Expenses 2.04 0.24 0.13 Miscellaneous Expenses 0.04 0 0.05 Less: Pre-operative Expenses Capitalised 0 0 0

Total Expenditure 2.84 0.91 0.56

Operating Profit 3.77 0.23 0.11 Interest 0 0 0 Gross Profit 3.77 0.23 0.11 Depreciation 0.09 0.04 0.03 Profit Before Tax 3.68 0.19 0.08 Tax 1.19 0.06 0.04 Fringe Benefit tax 0.03 0.01 0 Deferred Tax -0.02 0.01 -0.01 Reported Net Profit 2.48 0.11 0.05 Extraordinary Items 0.26 0 0 Adjusted Net Profit 2.22 0.11 0.05

Adjst. below Net Profit 0 0 0 P & L Balance brought forward 0.25 0.14 0.09 Statutory Appropriations 0 0 0 Appropriations 0 0 0 P & L Balance carried down 2.73 0.25 0.14

Dividend 0 0 0 Preference Dividend 0 0 0 Equity Dividend % 0 0 0

Earnings Per Share-Unit Curr 4960 220 100 Earnings Per Share(Adj)-Unit Curr NA NA NA Book Value-Unit Curr 10560 5600 5380

a comparative study on financial performance of select automobile industries in india” (four...

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