maruti udyog limited


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MARUTI UDYOG LIMITED. A Due Diligence for the Government of India. GROUP NO. 1 Priya AggarwalPGP-05-001 Alok SamtaneyPGP-05-056 Deepak MiglaniPGP-05-111 Hem Singh TanwarPGP-05-141 Pradeep KPGP-05-121. Objective of the Diligence. Background - PowerPoint PPT Presentation


  • MARUTI UDYOG LIMITEDA Due Diligence for the Government of IndiaGROUP NO. 1

    Priya AggarwalPGP-05-001Alok SamtaneyPGP-05-056Deepak MiglaniPGP-05-111Hem Singh TanwarPGP-05-141Pradeep KPGP-05-121

  • Objective of the DiligenceBackground

    Maruti Udyog Ltd started as a JV between the Government of India and Suzuki Motor Corporation in a 74:26 proportion

    Success of the JV led to Suzuki increasing its stake in the company to over 51% and the Government of India diluting its stake

    Presently the Government of India holds 10.27% stake in MarutiOur ObjectiveAdvising the Government of India to divest its stake in Maruti Udyog Limited

  • Agenda Indian Automobile Industry Maruti Udyog Limited Financial DiligenceValuation

  • Agenda Indian Automobile Industry Maruti Udyog Limited Financial Diligence Valuation

  • Indian Automobile IndustryLargest 3 wheeler market in the world2nd Largest 2 Wheeler Market in the world4th Largest Passenger Vehicle market4th Largest Tractor Market in the world5th Largest commercial vehicle market in the worldIndias share is a mere 1.2% as compared with US which is appx 17% Huge potential for India to grow

  • Size and Structure of the Industry Tata Motors MahindraMarutiTata MotorsHyundai

    ( **Figures in brackets are no of manufacturers)

  • Industry StatisticsDomestic market growing @ 14.5% CAGR (2000-01 to 2004-05)Industry contributes 4% to national GDP (2003-04)0.45 million direct employment and 10 million people indirectlyTo meet Bharat III norms:Appx 250 bn required for investment till 2010 by automobile companiesAppx 120 bn required for investment till 2010 by oil domestic oil companiesGovt has given certain incentives in this respectTotal 10 mill. Car/UV parc in India at presentLow Car Density of 8 cars per 1000 householdsExplosive Growth forecasted for next half decade: 16.2% CAGRDemand to zoom past 2 million by 2009-10

  • Passenger Car MarketTo grow from 0.75 million in 2000 to 1.9 million in 2010 (Growth rate of 51%)Small cars account for 70% of revenues1/3rd of customers go for replacement within the first three yearsReplacement demand at 35% of annual demandPlayers:Maruti Udyog LimitedTata Motors LimitedFiat India LimitedGeneral Motors India Ltd.Hyundai Motors India Ltd. Ford India LimitedHindustan Motors Honda SIEL Cars India Ltd.Daimler Chrysler India Ltd. Skoda Auto Motor Ltd.Toyota Motors

  • Segment-wise Market SharesMarutis Market Share

    (per cent)1999-20002000-012001-022002-032003-042004-05Cars100.0100.0100.0100.0100.0100.0A1: Mini35.629.628. Udyog Ltd100.0100.0100.0100.0100.0100.0A2: Compact49.851.454.254.752.960.5Fiat India Ltd6. Motors India Ltd----0.90.5Hyundai Motors India Ltd26.224.624.327.727.122.8Maruti Udyog Ltd33.239.442.240.347.754.7Tata Motors20.616.622.924.321.721.3A3: Mid-size14.518.816.316.920.021.8Fiat India Ltd5. India Ltd10.418.717.416.215.013.7General Motors India Ltd3.78.510.18.810.27.5Hindustan Motors31.526.423.319.710.78.2Honda SIEL India Ltd12.610.411.413.013.218.3Hyundai Motors India Ltd8.116.621.020.720.212.9Maruti Udyog Ltd24.015.415.312.010.216.6Tata Motors---6.920.122.0

  • Segment-wise Market Shares

    (per cent)1999-002000-012001-022002-032003-042004-05A4: Executive0. India Ltd-- Motors India Ltd--- Motors100.0100. Motors India Ltd-----21.2Skoda Auto India Pvt Ltd--41.672.335.830.8Toyota Kirloskar Motor Ltd---17.157.744.3A5: Premium0. India Ltd100.0100.09.710.114.314.1Ford India Ltd--10.711.02.90.6Honda SIEL Cars India Ltd--29.831.739.151.0Hyundai Motors India Ltd--49.835.922.914.5Skoda Auto India Pvt Ltd-----5.2Toyota Kirloskar Motor Ltd---11.320.914.5A6: Luxury0. India Ltd--100.0100.0100.0100.0Source: CRIS Infac Auto Industry Annual Review (2005)

  • Changing Profile of SegmentsMajor shift from A1 segment to A2 segment [ A2-segment (Wagon-R, Santro, Indica) taking over A1 (M800) as the largest and fastest growing segment ]

  • Key Demand DriversIncrease in the disposable incomes of familiesEasy Availability of Finance Lower Equated Monthly InstallmentsFrequent introduction of new modelsGrowth in demand for second car in a familyReduction in holding period of a car (from 7-8 years to 3-4 years)Increase in distribution / dealership of carsAggressive growth (20%) in exports of Indian vehicles abroad

  • Industry CapacitiesCompanies plan to bridge the gap between Demand and supply in 2010 by Exports+ Based on sales projections, *Only announced expansionSource: BW 29 Jan, 07

    CompanyCapacity in 2006Likely Capacity in 2010Maruti Udyog+600,0001,000,000Tata Motors/Fiat*225,000325,000Hyundai Motors India300,000600,000Honda Siel60,000200,000Toyota Kirloskar60,000200,000GM India85,000215,000Ford India60,000100,000M&M/Renault/Nissan100,000500,000Daimler Chrysler2,0002,000Skoda/Volkswagen30,000140,000Total Capacity1,522,0003,280,000Total Demand (Domestic)1,400,0002,300,000

  • Investments planned

  • New Car Models expected Mahindra LoganChevrolet SparkHyundais HatchNew Fiat PalioTata Indigo LBWMarutis Swift Diesel

    Hyundai Sonata DieselBentley ContinentalMarutis New Baleno

    Chevrolet Captiva

    Segment A2Segment A3SUV

  • Global ScorecardIndian Companies doing well Compared to US Counterparts

    * Includes Passenger Vehicles & Trucks, + Includes passenger Vehicles & LCVsSource: BW Jan 29, 07

    CompanyNet Profit Per car (in USD)India2005-062004-05Maruti354365Honda Siel797787Hyundai447403Tata Motors*748688M&M+853540USFord293515GM(938)311JapanNissan 1,2071,257Toyota1,4321,315

  • Porters Diamond An analysis of the industry Indias comparatively cheap and skilled workforce can be effectively utilized to set up large low cost production base Huge investments from the companies for capacity expansion, R&D etc.Factor ConditionsGovernmentLiberalized policy regimeAutomatic approval for 100% FDIThe customs duty on inputs and Raw materials has been reduced from 20% to 15%. Firm Strategy, structure & rivalryA large number of domestic and multinational playersHighly competitive industryDemand conditionsRelated & supporting industriesStrong industry associations to promote industrys interestWell established components industry support OEMs High demanding consumers Rapid urbanization, increasing literacy

  • Summing upOpportunities in the auto sector look good- Sales expected to grow at a CAGR of 15%- Income levels expected to continue to rise leading to a demand increase - Excise duty cuts to fuel growth- Easy availability of cheap finance to continue- India, though under penetrated, its GDP expected to grow at 8% till 2060

    However, factors such as- Liberalised government policies- Intense Competition and entry of new foreign players- Planned Capacity increases- Slew of new models in the pipeline- Competition in the export market from foreign companies- Products like the Rs 1 lac car by the Tatas expected to change sector dynamics

    could be a threat to the sector from an investment perspective

  • Agenda Indian Automobile Industry Maruti Udyog Limited Financial Diligence Valuation

  • Maruti Udyog LimitedLargest player in the passenger car segment in India (mkt share of over 50%)Established in 1981 as JV between GOI and Suzuki Motor CorporationCredited for bringing the automobile revolution in IndiaBrought in the latest technology, more fuel efficient cars and brought down the pricesFirst vehicle roll out in 1983 M800, now offers 13 models.First Indian company to sell 1 million vehicles (1994), and has produced over 5 million vehicles (2004)MUL fuels Automotive GrowthMULs emphasis on localization and indigenization led to development of component industryStarted with a dozen JVs with India entrepreneurs, got them foreign collaborationThis led to development of component industry as a whole with more such JVs and influx of technologyIt brought in better financing means enabling more people to buy cars

  • Maruti Car Models








    Segmentwise volumes



    Current Assets4256830042Debtors67676161

    Current Liabs2087516255Creditors63514730

    Debt (S+U)66963344Consumption of RM8941481884

    Net worth (E+R)5573044692Op stock30992642

    PAT121668801Cl Stock28283099



    No of equity shares288.91006288.91006in million shares

    Proposed Dividend1011578

    Net Sales120877109770

    Total Assets8420665414

    Fixed Assets2049119539


    Liquidity ratios

    Current ratio2.03918562871.8481697939Was an increase in cash and bank balance and also inventories

    Leverage ratios

    Debt Equity ratio0.12015072670.0748232346Unsecured loans increased

    Activity ratiosFY06FY05

    Total Asset Turnover1.441.68

    Debtors Turnover17.8617.82

    Collection Period in Days20.4320.49

    Creditors Turnover14.0417.41

    Payment Period in Days26.0020.97

    Profitability ratios





    Dividend Payout8.31%6.57%


    Profitability RatiosFY06FY05

    Current Ratio2.041.85








    SegmentModelsAvg Prices (Ex Factory)FY06 Sales (Volume)

    A1Maruti 800$164,270$89,223



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