Beruflich Dokumente
Kultur Dokumente
AMITY UNIVERSITY
UTTAR PRADESH
PROJECT
ON
TREND ANALYSIS
OF
MARUTI SUZUKI INDIA LTD.
SUBMITTED TO: SUBMITTED BY:
Mr. SUMIT SINGH JAISIAL NEHA GHILDIYAL D O4
FACULTY MEGHA SHARMA D 09
(QUANTITATIVE POOJA SARIN D 12
APPLICATIONS NIDHI MEHTA D 34
IN MANAGEMENT) MEDHA D 38
UMA YADAV D43
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ACKNOWLEDGEMENT
We would like to express our sincerest gratitude to all the people who
have contributed towards the successful completion of our project.
We would like to extend our heartfelt thanks to our faculty Mr. Sumit
Singh Jasial for nurturing a congenial yet competitive environment in
the department, which motivates all students to pursue higher goals. Our
sincere thanks for his guidance and expertise in making this project a
reality.
Last but not the least, we would like to extend our thanks to all the
teaching and non-teaching staff members of our department, and to all
our colleagues who helped us with the ever daunting task of gathering
information for the completion of project.
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CERTIFICATE
This is certify that the major project report entitled “Trend Analysis of
Maruti Suzuki India Limited” has been submitted to Amity Business
School, Amity University, Noida by mutual cooperation of Neha
Ghildiyal (Roll No: - D 04), Uma Yadav (Roll No: -D 43), Nidhi Mehta
(Roll. No: - D 34), Medha (Roll. No:-D 38), Megha Sharma (Roll No: - D
09), Pooja Sarin (Roll No: - D 12) in partial fulfillment for the award of the
degree, Master of Business Administration in Human Resource.
13/10/2008
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TABLE OF CONTENTS
7. Appendix 29 - 30
8. Bibliography 31
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PROJECT OVERVIEW:
TIME SERIES:
A time series may be defined as a sequence of repeated measurement of the
variables made periodically through time.
-Cecil H. Mayers
TREND ANALYSIS:
There are three main types of trends: short-, intermediate- and long-term.
Trend analysis tries to predict a trend like a bull market run and ride that trend until
data suggests a trend reversal. Trend analysis is helpful because moving with
trends, and not against them, will lead to profit for an investors.
The trend analysis module allows you to plot aggregated response over time. This is
especially valuable, if you are conducting a long running survey and would like to
measure differences in perception and responses over time.
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The “TIME FACTOR” on X axis can have the following granularity:
1. Daily
2. Weekly
3. Monthly
4. Quarterly (Jan-Mar, Apr-Jun, Jul-Sept, Oct-Dec)
5. Yearly
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OBJECTIVES OF MEASURING TREND
There are four main objectives of measuring Trend in a time series data:
1. To study past growth or decline of the series. On ignoring the short term
fluctuations, trend describes the basic growth or decline tendency of the data.
2. Assuming that the same behavior would continue in future also, the trend
curve can be extended for forecasting future.
3. In order to analyze the influence of other factors the trend may first be
measured and then eliminated from the observed values.
4. Trend values of two or more time series can be used for their comparison.
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MARUTI SUZUKI INDIA LTD.
COMPANY HISTORY:
Maruti Suzuki India Ltd. (MSIL) was established in Feb.1981 through an act of
parliament as a government company with Suzuki Motor Corporation of Japan
holding 26% stake. The joint venture agreement was signed between government of
India and Suzuki Motor Company in October1982. Maruti Suzuki India Ltd., formally
Maruti udyog ltd., a subsidiary of Suzuki Motor Corporation of Japan, is India’s
largest passenger car company accounting for over 50% of the domestic car market.
More than half the no. of cars sold in India wears a Maruti Suzuki batch. It offers 11
different ranges of cars. Since inception, Maruti produced and sold over 7.5 million
vehicles in India and exported over 5 lakh units to Europe and other countries.
PRODUCTS:
• MARUTI 800
• MARUTI OMNI
• ZEN
• ALTO
• WAGON-R
• GYPSY
• ESTEEM
• BALENO
• VERSA
• SX4
• SWIFT
• GRAND VITARA
• DEZIRE
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EQUITY STRUCTURE OF MARUTI:
EQUITY STRUCTURE
SUZUKI MOTOR
45.79% CORPORATION
54.21% OTHERS
COMPANY AT A GLANCE:
• Cars produced and sold : 7,000,000
• Domestic cars sales for 2007-08 : 711818
• Car exports for 2007-08 : 53024
• Recorded profit after tax in 2007-08 : 17308
• Total income in 2007-08 : 188238
• No. of Maruti Suzuki sales outlets in 393 towns and cities : 600
• No. of workshops that provide customers with maintenance
support in 1220 cities : 2628
• Employee strength till March 2008 : 7090
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One million promise
Maruti has laid down a clear road map to achieve an annual sale of 1 million cars in
the domestic market and 2 lakh exports by 2010-11. In addition, the management
team at Maruti Suzuki has identified specific initiatives to serve customers better and
ensure their leadership in the future.
COMPANY’S STRENGTH:
One of the Maruti’s great strength is that they have internal resources to finance both
R & D expansion as well as capital and investments. The higher interest rates and
the risk of making large borrowings till finance capital cost will not affect them.
SALES GROWTH:
SALES GROWTH
45.00%
40.00% 38.60%
35.00%
SALES GROWTH
30.00%
25.00%
22.60% SALES GROWTH
20.00% 19.50%
15.00%
11.90%
10.00%
5.00%
0.00%
2005 2006 2007 2008
YEAR
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EARNING PER SHARE & BOOK VALUE
350
EPS & BOOK VALUE
300 297
250
EARNING PER
200 189 SHARE
150 BOOK VALUE
124
100
50 59.9
41.2
18.8
0
2003 - 04 2005 - 06 2007 - 08
YEAR
800000
711818
EXPORTS & DOMESTIC
700000
600000
500000 527038
420947 EXPORTS (units)
400000
DOMESTIC (units)
300000
200000
100000
51175 34784 53024
0
2003 - 04 2005 - 06 2007 - 08
YEAR
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PROFIT AFTER TAX AND NET SALES:
200000
180000 178603
160000
PAT & NET SALES
140000
PROFIT AFTER TAX (Rs
120000 120034
Mn)
100000
90812 NET SALES
80000
60000
40000
20000 17308
5422 11891
0
2003 - 04 2005 - 06 2007 - 08
YEAR
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365 365 365 365 365
DII 24 29 34 24 27
Accounts Receivable 164.6 144.3 154.1 182.1 173.2
Sales/AR 12.69 17.76 18.61 18.81 27.41
365 365 365 365 365
DSO 29 21 20 19 13
1. The sales of the company have increased from 19.5% in 2007 to 38.6% in
2008.
2. Cost of goods sold also increased from 70.9% in 2007 to 73.7% in 2008.
3. Operating margin trended negatively from 18.3% to 15.3%.
4. Number of employees and revenue from the employees also increased from
2007 to 2008.
5. Also there is increment in asset utilization, net PPE, inventory and Days in
inventory.
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PROBLEMS FACED: -
1.) Cost of Goods Sold has been increased from 2004 to 2008 i.e., the expenses
incurred for the production of items has increased during this particular period of
time.
2.) Days in Inventory has also been increased from 2007 to 2008 i.e., time of
production has increased even after the implementation of new techniques and
technologies in production process.
2004 1539.7
2005 1939.3
2006 2147.4
2007 2447.1
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2008 3500.2
4000
3500
3000
COGS
2500
COGS(Y)
2000
Linear (COGS(Y))
1500
1000
500
0
2004 2005 2006 2007 2008
YEARS
2004 24
2005 29
2006 34
2007 24
2008 27
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Trend Showing DAYS IN INVENTORY:
40
35
30
25
DII (Y)
DII
20
Linear (DII (Y))
15
10
0
2004 2005 2006 2007 2008
YEARS
Method of Least Squares is a mathematical method which is most widely used and
with its help a trend line is fitted to the data in such a manner that the following two
conditions are satisfied.
(1) Σ (Y-Yc) = 0
i.e., the sum of deviations of the actual values of Y and the computed values of Y is
zero.
(2) Σ (Y-Yc)2 is least.
i.e., the sum of the squares of the deviations of the actual and computed values is
least from this line and hence the name method of least squares. The line obtained
by this method ‘as the line of best fit’.
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with a change of one unit in X variable.
X = represents time
Following points should be specified when any straight line trend is fitted:
1. Which year was selected as the origin?
2. What is the unit of time represented by X? Is it half year, one year or five
years?
3. In what kind of units is Y being measured? Is it production in tones, sales in
rupees, price in rupees, and employment in thousands of workers?
a = Σ Y/N
b = ΣXY/ΣX2
Where,
N = represents number of years (months or weeks) for which data are given.
The constant ‘a’ is simply equal to the mean of Y values and the constant ‘b’ gives
the rate of change.
Here,
Arithmetic mean = 10030/5
= 2006
Yc = a + bX
a = Σ Y/N
= 11573.7/5
= 2314.74
b = ΣXY/ΣX2
= 4428.8/10
= 442.88
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Linear trend by the Method of Least Squares
4000
3500
COGS and Yc
Trend Line
3000
2500
COGS(Y)
2000
Yc
1500
1000
Actual Line
500
0
2004 2005 2006 2007 2008
YEAR
Future Analysis:
Yc = a + bX
= 2314.74 + 442.88(2009-2006)
= 3643.38
This particular data shows that in coming year, COGS will increase which will effect
the revenue of the company.
2006 34 0 0 0 27.6
2007 24 1 24 1 27.7
2008 27 2 54 4 27.8
N=5 Σ Y = 138 Σ XY = 1 Σ X2 = 10
Here,
Arithmetic mean = 10030/5
= 2006
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Yc = a + bX
a = Σ Y/N
= 138/5
= 27.6
b = ΣXY/ΣX2
= 1/10
= 0.10
40
35
30
25
DII (Y)
DII
20
YC
15
10
0
2004 2005 2006 2007 2008
YEARS
Future Analysis:
Yc = a + bX
= 27.6 + 0.10(2009-2006)
= 27.9
This particular data also shows that in coming future there will be an increase in DII
which will result in delay in production of items
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3.) Method of Semi-averages
The important step of Semi-averages method is that whenever this method is used,
the given data is divided into two parts, preferably with the same number of years.
Procedure:
• If we are given data even number of years then simply divide the data into two
equal halves. For example, the data are from 2000 to 2005, i.e., over a period
of 6 years, the two equal parts will be each three years, i.e., from 2000 to
2002 and from 2003 to 2005.
• In case of odd number of years like 5, 9, 13, etc. two equal parts can be made
simply by omitting the middle year. For example, if data are given for 5 years
from 2000 to 2004, the equal parts would be from 2000 to 2001 and from
2003 to 2004-the middle year 2002 will be omitted.
• Now arithmetic mean is calculated for the two equal parts to get two points.
• Each point is plotted at the mid-point of the class interval covered by the
respective part and then the two points are joined by a straight line
2007 2447.1
2007.5 2973.65
2008 3500.2
Here,
Average of 2004 and 2005 is 2004.5
Average of 2007 and 2008 is 2007.5
Average of 1539.7 and 1939.3 is 1739.5
Average of 2447.1 and 3500.2 is 2973.65
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Trend by the Method of Semi-averages
4000
3500
3000
2500
COGS
COGS (Y)
2000
Linear (COGS (Y))
1500
1000
500
0
2004 2005 2007 2008
YEARS
Future analysis:
From the above graph, it is shown that due to increase in the trend line values there
will be hike in COGS in coming future.
Semi-average Semi-average
Year DII (Y)
(year) (DII)
2004 24
2004.5 26.5
2005 29
2007 24
2007.5 25.5
2008 27
Here,
Average of 2004 and 2005 is 2004.5
Average of 2007 and 2008 is 2007.5
Average of 24 and 29 is 26.5
Average of 24 and 27 is 25.5
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Trend by the Method of Semi-averages
35
30
25
20
DII (Y)
DII
10
0
2004 2005 2007 2008
YEARS
Future analysis:
By observing the trend line it may be predicted that there would be more chances of
DII to increase in coming future which will result in delay production.
Effect of averaging:
• Lessening the influence of the fluctuations that pull the annual figure away
from the general trend.
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Note: - It is necessary to select a period for moving average which coincides with
the length of the cycle; otherwise the cycle will not be entirely removed. The period
of moving average is to be decided in the light of the length of the cycle.
Here,
5626.4 is the 3-yearly moving totals of the values given corresponding to the years
2004, 2005 and 2006.
Similarly for the 3-yearly moving averages
4000
3500
3000
COGS (Y)
2500
COGS
2000 Linear
(COGS (Y))
1500
1000
500
0
2004 2005 2006 2007 2008
YEARS
Future analysis:
From the above graph, it is observed that due to increase in the trend line values
there will be hike in COGS in coming future which will affect the company’s revenue.
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(ii) Trend Analysis of DII using 3-yearly Moving Average Method
2005 29 87 29
2006 34 87 29
2007 24 85 28.33333333
_ _
2008 27
Here,
87 is the 3-yearly moving totals of the values given corresponding to the years 2004,
2005 and 2006.
Similarly for the 3-yearly moving averages.
40
35
30
25 DII (Y)
Linear (DII (Y))
DII
20
15
10
0
2004 2005 2006 2007 2008
YEARS
Future analysis:
By observing the trend line it is being predicted that there would be more chances of
DII to increase in coming future which will result in delay production in the company.
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HOW TREND CAN BE USEFUL IN COPING UP THE
PROBLEM
As can be seen that trend has helped us to measure the growth or decline of the
various problems faced by the company and hence is describing the basic growth or
decline tendency of the data. By assuming that the same behavior would continue in
future also, the trend curve can be extended for forecasting future.
• As can be seen from the trend Cost of Goods Sold has increased from 2004
to 2008. Hence the expenses incurred by the company in producing the items
that it sold during a particular period have been increased. This increment is
very large and as the price of steel is increasing there is the possibility of
increment in the prices of raw material.
• COGS will increase in the future in a very steep manner. Being a
manufacturing company it is very important for Maruti to lower the value of
COGS. This can be lowered by strategic sourcing and procurement i.e. by
continuously improving and re-evaluating the purchasing activities of a
company and also by acquisition of goods and/or services at the best possible
total cost of ownership, in the right quantity and quality, at the right time, at
the right place and from the right source for the direct benefit or use of
corporations, or individuals, generally via a contract.
• Days in inventory is the time period from the date of execution of the offer to
purchase with the employee through the resale closing date. As the days in
inventory have increased from 24 in 2007 to 27 in 2008 that means the time
of production has increased even after the implementation of new techniques
and technologies in production process.
• DII will also increase in future which again is a bad news for company.
According to the trend in future the value can go from 27 to as high as 30 and
this needs to be lowered so as to get more revenue. This can be done by
ensuring better inventory management. Effective Inventory Management
enables an organization to meet or exceed customers' expectations of
product availability while maximizing net profits or minimizing costs.
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LIMITATIONS OF TREND ANALYSIS:
GRAPHICAL METHOD
This method is highly subjective because the trend line depends on the personal
judgment of the investigator and, therefore, different persons may draw different
trend lines from the same set of data. Moreover, the work cannot be left to clerks
and it must be handled by skilled and experienced people who are well
conversant with the history of the particular concern.
Since freehand curve fitting is subjective, it cannot have much value if it is used
as a basis for prediction.
3.) This method appears simple and direct. However, it is very time consuming to
construct a freehand trend if a careful and a conscientious job is done.
It is only after long experience in trend fitting that a statistician should attempt to
fit a trend line by inspection.
1.) Great care has to be exercised in selecting the type of trend curve to be fitted,
i.e., linear, parabolic or some other type. Carelessness in this respect may lead
to fallacious results.
2.) This method is more tedious and time-consuming compared to other methods.
3.) Predictions are based only on long-term variations, i.e., trend and the impact of
cyclical, seasonal and irregular variations is ignored.
4.) Being a mathematical method it is not flexible-the addition of even one more
observation makes it necessary to do all the computations again.
5.) The method cannot be used to fit the growth curves like Gompertz curve, logistic
curve, etc.
Hence, mathematically methods of fitting trend are not foolproof-in fact; they can
be the source of some of the most serious errors that are made in statistical
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work. They should never be used unless rigidly controlled by a separate logical
analysis. Trend fitting depends upon the judgment of the statistician, and a
skillfully made freehand sketch is often more practical than a refined
mathematical formula.
METHOD OF SEMI-AVERAGES
1.) Gives only linear trend of the data irrespective of whether it exists or not.
3.) The limitations of arithmetic averages shall automatically apply. If there are
extremes in either half or both halves of the series, then the trend line will not
give a true picture of the growth factor. This danger is greatest when the time
period represented by the average is small. Consequently, trend values obtained
are not precise enough for the purpose either of either of forecasting the future
trend or of eliminating trend from original data.
For the above reasons if the arithmetic averages of the data are to be used in
estimating the secular movement. It is sometimes better to use moving averages
than semi-averages.
1.) Trend values cannot be computed for all the years. The longer the period of
moving average, the greater the number of years for which the trend values
cannot be obtained. For example, n a three-yearly moving average, trend values
cannot be obtained for the first year and last year, in a five-yearly moving
average for the first two years and the last two years, and so on.
2.) Great care has to be exercised in selecting the period of moving average. No
hard and fast rules are available for the choice of the period and one has to use
his own judgment.
3.) Since the moving average is not represented by a mathematical function this
method cannot be used in forecasting which is one of the main objectives of
trend analysis.
4.) Although theoretically we say that if the period of moving average happens to
coincide with the period of cycle, the cyclical fluctuations are completely
eliminated, but in practice since the cycles are by no means perfectly periodic,
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the lengths of the various cycles in any given series will usually vary considerably
and, therefore, no moving average can completely remove the cycle. The best
result would be obtained by a moving average whose period was equal to the
average length of all the cycles in the given series. However, it is difficult to
determine the average length of the cycle until the cycles are isolated from the
series.
5.) Finally, when the trend situation is not linear (a straight line) the moving average
lies either above or below the true sweep of the data. Consequently, the moving
average is appropriate for trend computations only when
• the purpose of investigation does not call for current analysis or forecasting.
• the trend is linear, and
• the cyclical variations are regular both in period and amplitudes.
Unfortunately, these conditions are encountered very infrequently.
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APPENDIX:
Full forms:
DEFINITIONS:
ASSET UTILISATION:
A ratio that indicates the amount of money invested in non-liquid assets (such as
property, plant, and equipment) for each dollar of revenue
COGS:
The expenses incurred by the company in producing the items that it sold during a
particular period.
DII:
The number of days of sales that goods and materials are held in stock by a
business i.e., it is the time period from the date of execution of the offer to purchase
with the employee through the resale closing date.
EQUITY:
The percentage of revenue held as equity.
OPERATING MARGIN:
PROCUREMENT:
Procurement is the acquisition of goods and/or services at the best possible total
cost of ownership, in the right quantity and quality, at the right time, in the right place
and from the right source for the direct benefit or use of corporations, or individuals,
generally via a contract.
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RESEARCH AND DEVELOPMENT:
S, G & A:
This is the sum of all direct and indirect selling expenses and all general and
administrative expenses of a company. For a manufacturer these are expenses
outside of the manufacturing function. These expenses are reported on the income
statement of the period in which they occur.
STRATEGIC SOURCING:
VALUE ENGINEERING:
a = Σ Y/N
b = ΣXY/ΣX2
Where,
N = represents number of years (months or weeks) for which data are given.
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BIBLIOGRAPHY
Following are the sources of data required in handling and
solving the issues: -
• www.marketsimplifies.com
• www.oppapers.com
• www.moneycontrol.com
• www.justauto.com
• www.economictimes.indiatimes.com
• www.indiatelevision.com
• B. M. Agrawal
• S. P. Gupta
• Levin and Rubin
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