A COMPARATIVE STUDY ON FINANCIAL PERFORMANCE OF SELECT AUTOMOBILE INDUSTRIES IN INDIA Four Wheelers PDF

A REPORT
ON
“A COMPARATIVE STUDY ON FINANCIAL PERFORMANCE OF SELECT

AUTOMOBILE INDUSTRIES IN INDIA”
A REPORT SUBMITTED IN THE PARTIAL FULFILLMENT OF

THE REQUIREMENTS OF FOR THE AWARD OF THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION
SUBMITTED BY:
NIDHI MAHESHWARI
M.B.A IV SEMESTER
ENROLL NO.: 1815040006
ACKNOWLEDGEMENTS
I am glad to express my profound sentiments of gratitude to all who rendered their
valuable help for the successful completion of this project report titled,
“A COMPARATIVE STUDY ON FINANCIAL PERFORMANCE OF SELECT
AUTOMOBILE INDUSTRIES IN INDIA”. I extend my sincere gratitude to professors,
SITM for providing me the opportunity to undertake such a project. Her tremendous
support and guidance helped me a lot in the completion of my project.
And lastly I would like to thank my friends and family members for believing in me
and providing me with the needed moral support.
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.
a. Common size Income Statement
b. 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 18th 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 its 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 produce 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

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
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.
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.
• Began the production of the Road Trusted Vehicle.

1997
• Commenced the Mitsubishi Lancer Car project.

1998
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
employment 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.
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 Assets
Current Ratio =
Current 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:
current Ratios
current Ratios
7.337
1.198 1.567 1.584 1.104
Tata Motors Maruti Mahindra & Hindustan Toyota

Udyog Ltd Mahindra Motors Kirloskar
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.
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 Assets
Liquid Ratio =
Liquid 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:
Liquid Ratios
Liquid Ratios
7.337
1.198 1.567 1.585 1.105

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.
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 Current Liabilities Ratio

investment
Tata motors 2397.31 4910.27 8667.2 0.843
Maruti Udyog 324 5180.7 2449.2 2.247
Mahindra & 861.23 4215.06 2307.55 2.199
Mahindra
Hindustan Motors 13.78 71.79 173.93 0.492
Toyota Kirloskar 0.33 1 0.83 1.602
motors Ltd
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
Absolute liquid Ratio

Absolute liquid Ratio
2.247 2.199
1.602
0.843
0.492
Tata motors Maruti Mahindra & Hindustan Toyota

Udyog Mahindra Motors Kirloskar
motors Ltd
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.
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 Gross Profit

× 100 ( OR) × 100
𝑠𝑎𝑙𝑒𝑠 𝑠𝑎𝑙𝑒𝑠
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 & 1645.43 11281.73 14.58

Mahindra

Chart No: 4.4
Chart shows comparative Gross Profit Ratio
Gross profit Ratios

Gross profit Ratios
63.468
11.317 17.165 14.58 9.502

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.
Net profit margin ratio
The ratio is designed to focus-attention on the net profit margin arising from business
operations before interest and tax is deducted. The convention is to express profit after tax
and interest as percentage of sales. A drawback is that the percentage which results varies
depending on the sources employed to finance business activity. Interest is charged above the
line while dividends are deducted below the line. It is for this reason that net profit i.e.,
earning before interest and tax (EBIT) is used this ratio reflects net profit margin on the total
sales after deducting all expenses but before deducting interest 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
Interest. 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 Interest and Tax

× 100
𝑠𝑎𝑙𝑒𝑠
Table No: 4.5
The table showing Comparative Net profit margin ratio:
Company Net profit before Interest and Sales Ratio’s

Tax
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
Net Profit Margin Ratio

Net Profit Margin Ratio
63.468
12.81 17.499 15.36 12.34

Ltd
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.
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.
Cash Profit
× 100
𝑠𝑎𝑙𝑒𝑠
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 1730.8 568.2 17891.6 12.85
Ltd
Mahindra & 1103.37 238.66 11281.73 11.90
Mahindra
Hindustan 30.84 21.15 704.66 7.38
Motors
Toyota Kirloskar 2.48 0.09 5.94 43.26
Chart No: 4.6
Chart shows comparative Cash Profit ratio.
Cash Profit Ratios

Cash Profit Ratios
43.26
9.4 12.85 11.9 7.38

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.
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 Tax

× 100
Total assets
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.
Return on Total Assets

Return on Total Assets
46.97
14.37 18.58 15.9 11.84

Ltd
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.
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 Interest and Tax

× 100
Net worth
Net worth = Equity capital + Reserves and Surplus
Table No: 4.8
The Table showing Comparative Funds on Net worth Ratio:
company Net Profit after Equity capital Reserves & Ratios

Interest and tax surplus
Tata Motors 1879.43 385.54 7453.96 23.97
Maruti Udyog 1705.01 144.5 8270.9 20.26
Ltd
Mahindra & 935.31 239.07 4111 21.50
Mahindra
Hindustan 30.84 161.26 -29.08 23.33
Motors
Chart No: 4.8
Chart shows comparative Funds on net worth ratio.
Funds on Net worth Ratios

Funds on Net worth Ratios
42.04
23.97 20.26 21.5 23.33

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.
OPERATING RATIO
This ratio establishes the relationship between operating cost and sales
Operating Cost
Operating Ratio = × 100
Sales
Operating cost = Cost of Goods Sold + Operating Expenses
Table No: 4.9
The Table showing Comparative operating Ratio:
company Sales Cost of Goods Operating Ratios

sold Expenses
Tata Motors 28529.4 29461.85 25807.46 193.73
Maruti Udyog 17891.6 19115.5 15984.7 196.18
Ltd
Mahindra & 11281.73 12069.38 10336.36 198.60
Mahindra
Hindustan 704.66 822.16 735.17 221.00
Motors
Chart No: 4.9
Chart shows comparative Operating ratio:
Operating Ratios
Operating Ratios
193.73 196.18 198.6 221

159.09

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.
OPERATING PROFIT RATIO
Operating profit ratio studies the relationship between operating profit (EBIT – Earning
Before Interest 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
Operating Profit Ratio = × 100
Sales
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 & 11281.73 1733.02 15.36

Mahindra

Chart No: 4.10
Chart shows comparative Operating Profit ratio:
Operating Profit Ratio

Operating Profit Ratio
63.46
12.81 17.5 15.36 12.34

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.
EXPENSES RATIO:-
This ratio studies the relationship between factory expenses and sales. this ratio shows the
manufacturing efficiency of the organization.
Factory Expenses
Factory Expenses Ratio = × 100
Sales
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 15984.7 17891.6 89.34
Ltd
Mahindra & 10336.36 11281.73 91.62
Mahindra
Hindustan 735.17 704.66 104.32
Motors
Chart No: 4.11
Chart shows comparative Factory Expenses ratio:
Factory Expenses Ratio

Factory Expenses Ratio
104.32
90.46 89.34 91.62
47.81

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.
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.
Sales
Stock Turnover Ratio = × 100
Inventory
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:
Stock Turnover Ratio

Stock Turnover Ratio
1723.66
1178.01 1040.64 858.82
0
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.
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’.
Net profit after Tax

Return on Shareholders Equity = × 100
Shareholders Equity
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 & 1103.37 115 9.59

Mahindra
Hindustan Motors 30.84 0 0

Chart No: 4.13
Chart shows comparative Return on share holders’ equity ratio:
Return on Shareholders Eqity

Return on Shareholders Eqity
17.308
13.526
9.59
0 0
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
Interest to invest this company. But Hindustan Motors and Toyota kirloskar Ltd Return on
equity shareholders is (0) the future market condition shareholders cannot Interest to invest
this companies. It is affect on company growth rate, When the compare to the other
companies.
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’.
Net profit after tax

Return on Total Resources = × 100
Total assets
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:
Return on Total Resources Ratio

Return on Total Resources Ratios
46.969
14.369 18.579 16.294 11.844

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.
INTEREST COVERAGE RATIO:
This ratio shows the relationship between net profit before Interest and tax and Interest.
Net profit (before Interest tax)

Interest coverage Ratio = × 100
Interest
Table No: 4.15
The Table showing Comparative Interest coverage Ratio:
company Net profit before Interest Ratios

Interest and Tax
Tata Motors 3654.39 425.61 858.62
Maruti Udyog Ltd 3130.8 59.6 5253.02

Chart No: 4.15
Chart shows comparative Interest coverage ratio:
Interest coverage
Ratio
Interest coverage Ratio
5253.02
1978.55
858.62 434.29 0
Interpretation:
This chart shows Interest coverage ratio Maruti Udyog Ltd (5253.02) pay the highest Interest
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 Interest because the current
liabilities is low (0) the company more profit earn, when the compare to the other companies.
DIVIDEND PAYOUT RATIO:
This ratio shows the relationship between dividend per equity share and earning per share.
Dividend per equity share

Dividend payout ratio = × 100
Earning per share
Table No: 4.16
The Table showing Comparative Dividend Payout Ratio:
company Dividend per equity Earnings per share Ratio

share
Tata Motors 578.43 50.52 1144.9
Maruti Udyog Ltd 144.5 59.03 244.79
Mahindra & 282.61 44.54 634.51

Mahindra
Hindustan Motors 0 1.91 0
Toyota Kirloskar 0 4960 0

Chart No: 4.16
Chart shows comparative Dividend Payout ratio:
Dividend payout ratio

Dividend payout ratio
1144.9
634.51
244.79
0 0
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 Interest to invest this companies. When the
compare to the other companies.
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’.
Net profit after taxes − preference dividend

Earning per share = × 100
NO. of equity shares
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:
Earning per share

Earning per share
4960
50.52 59.03 44.54 1.91

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
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.
Total debt
Debt equity Ratio =
Equity
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:
Debt equity Ratio

Debt equity Ratio
0.97
0.8
0.59
0.107 0
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
➢ 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
➢ 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
➢ Interest coverage ratio Maruti Udyog Ltd pay the highest Interest and compare to the
other companies Toyota kirloskar (0) cannot pay in any Interest.
➢ 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
Profit and loss account were considered for analyzing various financial 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, Interest coverage ratio
and Debt equity ratio, the expenses reduce the profitability will be increase, Interest coverage
ratio will be decrease the barrowing money and total debt reduce or taken the secured loan is
better, because the Interest 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
CONCLUSION
CONCLUSION
Profit and loss account were considered for analyzing various financial 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.MarutiUdyog.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.
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 account
2008 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 Sales 11281.73 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 Income 12069.38 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 Expenditure 10336.36 8797.52 7375.18 6065XD 4477.19

.12
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
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
Gross Block 7285.3 6146.8 4954.6 5053.1 4566.7
Net Block 3296.5 2659.7 1695.2 1873.7 1830.8
Capital Work in Progress 736.3 250.7 92 42.1 74.9
Investments 5180.7 3409.2 2051.2 1516.6 1677.3
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
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
Off 0 0 0 0 16.3
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

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
Capitalised 0 0 0 0 0
Total Expenditure 15984.7 12462.8 10625.3 9671 8177.1

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
Adjst. below Net Profit 0 -8.8 0 0 0

Statutory Appropriations 0 0 0 0 0
Appropriations 342.4 309.8 237.3 168.9 120.6
Dividend 144.5 130 101.1 57.8 43.3

Equity Dividend % 100 90 70 40 30

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
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
Gross Block 10830.83 8775.8 7971.55 6611.95 5985.4
Net Block 5387.31 3881.26 3570.04 3157.67 2961.71
Investments 4910.27 2477 2015.15 2912.06 3056.77
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
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
off 6.05 10.09 14.12 18.16 22.19
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

2008 2007 2006 2005 2004
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
EXPENDITURE :
Raw Materials 20190.19 19374.93 14263.86 11929.48 8341.39
Power & Fuel Cost 325.19 327.41 258.51 237.81 214.52
Employee Cost 1534.41 1361.2 1141.48 1037.93 879.49
Capitalised 1131.4 577.05 308.85 218.13 144.89
Total Expenditure 25807.46 24581.58 18376.32 15473.01 11303.94

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
Adjst. below Net Profit 0 0 0 0 0

Appropriations 1659.68 1676.39 1337.72 1017.15 568.25
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

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
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
Gross Block 486.02 487.29 479.53 470.21 749.95
Net Block 164.24 185.67 199.25 204.66 318.82
Investments 71.79 70.61 70.25 70.57 1.5

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
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
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

profit and loss account 2008 2007 2006 2005 2004
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
EXPENDITURE :
Raw Materials 489.03 491.27 324.83 698.13 470.02
Power & Fuel Cost 13.65 16.15 12.61 29.62 23.13
Employee Cost 85.41 68.5 50.83 135.31 108.33
Capitalised 0.05 0.02 0.02 0.69 0.11
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
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
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
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
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
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
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

2008 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
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 Wheelers PDF

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A COMPARATIVE STUDY ON FINANCIAL PERFORMANCE OF SELECT AUTOMOBILE INDUSTRIES IN INDIA Four Wheelers PDF

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A REPORT

“A COMPARATIVE STUDY ON FINANCIAL PERFORMANCE OF SELECT

A REPORT SUBMITTED IN THE PARTIAL FULFILLMENT OF

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

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

ii. Wide distribution of corporate ownership, and

iii. Separation of ownership and management.

i. Financial planning and successful promotion of an enterprise:

iii. Proper use and allocation of funds:

iv. Taking sound financial decisions:

v. Improving the profitability through financial controls:

vii. Promoting and mobilizing individual and corporate savings.

Statement of Retained Earnings:

Funds Flow Statement:

Limitations of Financial Statements

• Comparative financial statements

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

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

• Common size statements

a. Common size Income Statement

b. Common size Balance sheet

• Funds flow analysis

• Break-even and cost-volume profit analysis

• Value added analysis

“A COMPARATIVE STUDY OF FINANCIAL

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

1) To study the growth of Automobile industry

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

• Survey method is proposed to use for studying the samples.

Expectation of the study

Proper management of Automobile Industry is very essential for ensuring growth

The following can be stated as the need for the study

1) To get more knowledge of the study.

Type Public BSE: 500570 (NYSE: TTM)

Maruti Udyog Ltd – Profile

Business Interests of Mahindra Group

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

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

• Standardize information from financial statements across multiple financial years to

• What return is the company making on its capital investment?

• What are its profit margins?

• How quickly are debts paid?

• 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?

Founder B.M. Birla

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

1942 • Incorporation at Port Okha in Gujarat as a small assembly plant for

1948 • Shifted its activities to Uttarpara in West Bengal (close to Howrah)

1971 • The company further diversified its activities by setting up an

1985 • The company commenced a Power Products Division at Hosur

1986 • Commencement of the manufacture of Heavy Commercial

1987 • Commenced production of petrol engines and transmissions at

1996 • The company modernized, upgraded and expanded its three

• Began the production of the Road Trusted Vehicle.

• Commenced the Mitsubishi Lancer Car project.

2001 • Earthmoving Equipment Division plant was sold off to Caterpillar

2002 • Launched Mitsubishi Pajero, collaboration with Mitsubishi Motors

2004 • Components Business (PUP-Pithampur and PPD - Hosur)