INTRODUCTION TO INDUSTRY

An industry is the manufacturing of a good or service within a category. Although industry is a broad term for any kind of economic production, in economics and urban planning, industry is a synonym for the secondary sector, which is a type of economic activity involved in the manufacturing of raw materials into goods and products. Industry means any systematic activity carried on by co-operation between an employer and his workmen for the production, supply or distribution of goods or services with a view to satisfy human wants or wishes (not being wants or wishes which are merely spiritual or religious in nature), whether or not any capital has been invested for the purpose of carrying on such activity; or such activity is carried on with a motive to make any gain or profit.

SCOPE OF THE STUDY

There are four key industrial economic sectors: the primary sector, the secondary sector, the tertiary sector, the quaternary sector, and the quinary sector. The economy is also broadly separated into public sector and private sector, with industry generally categorized as private. Industries are also any business or manufacturing. Primary sector: These industries are involved in the extraction or production of raw materials such as mining, farming, fishing, forestry, coal mining, oil drilling, gold mining etc.

Secondary sector: The secondary sector of the economy includes those economic sectors that create a finished, usable product. These industries are involved in the processing of raw materials such as refining, construction, and manufacturing. This sector generally takes the output of the primary sector and manufactures finished goods for export, or sale to domestic consumers. Tertiary sector: These are the service industries, e.g. Transport, dentists, doctors, and so on. The capital required for a manufacturing business (secondary sector) is usually prohibitively large. Quaternary sector: A relatively new type of knowledge industry focusing on technological research, design and development such as computer programming, and biochemistry. It focuses on the latest technology. Examples of Quaternary Industries are designing new computers/writing computer software, Researching new medicines and medical equipment. Quinary sector: The sector comprises of health, education, culture, research, police, fire service, and other government industries not intended to make a profit. The quinary sector also includes domestic activities such as those performed by stay-at-home parents or homemakers. These activities are not measured by monetary amounts but make a considerable contribution to the economy.

INDUSTRY LIFECYCLE
The stages of evolution through which an industry progresses as it moves from conception to stabilization and stagnation represent an industry lifecycle. An industry has a beginning, with technological innovation; a period of rapid growth;

maturity and consolidation; and finally decline and possibly death. The stages of industry lifecycle include fragmentation, shake-out, maturity and decline. Developmental Stage: The first stage of the industry life cycle is developmental or formative stage. This is the stage when the new industry develops the business. At this stage, the new industry normally arises when an entrepreneur works out how to bring the new products or services into the market. The growth prospects are usually high. Competition is likely to enhance during the development of this stage as other entrepreneurs become acquainted with the market potential. High risks can be seen in this phase given that there is insecurity as to whether or not consumers will generally acknowledge the product, and which firms will continue to exist. Shake-out or growth stage: Shake-out is the second stage at which a new industry emerges. Consumer recognition extends the market as the leaders develop the product more. The risk in this stage reduces because of increased consumer acceptance and customer loyalty starts to come about. Competitors start to realize business opportunities in the emerging industry. Maturity: Maturity is the third stage in the industry lifecycle. This is by and large the most extended stage in the life cycle and can last for a good number of years. The competition in the industry is rather aggressive because there are many competitors and product substitutes. The growth rate slows down and becomes stable at a level that is sustainable over a long period of time, as a result of competition and shrinking profit margins. Some companies may shift some of the production overseas in order to gain competitive advantage.
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Decline: Decline is the final stage of the industry lifecycle during which a war of slow destruction between businesses may develop and those with heavy bureaucracies may fail. In addition, the demand in the market may be fully satisfied or suppliers may be running out. Some companies may leave the industry if there is no demand for the products or services they provide, or they may develop new products or services that meet the demand in the market. In such cases, this will create a new industry.

AUTOMOBILE INDUSTRY
The automobile industry in India is the ninth largest in the world with an annual production of over 2.3 million units in 2008. In 2009, India emerged as Asia's fourth largest exporter of automobiles, behind Japan, South Korea and Thailand. Following economic liberalization in India in 1991, the Indian automotive industry has demonstrated sustained growth as a result of increased competitiveness and relaxed restrictions. Several Indian automobile manufacturers such as Tata Motors, Maruti Suzuki and Mahindra and Mahindra, expanded their domestic and international operations. Since the first car rolled out on the streets of Mumbai (then Bombay) in 1898, the Automobile Industry of India has come a long way. During its early stages the auto industry was overlooked by the then Government and the policies were also not favorable. The liberalization policy and various tax relief by the Govt. of India in recent years has made remarkable impacts on Indian Automobile Industry. Indian auto industry, which is currently growing at the pace of around 18 % per annum, has become a hot destination for global auto players like Volvo, General Motors and Ford.

A well developed transportation system plays a key role in the development of an economy, and India is no exception to it. With the growth of transportation system the Automotive Industry of India is also growing at rapid speed, occupying an important place on the canvas of Indian economy. The face of the Indian automobile market has changed tremendously since the turn of the millennium and will change even further since Nano.
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Today Indian automotive industry is fully capable of producing various kinds of vehicles and can be divided into 03 broad categories: Cars, two-wheelers and heavy vehicles.

Segment Know-how
Among the two-wheeler segment, motorcycles have major share in the market. Hero Honda contributes 50% motorcycles to the market. In it Honda holds 46% share in scooter and TVS makes 82% of the mopeds in the country. 40% of the three-wheelers are used as goods transport purpose. Piaggio holds 40% of the market share. Among the passenger transport, Bajaj is the leader by making 68% of the three-wheelers. Cars dominate the passenger vehicle market by 79%. Maruti Suzuki has 52% share in passenger cars and is a complete monopoly in multi purpose vehicles. In utility vehicles Mahindra holds 42% share. In commercial vehicle, Tata Motors dominates the market with more than 60% share. Tata Motors is also the world's fifth largest medium & heavy commercial vehicle manufacturer.

INDIAN AUTOMOBILE HISTORY

During the 1920s, cars exhibited design refinements such as balloon tires, pressed-steel wheels, and four-wheel brakes. An embryonic automotive industry emerged in India in the 1940s. Following the independence, in 1953, the Government of India and the private sector launched efforts to create an automotive component manufacturing industry to supply to the automobile industry. However, the growth was relatively slow in the 1950s and 1960s due to nationalisation and the license raj which hampered the Indian private sector. After 1970, the automotive industry started to grow, but the growth was mainly driven by tractors, commercial vehicles and scooters. Cars were still a major luxury. Japanese manufacturers entered the Indian market ultimately leading to the establishment of Maruti Udyog. A number of foreign firms initiated joint ventures with Indian companies. In the 1980s, a number of Japanese manufacturers launched joint-ventures for building motorcycles and light commercial-vehicles. It was at this time that the Indian government chose Suzuki for its joint-venture to manufacture small cars. Following the economic liberalisation in 1991 and the gradual weakening of the license raj, a number of Indian and multi-national car companies launched operations. Since then, automotive component and automobile manufacturing growth has accelerated to meet domestic and export demands The automobile industry has changed the way people live and work. The earliest of modern cars was manufactured in the year 1895. Shortly the first appearance of the car followed in
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India. As the century turned, three cars were imported in Mumbai (India). The dawn of automobile actually goes back to 4000 years when the first wheel was used for transportation in India. In the beginning of 15th century 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 1600s small steam-powered engine models was developed. The actual horseless carriage was introduced in the year 1893. One of the highest-rated early luxury automobiles was the 1909 Rolls-Royce Silver Ghost that featured a quiet 6-cylinder engine, leather interior, folding windscreens and hood, and an aluminum body. It was usually driven by chauffeurs and emphasis was on comfort and style rather than speed.

The year 1957 brought powerful high-performance cars such as Mercedes-Benz 300SL. It was built on compact and stylized lines, and was capable of 230 kmh (144 mph). This was the Indian automobile history, and today modern cars are generally light, aerodynamically shaped, and compact.

GROWTH
In India there are 100 people per vehicle, while this figure is 82 in China. It is expected that Indian automobile industry will achieve mass motorization status by 2014. The Indian automobile industry is often described as the sunrise Industry. The Automobile Industry is one of the fastest growing sectors in India. The increase in the demand for cars, and other vehicles, powered by the increase in the income is the primary growth driver of the automobile industry in India. The introduction of tailor made finance schemes, easy repayment schemes has also helped the growth of the automobile sector. India, in auto sector, is turning to be a sourcing base for the global auto majors. The passenger car and the motorcycle segment are set to grow by 8-9 per cent in coming couple of years. The industry is striving to maintain the growth momentum picked up in 2002-03.

India has become one of the international players in the automobile market In the year 2006-07, the Indian Automobile Industry produced 2.06 million four wheelers and 9 million two and three wheelers The four wheelers include passenger cars, multi-utility vehicles, sports utility vehicles, light, medium and heavy commercial vehicles, etc The three wheelers include mopeds, motor-cycles, scooters, and three wheelers
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 India ranks 2nd in the global two-wheeler market India is the 4th biggest commercial vehicle market in the world India ranks 11th in the international passenger car market India ranks 5th pertaining to the number of bus and truck sold in the world It is expected that the Automobile Industry in India would be the 7th largest automobile market within the year 2016 Sales incentives, introduction of new models as well as variants coupled with easy availability of low cost finance with comfortable repayment options continued to drive demand and sales of automobiles. As the players continue to introduce new models and variants, the competition may intensify further. It is not only meeting the growing domestic demands, but also gradually increasing its penetration in the international markets. It has been continuously restructuring itself and absorbing newer technologies in order to align itself to the global developments and realize its potentialities. Among the car companies that are investing in India are US automakers General Motors and Ford, Germany's BMW and DaimlerChrysler AG, France's Renault, Japan's Suzuki, Toyota and Honda, and South Korea's Hyundai. Automobile industry in India also received a boost from stringent government auto emission regulations over the past few years. This ensured that vehicles produced in India conformed to the standards of the developed world. With the growing automotive market, customers are always looking for newer designs. Automobile designing has, therefore, become as important as fuel efficiency or the safety and ergonomics of a vehicle. The setting up of indigenous

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auto designing capabilities through a national automobile design institute is, therefore, essential for the growth of Indian auto Industry There is also a boom in auto ancillary companies. India is an attractive outsourcing destination for global auto companies because of its strong engineering skills and low costs. Sourcing parts from India is 10-20% cheaper for US auto makers and about 50% cheaper for their European counterparts. The auto component sector has also posted significant growth of 20 per cent in 2003-04, to achieve a sales turnover of Rs.30, 640 crore. There is a potential for higher growth due to outsourcing activities by global automobiles giants. Today, this sector has emerged as another sunrise sector.

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CONTRIBUTION
In India, automotive is one of the largest industries showing impressive growth over the years and has been significantly making increasing contribution to overall industrial development in the country. It plays a pivotal role in country's rapid economic and industrial development. It caters to the requirement of equipment for basic industries like steel, non-ferrous metals, fertilizers, refineries, petrochemicals, shipping, textiles, plastics, glass, rubber, capital equipments, logistics, paper, cement, sugar, etc. It facilitates the improvement in various infrastructure facilities like power, rail and road transport. On the canvas of the Indian economy, auto industry occupies a prominent place. The automotive industry has a strong multiplier effect and is capable of being the driver of economic growth. A sound transportation system plays a pivotal role in the country's rapid economic and industrial development. The well-developed Indian automotive industry ably fulfils this catalytic role by producing a wide variety of vehicles: passenger cars, light, medium and heavy commercial vehicles, multi-utility vehicles such as jeeps, scooters, motorcycles, mopeds, three wheelers, tractors etc. Indian automobile industry; manufacturing cars, buses, three wheelers, two wheelers, commercial vehicles, heavy vehicles, provides employment to a large number of workforce. The abolition of license raj in 1991 opened the doors for international automobile manufacturers. A number of leading global automotive companies entered into joint ventures with domestic manufacturers of India and thus started the large-scale production of automobiles in India. The automobile sector is one of the core industries of the Indian economy, whose prospect is reflective of the economic resilience of the country.
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The automotive industry comprising of the automobile and the auto component sectors has made rapid strides since delicensing and opening up of the sector to FDI in 1991. The Auto Component industry is today considered as the sunrise industry with huge growth prospects. This industry is also expected to drive the growth of the engineering sector in view of its strong downstream and upstream linkages with many other segments of the engineering sector like raw materials, capital goods, intermediate products etc. Government has also liberalized the norms for import of technology and that appears to have benefited the automobile sector. The industry had an investment of about Rs. 50,000 crore in 2002-03 which has gone upto Rs. 80,000 crore by the year 2007. The contribution of the automotive industry to GDP has risen from 2.77% in 1992-93 to 5% in 2006-07. The industry is also making a contribution of 17% to the kitty of indirect taxes of the Government. The Indian automotive industry has already attained a turnover of Rs. 1, 65,000 crore (34 billion USD) and has provided direct and indirect employment to 1.31 crore people in the country. Endowed with several advantages like low cost and high skill manpower; globally competitive auto-ancillary industry; established testing and R & D centers; production of steel at lowest cost; etc., the industry provide immense investment opportunities. This has instilled confidence in auto manufacturers to face international competition as well as improve quality standards of vehicles with safety norms in the wake of rapidly increasing traffic.

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PROFILE OF MARUTI SUZUKI

Maruti Suzuki India Limited (MSIL, formerly Maruti Udyog Limited), a subsidiary of Suzuki Motor Corporation of Japan, is India's largest passenger car company, accounting for over 50 per cent of the domestic car market. More than half the numbers of cars sold in India wear a Maruti Suzuki badge. The company offers full range of cars- from entry level Maruti 800 & Alto to stylish hatchback Ritz, A star, Swift, Wagon R, Estillo and sedans DZire, SX4 and Sports Utility vehicle Grand Vitara. Since inception, it has produced and sold over 7.5 million vehicles in India and exported over 500,000 units to Europe and other countries. The turnover for the fiscal 2008-09 stood at Rs. 203,583 Million & Profit after Tax at Rs. 12,187 Million. The company was born as a government company, with Suzuki as a minor partner, to make a people's car for middle class India. Over the years, the product range has widened, ownership has changed hands and the customer has evolved. What remains unchanged, then and now, is its mission to motorize India. The parent company, Suzuki Motor Corporation, has been a global leader in mini and compact cars for three decades. Suzuki's technical superiority lies in its ability to pack power and performance into a compact, lightweight engine that is clean and fuel efficient.
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The company takes great pride in sharing that customers have rated Maruti Suzuki first once again in Customer Satisfaction Survey conducted by independent body, J.D.Power Asia Pacific. It is 10th time in a row.

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FINANCIAL STATEMENTS Balance Sheet

Balance Sheet of Maruti Suzuki India Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deferred Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs)

------------------- in Rs. Cr. ------------------Mar '07 12 mths 144.50 144.50 0.00 0.00 6,709.40 0.00 6,853.90 63.50 567.30 630.80 7,484.70 Mar '07 12 mths 6,146.80 3,487.10 2,659.70 238.90 3,409.20 713.20 747.40 114.80 1,575.40 1,072.60 1,308.00 3,956.00 0.00 2,288.60 490.50 2,779.10 1,176.90 0.00 7,484.70 2,094.60 237.23 Mar '08 12 mths 144.50 144.50 0.00 0.00 8,270.90 0.00 8,415.40 0.10 900.10 900.20 9,315.60 Mar '08 12 mths 7,285.30 3,988.80 3,296.50 736.30 5,180.70 1,038.00 655.50 324.00 2,017.50 1,173.00 0.00 3,190.50 0.00 2,718.90 369.50 3,088.40 102.10 0.00 9,315.60 2,734.20 291.28 Mar '09 12 mths 144.50 144.50 0.00 0.00 9,200.40 0.00 9,344.90 0.10 698.80 698.90 10,043.80 Mar '09 12 mths 8,720.60 4,649.80 4,070.80 861.30 3,173.30 902.30 918.90 239.00 2,060.20 1,809.80 1,700.00 5,570.00 0.00 3,250.90 380.70 3,631.60 1,938.40 0.00 10,043.80 1,901.70 323.45

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Profit and loss account (income statement)

Profit & Loss account of Maruti Suzuki India Mar '07 Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses 17,358.40 2,552.00 14,806.40 338.10 -200.70 14,943.80 10,863.00 97.40 288.40 392.40 ------------------- in Rs. Cr. ------------------Mar '08 21,200.40 3,133.60 18,066.80 494.00 336.30 18,897.10 13,958.30 147.30 356.20 523.30 Mar '09 23,381.50 2,652.10 20,729.40 491.70 -356.60 20,864.50 15,983.20 193.60 471.10 716.10 17

Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalized Total Expenses Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualized) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)

483.26 239.44 -14.30 12,349.60 Mar '07 12 mths 2,256.10 2,594.20 37.60 2,556.60 271.40 0.00 2,285.20 33.40 2,318.60 705.30 1,562.00 1,486.60 0.00 130.00 21.90 2,889.10 54.07 90.00 237.23

521.48 287.62 -19.80 15,774.40 Mar '08 12 mths 2,628.70 3,122.70 59.60 3,063.10 568.20 0.00 2,494.90 76.60 2,571.50 763.30 1,730.80 1,816.10 0.00 144.50 24.80 2,889.10 59.91 100.00 291.28

751.06 303.44 -22.30 18,396.20 Mar '09 12 mths 1,976.60 2,468.30 51.00 2,417.30 706.50 0.00 1,710.80 37.90 1,748.70 457.10 1,218.70 2,413.00 0.00 101.10 17.20 2,889.10 42.18 70.00 323.45

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PROFILE OF TATA MOTORS

Tata Motors Limited is India's largest automobile company, with consolidated revenues of Rs.70, 938.85 crores (USD 14 billion) in 2008-09. It is the leader in commercial vehicles in each segment, and among the top three in passenger vehicles with winning products in the compact, midsize car and utility vehicle segments. The company is the world's fourth largest truck manufacturer, and the world's second largest bus manufacturer. The company's 23,000 employees are guided by the vision to be "best in the manner in which we operate best in the products we deliver and best in our value system and ethics." Established in 1945, Tata Motors' presence indeed cuts across the length and breadth of India. The company's manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand) and Dharwad (Karnataka).

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Tata Motors, the first company from India's engineering sector to be listed in the New York Stock Exchange (September 2004), has also emerged as an international automobile company. Through subsidiaries and associate companies, Tata Motors has operations in the UK, South Korea, Thailand and Spain. Among them is Jaguar Land Rover, a business comprising the two iconic British brands that was acquired in 2008. It was Tata Motors, which developed the first indigenously developed Light Commercial Vehicle, Indias first Sports Utility Vehicle and, in 1998, the Tata Indica, India's first fully indigenous passenger car. Within two years of launch, Tata Indica became Indias largest selling car in its segment. In 2005, Tata Motors created a new segment by launching the Tata Ace, India's first indigenously developed mini-truck. In January 2008, Tata Motors unveiled its People's Car, the Tata Nano, which India and the world have been looking forward to. The Tata Nano has been subsequently launched, as planned, in India in March 2009 and has won the prestigious Indian Car of the Year (ICOTY) award. In May 2009, Tata Motors introduced ushered in a new era in the Indian automobile industry, in keeping with its pioneering tradition, by unveiling its new range of world standard trucks called Prima. In June 2009, the exciting new range of premium luxury vehicles from Jaguar and Land Rover were introduced for the Indian market.

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FINANCIAL STATEMENTS Balance Sheet

Balance Sheet of Tata Motors

------------------- in Rs. Cr. ------------------Mar '07 12 mths Mar '08 12 mths 385.54 385.54 0.00 0.00 7,428.45 25.51 7,839.50 2,461.99 3,818.53 6,280.52 14,120.02 Mar '08 12 mths 10,830.83 5,443.52 5,387.31 5,064.96 4,910.27 2,421.83 Mar '09 12 mths 514.05 514.05 0.00 0.00 11,855.15 25.07 12,394.27 5,251.65 7,913.91 13,165.56 25,559.83 Mar '09 12 mths 13,905.17 6,259.90 7,645.27 6,954.04 12,968.13 2,229.81 21

Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities

385.41 385.41 0.00 0.00 6,458.39 25.95 6,869.75 2,022.04 1,987.10 4,009.14 10,878.89 Mar '07 12 mths 8,775.80 4,894.54 3,881.26 2,513.32 2,477.00 2,500.95

Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories

Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deferred Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs)

782.18 535.78 3,818.91 6,208.53 290.98 10,318.42 0.00 6,956.88 1,364.32 8,321.20 1,997.22 10.09 10,878.89 5,196.07 177.59

1,130.73 750.14 4,302.70 4,831.36 1,647.17 10,781.23 0.00 10,040.37 1,989.43 12,029.80 -1,248.57 6.05 14,120.02 5,590.83 202.70

1,555.20 638.17 4,423.18 5,909.75 503.65 10,836.58 0.00 10,968.95 1,877.26 12,846.21 -2,009.63 2.02 25,559.83 5,433.07 240.64

PROFIT AND LOSS ACCOUNT (INCOME STATEMENT)

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PARTICULARS Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalized Total Expenses Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualized) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)

MAR 07 31,089.69 4,425.44 26,664.25 1,114.38 349.68 28,128.31 19,879.56 327.41 1,367.83 872.95 1,505.23 1,051.49 -577.05 24,427.42 Mar '07 12 mths 2,586.51 3,700.89 455.75 3,245.14 586.29 85.02 2,573.83 -0.07 2,573.76 660.37 1,913.46 4,547.86 0.00 578.07 98.25 3,853.74 49.65 150.00 177.59

MAR 08 33,123.54 4,355.63 28,767.91 734.17 -40.48 29,461.60 20,891.33 325.19 1,544.57 904.95 2,197.49 964.78 -1,131.40 25,696.91 Mar '08 12 mths 3,030.52 3,764.69 471.56 3,293.13 652.31 64.35 2,576.47 0.00 2,576.47 547.55 2,028.92 4,805.58 0.00 578.43 81.25 3,855.04 52.63 150.00 202.70

MAR 09 28,538.20 2,877.53 25,660.67 921.29 -238.04 26,343.92 18,801.37 304.94 1,551.39 866.65 1,652.31 1,438.89 -916.02 23,699.53 Mar '09 12 mths 1,723.10 2,644.39 704.92 1,939.47 874.54 51.17 1,013.76 15.29 1,029.05 12.50 1,001.26 4,898.16 0.00 311.61 34.09 5,140.08 19.48 125.00 240.64

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COMPARISION OF FINANCIAL ACCOUNT WITH THE HELP OF RATIOS:

LIQUIDITY RATIOS: 24

It measures the ability of the firm to meet its short-term obligations that is capacity of the firm to pay its current liabilities as and when they fall due. Thus these ratios reflect the short-term financial solvency of a firm. 1. Current ratio Current ratio is the relationship between current assets and current liabilities. It is a measure of general liquidity i.e. analysis of short-term financial position. A current ratio of 2:1 is the standard ratio of liquidity for a firm. The higher the current ratio the greater is the margin of safety. The larger the amount of current assets in relation to current liabilities, the more is the firms ability to meet its current obligations. Current Ratio = Current Asset Current Liabilities

Maruti Suzuki Total Current

Mar

Mar

Mar

TATA Motors Total Current

Mar '07 Mar '08 Mar '09 3818.9 4302.7 4423.18 1

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'07 '08 '09 1575. 2017. 2060. 4 5 2

Assets Current Liabilities Current Ratio 2288. 6 0.69 2718. 9 0.74 3250. 9 0.63

Assets Current Liabilitie s Current Ratio 6956.8 8 0.55 10040.3 7 10968.21 0.43 0.40

Interpretation:
The short-term liquidity position of the Maruti and Tata is not sound as the ratio in all the years is below the standard of 2:1. The current ratio of maruti Suzuki is higher than tata motors.

2. Quick Ratio

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Quick ratio is the relationship between quick assets and current liabilities. It measures the firms capacity to pay off current obligations immediately and is a more rigorous test of liquidity. A high quick ratio indicates that the firm is liquid and has the ability to meet its current obligations in time and on the other hand a low quick ratio represents that the firms liquidity position is not good. A standard of 1:1 is considered satisfactory. Quick Ratio = Quick Assets Current liabilities (Quick assets = current assets inventory)

Mar Maruti Suzuki Total Current Assets Inventories Current Liabilities Quick Assets

Mar TATA Motors Mar '07 Mar '08 Total Current Assets Inventories Current Liabilities Quick Assets 3818.91 2,500.9 4302.7 Mar '09 4423.18 2,229.81

'07 Mar '08 '09 1575. 2060. 4 713.2 2288. 6 0.38 2017.5 1,038.0 0 2718.9 0.36 2 902.3 3250. 9 0.36

5 2,421.83 10040.3 6956.88 0.19

7 10968.21 0.19 0.20

Interpretation:
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The quick ratio in of both the companies does not reveal good liquidity position as it is below the standard of 1:1. This means that the liquid assets are not sufficient to provide a cover to current liabilities. The quick ratio of maruti Suzuki is hifhe as compared to tata motors.

PROFITABILITY RATIOS

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The primary objective of a business is to earn profits. Profitability ratios are a test of efficiency and a measurement of control.

1. Gross Profit Ratio

This ratio indicates the extent to which selling prices of goods per unit may decline without resulting in losses on operations of a firm. It measures profitability of the firm through the relationship between gross profit and sales. It reflects the efficiency with which the firm produces its products. The gross profit ratio should be adequate to cover the operating expenses of the firm. Higher the ratio better is the profitability. Gross profit margin or ratio = Gross profit X 100 Net sales
Maruti suzuki Gross Profit Net Sales Gross profit ratio Mar Mar Mar TATA Motors Gross Profit Net Sales Gross profit ratio Mar '07 3473.89 26664.2 5 13.03 Mar '08 3511.15 28767.9 Mar '09 2627.24

'07 '08 '09 2588.8 3130.8 2 14806. 4 17.48 4 18066. 8 17.33 2433.4 20729. 4 11.74

1 25660.67 12.21 10.24

Interpretation:
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The gross profit ratio has declined for both the companies in the year 2009 compared to the previous years which shows that the profitability of the firms has declined. The gross profit declined but as compared to tata motors, maruti Suzuki has higher gross profit rate.

2. Net Profit Ratio

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It measures the relationship between net profit and sales of a firm. It indicates managements efficiency in manufacturing, administrating, and selling the products. It also indicates the firms capacity to face adverse economic conditions such as price competition, low demand etc. Higher the ratio better is the profitability. Net profit margin or ratio = Earning after tax X 100 Net Sales

Maruti Suzuki Net Profit Net Sales Net profit ratio

Mar

Mar

Mar TATA Motors Net Profit Net Sales Net profit ratio Mar '07 1913.46 26664.2 5 7.18 Mar '08 2028.92 28767.9 Mar '09 1001.26

'07 '08 '09 1561.9 1739.7 1218.7 8 14806. 4 10.55 3 18066. 8 9.63 4 20729. 4 5.88

1 25660.67 7.05 3.90

Interpretation: The ratios show a steep decline over the 3 years which shows the weak profitability position of both the companies. As gross profit net profit of maruti Suzuki is also high compared to tata motors.

3. Operating Profit Ratio

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The operating profit ratio establishes the relationship between the operating profit and net sales of the firm and is used to measure the operating efficiency of the firm. Higher the ratio better is the operating efficiency. Operating profit ratio = Operating profit X 100 Net sales
Maruti Suzuki Operating Profit Net Sales Operating profit ratio Mar '07 2256.1 14806. 4 15.24 Mar '08 2628.7 18066. 8 14.55 Mar '09 1976.6 20729. 4 9.54 TATA Motors Operating Profit Net Sales Operating profit ratio Mar '07 3228.7 26664.2 5 12.11 Mar '08 3028.02 28767.9 Mar '09 1701.27

1 25660.67 10.53 6.63

Interpretation: The ratio has fallen down considerably in case of both the firms which show that the operating efficiency of the firm is not satisfactory. Whereas compared to tata motors maruti Suzuki has high operating profit.

4. Networth Ratio or Return on investment Ratio(ROI):

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ROI is the relationship between net profits and proprietors funds. It is used to measure the overall efficiency of a firm. It indicates the extent to which the earnings of a firm can be maximized. As the ratio reveals how well the resources of a firm are being used, higher the ratio, better are the results. ROI= Net Profit after tax X 100 Shareholder funds
Maruti Suzuki Mar '07 Mar '08 Mar '09 Net PAT 1562 1730.8 1218.7 Shareholders funds Networth ratio 6853.9 22.78994 4 8415.4 20.56705 6 9344.9 13.04133 8 TATA Motors Net PAT Shareholder s funds Networth ratio Mar '07 Mar '08 Mar '09 1913.46 2028.92 1001.26 6869.75 27.85341 5 7839.5 25.88073 2 12394.27 8.0784104

Interpretation:

The efficiency of the firm has deteriorated considerably in the year 2009 as the ROI has come down from the year 2007. Due to recession return on investment low down maruti suzukis return was high as compared to tata motors.

5. Return on Capital Employed Ratio(ROCE):

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ROCE establishes the relationship between profits and capital employed. It is the primary ratio to measure the overall profitability and efficiency of a business. It represents the long-term funds supplied by creditors and owners of the firm. A higher percentage of ROCE will satisfy the owners that their money is profitably used. Return on capital employed = Profits before Tax X 100 Capital employed
Mar Maruti Suzuki Profit Before Tax Networth ROCE Mar Mar TATA Motors Profit Before Tax Networth ROCE Mar Mar

'07 '08 '09 2285. 2494. 1710. 2 6853. 9 33.34 9 8415. 4 29.65 8 9344. 9 18.31

'07 '08 Mar '09 2573.8 2576.4 3 6869.7 5 37.47 7 1013.76

7839.5 12394.27 32.87 8.18

Interpretation: A very low percentage in the year 2009 as compared to 2007 indicates that there is a decline in the profitability position of the both the firms. In 2007 and 2008 tata motors ROCE was high but in 2009it wasow as compared to maruti Suzuki.

LEVERAGE or CAPITAL STRUCTURE RATIOS

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Financing firms assets is a very crucial problem in every business and as general rule there should be a proper mix of debt and equity capital in financing the firms assets. Leverage ratios are calculated to test the long term financial position of a firm. These ratios are based on the relationship between borrowed funds and owners capital.

1. Debt-Equity Ratio:
Debt-equity ratio measures the relative claims of outsiders and the owners against the firms assets. It indicates the extent to which debt financing has been used in a business. The purpose is to get an idea of the cushion available to outsiders on the liquidation of the firm. A ratio of 1:1 is considered to be satisfactory. A low ratio is considered as favorable. Debt equity ratio = Outsider Funds (Total Debts) Shareholder Funds or Equity

Mar Maruti Suzuki Total Debt Networth Debt to Equity Ratio '07 630.8 6853. 9 0.09

Mar '08 900.2 8415. 4 0.11

Mar '09 698.9 9344. 9 0.07 TATA Motors Total Debt Networth Debt to Equity Ratio

Mar

Mar

'07 '08 Mar '09 4009.1 6280.5 4 6869.7 5 0.58 2 13165.56 7839.5 12394.27 0.80 1.06

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Interpretation:
The debt-equity ratio in all the years is favourable as it is below the standard of 1:1.This shows that the long term solvency position of the firm is satisfactory. Debt of tata motors is higher than maruti Suzuki.

2. Fixed Assets to Networth Ratio:

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The ratio of fixed assets to Networth indicates the extent to which shareholders funds are sunk into the fixed assets. If the ratio is more than 100%, it implies that owners funds are not sufficient to finance fixed assets. 60 to 65 per cent is considered to be satisfactory ratio. Fixed assets to net worth ratio = Fixed Assets X 100 Net Worth
Mar Mar Mar TATA Motors Net Block/ fixed asset Networth Fixed assets to net worth 38.81 39.17 43.56 ratio 56.50 68.72 61.68 Mar Mar

Maruti Suzuki '07 '08 '09 2659. 3296. 4070. Fixed assets Networth Fixed assets to net worth ratio 7 6853. 9 5 8415. 4 8 9344. 9

'07 '08 Mar '09 3881.2 5387.3 6 6869.7 5 1 7645.27

7839.5 12394.27

Interpretations:
In 2009, the ratio has increased which shows that there are sufficient funds for financing fixed assets as well as working capital for Maruti. Similarly in case of Tata, the ratio has been below 100% which indicates there are sufficient funds to finance the fixed assets.

3. Proprietary Ratio:
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This ratio establishes the relationship between shareholders funds to total assets and is used to determine the long-term solvency of a firm. Higher the ratio or the share of the shareholders in the capital of the company better is the long-term solvency position of the company. Proprietary ratio = Networth Total assets
Maruti Suzuki Networth Total Assets Proprietary ratio Mar Mar Mar TATA Motors Networth Total Assets Proprietary ratio Mar '07 6869.75 10878.8 9 63.15 Mar '08 Mar '09

'07 '08 '09 6853. 8415. 9 7484. 7 91.57 4 9315. 6 90.34 9344.9 10043. 8 93.04

7839.5 12394.27 14120.0 2 25559.83 55.52 48.49

Interpretations:
In case of Maruti the shareholders funds being 90% of total assets in 2008 has gone up to 93% of total assets in 2009, it proves that the long-term solvency position of the firm is satisfactory. Whereas in case of Tata, the ratio has fallen down which indicates that the long-term solvency position of the firm is deteriorating.

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RESULTS / FINDINGS

The Indian automotive industry has provided direct employment and contributed to the GDP. The short-term solvency position of the companies is not sound and is deteriorating at a constant rate. The long-term position of the companies is quite satisfactory. The firms are making losses in the core activities of the business. So they should try to increase the sales.

The funds of shareholders are employed efficiently. The efforts to maximize earnings seem to be unproductive. The overall efficiency of the companies has deteriorated considerably. The firms are witnessing sharp decline in profitability and are also facing severe problem of non-availability of working capital.

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CONCLUSION
The face of the Indian automobile market has changed tremendously since the turn of the millennium and will change even further since Nano.

De-licensing in 1991 has put the Indian automobile industry on a new growth track, attracting foreign auto giants to set up their production facilities in the country to take advantage of various benefits it offers. The industry has progressively witnessed the formation of global alliances seeking the benefits of scale, market access and technology which is strengthening the evolution of the Industry in our country. IT plays an important role in reducing the cost of developing a vehicle, and India is emerging as a research and development (R&D) hub for the auto industry. Amid the economic crisis, the Indian auto industry managed to stay positive. Even as global auto majors went into reverse gear in 2009, the Indian industry largely bucked the trend, launching new models for the domestic market and registering significant growth in exports. With the Nano, Tata has challenged the global auto industry and created an absolutely new segment with this car. Low cost, design innovation and economies of scale are now becoming the hallmark of the Indian automobile industry.

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SUGGESTIONS

The firms need to improve their short-term financial position. The borrowed debt should be invested properly so as to maximize the earning capacity. The firms have sufficient funds to finance the fixed assets. They can use these funds to finance working capital also so as to improve the short-term financial position.

Instead on depending on the debt financing, the company should focus on internal equities. Like Nano, the firms shall try to introduce such products at lower price ranges which will be a good sign of growing competition. A healthy competition is prevailing in the automobile industry. Maruti and Tata are facing tough competition from others companies like Toyota, Hindustan Motors, and Mahindra etc. The firms should try to make competitive strategies to increase the sales and profits.

Modern-age design tools should be used by automobile manufacturers to develop better products in a shorter timeframe, as well as further reduce overall costs.

The Indian auto component industry which is the supply chain for the automobile vehicle manufactures in India needs to be supported especially the Small and Medium Enterprises, (SME).

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INDUSTRIES IS TAKEN FROM SEARCH ENGINE,
WWW.GOOGLE.COM WWW.YAHOO.COM

BOOKS FINANCIAL MANAGEMENT

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