A cost analysis of

automobile sector
AUTOMOBILE INDUSTRY IN
INDIA
 Automobile industry is one of the most building
blocks of the world’s most influential economies
such as US and Japan.
 Today , the industry is among the most vibrant ,
modern,and growing markets in the world.
 In 2009 India emerged as Asia’s 4th largest
exporter of automobiles.
 Indian automobile industry is ranked 10th globally.
(2nd in two-wheelers,4th in four wheelers).
 The auto industry accounts for about 5.2% of
India's GDP


TATA MOTORS Ltd.
COST ELEMENTS

  2007 2008 2009

raw materials 19,879.56 20,891.33 18,801.37

employee cost 1,367.83 10,554.57 1,551.39

Prime cost 21,247.39 31,445.90 20,352.76

power and fuel 327.41 325.19 304.94

manufacturing  872.95 904.95 866.65
factory cost 22,447.75 32,676.04 21,524.35

selling and adminstration 1505.23 2197.49 1652.31

miscellaneous expense 1051.49 964.78 1438.89

Total expense 25,004.47 35,838.31 24,615.55

PERCENTAGE CHANGE IN COST ELEMENTS

2007-08 2008-09
raw materials 5.08 -10.0

employee cost 671.6 -85.3

Prime cost 47.93 -35.2

-0.67 -6.22
power and fuel
manufacturing 3.6 -4.23

factory cost 45.5 -34.1

selling and administration 45.9 -24.8

miscellaneous expense -8.246 49.14

Total expense 43.3 -31.315

Vertical analysis of cost elements with respect to Total cost(%)

2007 2008 2009

Prime cost 84.9743666 87.744 82.683

factory cost 89.7749482 91.176 87.442

selling and 6.01984365 6.1317 6.7125

administration

miscellaneous expense4.20520811 2.692 5.8455

CONTRIBUTION OF COST ELEMENTS  ON TOTAL COST 
ANALYSIS

 Net sales is highest in 2008 ,which amounts
to 28768 Cr.


 The cost incurred in 2008 is found to be

highest compared to other years, which
amounts to 35838.8cr and Total income is
29214Cr.

INTERPRETATION
 In year 2007-08 Tata motors were marked
with two events.
 unveiling of Tata Nano.
 acquisition of Jaguar and Land Rover.
 The Company recorded its highest ever sale
of 5,85,649 vehicles and grew its turnover
to Rs. 33,094 Crs. to remain as India’s
largest automobile company by revenue.
 RISE IN EMPLOYEE COST IN 2007-08
 Due to companies expansion and growth
plans, employee recruitment and training
was carried out extensively .
 During the year, the Company entered into
a three year wage settlement with its
unions at Jamshedpur and Pune,
Passenger Car Business.

Maruti - Suzuki Ind . ltd
Cost Sheet of Maruti Suzuki of
Ind Ltd
Particulars 2007 2008 2009
Raw Materials 10,863.00 13,958.30 15,983.20
Materials consumed 10,863.00 13,958.30 15,983.20
Power & Fuel Cost 97.4 147.3 193.6
Employee Cost 288.4 356.2 471.1
Other Manufacturing 392.4 523.3 716.1
Expenses
Factory cost 11,641.20 14,985.10 17,364.00
Administrative Expenses 274.5 170.6 150.2

Miscellaneous Expenses 239.44 287.62 303.44

Cost of production 12,155.14 15,443.32 17,817.64
Selling& Distribution 194.46 331.08 578.56
Expenses
Cost of sales 12,349.74 15,774.40 18,396.20
Sales 14806.4 18066.8 20729.4
PROFIT 2165.66 2287.28 2564.16
Comparison of items on cost
sheet
Expenditure as a percentage of total
expenses
Expenditure 2007 %of Cost of 2008 %of Cost of sales2009
sales

Raw Materials 10,863.00 87.96 13,958.30 88.49 15,983.20

Power & Fuel 97.4 0.79 147.3 0.93 193.6

Cost
Employee Cost 288.4 2.34 356.2 2.26 471.1

Other 392.4 3.18 523.3 3.32 716.1

Manufacturing
Expenses
Selling and 483.26 3.91 521.48 3.31 751.06
Admin Expenses

Miscellaneous 239.44 1.94 287.62 1.82 303.44

Expenses
Total 12,349.60 100.00 15,774.40 100.00 18,396.20
Expenses
Cost of Sales for the year
2009
 Material consumed
formed a major
part of cost of
sales(87%)
 Manufacturing
expenses formed
4.83% of cost of
sales
 Selling and
administrartive
expenses fomed
3.92 % and 2.07%
of the cost of sales.

Expenses as % of cost of sales for
the year 2008
Material consumed
formed a major part
of cost of sales
amounting to 87.8%
Manufacturing expenses
contributed 4.32%
towards cost of sales.
Selling expenses and
administrative expenses
contributed 3.6% and
2.10% respectively
towards cost of sales.

 Interpretation
The operating income of the company showed
an increasing trend over the years.
It increased from Rs 11046.30 in 2005 to Rs 20729.40
in the year 2009.
The cost of sales increased from Rs 9476 to Rs 18825.70
from the year 2005 to 2009.
The operating income increased to 21.23% from the year
2005 to 2009.
The net profit increased to 39.3% in the year
2005-06, 22.39% in the year 2006-07, 10.84%
in the year 2007-08 but it decreased to 29.59%
in the year 2008-09




Ashok Leyland
Cost sheet
Particulars 2007 % change 2008 % change 2009

Raw Materials 5,570.18 6.87 5,952.86 -23.49 4,554.36

Materials consumed 5,570.18 6.87 5,952.86 -23.49 4,554.36

Power & Fuel Cost 45.44 -0.35 45.28 -15.15 38.42

Employee Cost 480.7 28.18 616.17 -8.10 566.26

Other Manufacturing Expenses 41.7 37.84 57.48 -12.49 50.3

Factory cost 6,138.02 8.70 6,671.79 -21.92 5,209.34

Administrative Expenses 413.1 -3.23 399.76 -83.76 64.91

Cost of production 6,551.12 7.94 7,071.55 -25.42 5,274.25

Selling& Distribution Expenses 170.7 14.02 194.63 62.65 316.57

Cost of sales 6,721.82 8.10 7,266.18 -23.06 5,590.82

Sales 7,358.88 8.34 7,972.52 -24.09 6,051.64

Profit 637.06 10.87 706.34 -34.76 460.82

Expenses as % of Cost of Sales
Particulars 2007 As % of 2008 As % of 2009 As % of
cost of cost of cost of
sales sales sales

Raw Materials 5 , 570 . 18 82 . 87 5 , 952 . 86 81 . 93 4 , 554 . 36 81 . 46

Power & Fuel Cost 45 . 44 0 . 68 45 . 28 0 . 62 38 . 42 0 . 69

Employee Cost 480 . 7 7 . 15 616 . 17 8 . 48 566 . 26 10 . 13

Other Manufacturing 41 . 7 0 . 62 57 . 48 0 . 79 50 . 3 0 . 90
Expenses
Administrative Expenses 413 . 1 6 . 15 399 . 76 5 . 50 64 . 91 1 . 16

Selling & Distribution 170 . 7 2 . 54 194 . 63 2 . 68 316 . 57 5 . 66

Expenses
Cost of sales 6 , 721 . 82 100  7 , 266 . 18 100 5 , 590 . 82 100


HINDUSTHAN MOTORS


 COST SHEET
PARTICULERS AMOUNT ’ 07 AMOUNT ’ 08 AMOUNT ’ 09

SALES 666 . 51 704 . 66 626 . 55

RAW MATERIALS 504.08 502.93 469.96
PRIME COST 504 . 08 502 . 93 469 . 96
+ FACTORY O/H      
POWER & FUEL 16.15 13.65 12.92
EMPLOYEE COST 69.14 86.11 75.97
MANUFACTURING EXP 2.4 8.17 4.93

TOTAL FACTORY COST 87.69 107.93 93.82

ADMINISTRATIVE & SELLING 84.48 94.33 84.48

COST
MISCELLANEOUS EXPENSES 21.5 21.72 26.85

COST OF SALES 697 . 75 726 . 91 675 . 11

 % CHANGES IN COST
PARTICULERS 2007 % CHANGE 2008 %CHANGE 2009
POWER & FUEL 16.15 -15.47 13.65 -5.34 12.92
EMPLOYEE COST 69.14 24.54 86.11 -11.77 75.97
MANUFACTURING EXP 2 .4 240.41 8.17 -39.65 4.93

TOTAL FACTORY COST 87.69 23.08 107.93 -13.07 93.82

ADMINISTRATIVE & 84.48 11.65 94.33 -10.44 84.48

SELLING COST

MISCELLANEOUS 21.5 1.02 21.72 23.61 26.85

EXPENSES
Mahindra & Mahindra
 Cost Sheet 2007-2009
Mar '07 Mar '08 Mar '09
Raw Materials 6,937.16 7,963.82 9,208.71
Prime Cost 6,937.16 7,963.82 9,208.71
Power & Fuel Cost 65.19 91.33 98.69
Employee Cost 666.15 853.65 1,024.61
Other Manufacturing  68.8 73.35 75.36
Expenses 7,737.30 8,982.15 10,407.37
Work Cost
Adminstrative expenses 466.22 561.66 575.34
Cost Of Production 8 , 203 . 52 9 , 543 . 81 10 , 982 . 71
Selling expenses 635.1 804.51 937.56
Cost of sales 8,838.62 10,348.32 11,920.27
Operating Profit 1,136.23 1,157.65 1,092.25
Operating income 10,458.92 12,035.44 13,339.54
 Comparison of Various Costs
and Incomes
% Cng. Frm. % Cng. Frm. % Cng. Frm. Base
2007 2008 year 2007
Raw Materials 14.80 15.63 32.74
Prime Cost 14.80 15.63 32.74
Power & Fuel Cost 40.10 8.06 51.39
Employee Cost 28.15 20.03 53.81
Other Manufacturing  6.61 2.74 9.53
Expenses 15.87 34.51
Work Cost 16.09
Administrative expenses 20.47 2.44 23.41
Cost of Production 16.34 15.08 33.88
Selling expenses 26.67 16.54 47.62
Cost of sales 17.08 15.19 34.87
Operating Profit 1.89 -5.65 -3.87
Operating income 15.07 10.84 27.54
 Contribution of Expenses to
Cost of Sales
Expenses 2007 2008 2009

Raw Materials 78.49 76.96 77.25

Power & Fuel Cost 0.74 0.88 0.83

Employee Cost 7.54 8.25 8.60

Other Manufacturing  0.78 0.71 0.63

Expenses

Adminstrative expenses 5.27 5.43 4.83

Selling expenses 7.19 7.77 7.87

Cost of sales 100.00 100.00 100.00

 Conclusion
v The net profit of Tata motors was highest in the year 2008 i.e. 2028.92 
crore, but in the year 2009 it’s profit decreased  to 1016.55 crore .
v
v The profit of the company decreased by 49 % in the year 2009.
The net profit of Maruti Suzuki in the year 2008 was 1730.80 crore which was 

lower than that of Tata motors 


v In the year 2009 the net profit of the company decreased by 29.58% but on 
comparing the profit with Tata motors the net profit of Maruti Suzuki was 
11.9%  higher .
v
v Hindustan Motors is the worst performing company showing  a negative 
growth in the year 2008 and a minimal profit 0f 30.84 in the year 2009.


v On the basis of pas records Tata Motors is the best performing company in 
India.
