A

SUMMER TRAINING PROJECT REPORT

ON

“FINANCIAL ANALYSIS OF MAHINDRA &

MAHINDRA Pvt. LTD”

SUBMITTED TO THE PARTIAL FULLFILMENT TO AWARD THE DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

(MBA)

Dr. A.P.J. Abdul Kalam Technical University, Lucknow (U.P.)

(SESSION 2017-18)

SUBMITTED TO:- SUBMITTED BY:-

Mrs. Smita Srivastava Farheen Anjum
(Asst. Professor) MBA 2nd Year
Roll No.1643870027

VIVEK COLLEGE OF MANAGEMENT & TECHNOLOGY

Moradabad Road, Bijnor-246701
 PREFACE

Someone has rightly said that practical knowledge is far better than classroom
teaching. During this project I fully realized this and I came to know that
financial analysis is very necessary for each and every company for analysing
the records of financial condition.
The subject of my study is Financial Analysis of Mahindra & Mahindra Pvt.
Ltd., which has slowly but steadily evolved from a beginner to a corporate giant
earning laurels and kudos throughout.
The report contains first of all brief introduction about the company. Finally
there comes data presentation and analysis in the end of my project report. I also
put forward some of my suggestion hoping that they will help Mahindra &
Mahindra Pvt. Ltd. Move a step forward to being the very best.
 ACKNOWLEDGEMENT

I acknowledge my deep sense of gratitude for giving me this

opportunity to undergo my project with Mahindra & Mahindra
Pvt. Ltd. At this moment of successful completion of the project, I
would like to express my sincere thankfulness and indebtedness
to all those who extended their kind help by spending their
precious time in explaining the various intricacies of the subject
and suggesting the correct approach to me.
To start with I would like to thank not once but twice Mr. Deepak
Garg (Chairman)
Mr. Deepak Gupta (Dpt. MGR), who had been my project guide for
their understanding, gracious and constructive advice which
played a major in completion of this project.
At last but not least I would also like to thanks Mrs.Smita
Srivastava ( Asst. Professor) Guide for providing insights about
performing our work. This Project has been a great learning
outcome for me and without his help it would not have possible
for me to this project.

Farheen Anjum
MBA 2nd Year
Roll No.1643870027
 DECLARATION

I, FARHEEN ANJUM is a bonafied student of M.B.A. at VIVEK

COLLEGE OF MANAGEMENT & TECHNOLOGY. My
roll number is 1643870027. I hereby declare that present
summer internship report titled Financial Analysis is my
original work. I conducted this study at Mahindra & Mahindra
Pvt. Ltd. Bijnor during 1 June, 2017 to 11 Aug, 2017. This
report has not been submitted earlier either with VIVEK
COLLEGE OF MANAGEMENT & TECHNOLOGY and any
other educational organization as an essential requirement for
the award of any Diploma/ Degree.

Signature
Farheen Anjum
MBA 2nd Year
Roll No.1643870027
 TABLE OF CONTENT

S.No. Content Page No.

1. Executive Summary
2. Introduction
3. Company Profile
4. Research methodology
5. Financial Analysis
6. Ratio Analysis
7. Financial Health of the Company
8. Accounting Policies
9. Conclusion
10. Bibliography
 EXECUTIVE SUMMARY
The automobile sector in India has been operating under a monolithic structure.
With the growing requirements for improvement in the sector, various models
to bring in improvements and investments into the sector have been
contemplated. In order to bring in accelerated improvements, further
restructuring of the distribution segment is being contemplated.
As a student of Vivek Collage of Management, Bijnor and doing my MBA, we
got this opportunity of working as a summer trainee with Mahindra & Mahindra
Pvt. Ltd. for a period of two months from June 01, 2017 to August 11, 2017.
In this summer internship training I had experience many new this actually I
have taken a practical experience of financial analysis.
I had learned how to take out the ratio, learned the accounting polices etc.
In this report firstly I have told about the automobile industry the market size of
automobile industry then I told about the industry or about the Mahindra and
Mahindra. I have told full history of the company. Then I have told about the
financial analysis.
In this report I have done the ratio analysis of Mahindra & Mahindra Pvt. Ltd.
On the basis of the years data 2014, 2015, and 2016. I have plotted the graphs
on the basis of the data.
The company is working internationally also because it is very old company in
India the growth of a company is very high he has captured most of the
domestic as well as international market. The company made itself a brand.
The first car they made is jeep with 4x4. It was the first achievement of the
company after that the company has not looked back. Just move upward. Later
on many more achievement the company has done. This was the first company
who think for the poor committee and agriculture as well.
Introduction
 INTRODUCTION

AUTOMOBILE INDUSTRY
The Indian auto industry is one of the largest in the world. The industry
accounts for 7.1 per cent of the country's Gross Domestic Product (GDP).
The Two Wheelers segment with 81 per cent market share is the leader of
the Indian Automobile market owing to a growing middle class and a young
population. Moreover, the growing interest of the companies in exploring
the rural markets further aided the growth of the sector. The overall
Passenger Vehicle (PV) segment has 13 per cent market share.
India is also a prominent auto exporter and has strong export growth
expectations for the near future. In April-March 2016, overall automobile
exports grew by 1.91 per cent. PV, Commercial Vehicles (CV), and Two
Wheelers (2W) registered a growth of 5.24 per cent, 16.97 per cent, and
0.97 per cent respectively in April-March 2016 over April-March 2015.* In
addition, several initiatives by the Government of India and the major
automobile players in the Indian market are expected to make India a
leader in the 2W and Four Wheeler (4W) market in the world by 2020.

Market Size
The industry produced a total 14.25 million vehicles including PVs,
commercial vehicles (CVs), three wheelers (3W) and 2W in April–October
2015, as against 13.83 in April–October 2014, registering a marginal
growth of 3.07 per cent, year-to-year.
The sales of PVs grew by 8.51 per cent in April–October 2015 over the
same period in the previous year. The overall CVs segment registered a
growth of 8.02 per cent in April–October 2015 as compared to same period
last year. Medium and Heavy Commercial Vehicles (M&HCVs) registered
very strong growth of 32.3 per cent while sales of Light Commercial
Vehicles (LCVs) declined by 5.24 per cent during April–October 2015, year-
to-year.
In April–October 2015, overall automobile exports grew by 5.78 per cent.
PVs, CVs, 3Ws and 2Ws registered growth of 6.34 per cent, 17.95 per cent,
18.59 per cent and 3.22 per cent, respectively, in April–October 2015 over
April–October 2014.
Investments
In order to keep up with the growing demand, several auto makers have
started investing heavily in various segments of the industry during the last
few months. The industry has attracted foreign direct investment (FDI)
worth US$13.48 billion during the period April 2000 to June 2015,
according to data released by Department of Industrial Policy and
Promotion (DIPP).
Some of the major investments and developments in the automobile sector
in India are as follows:

 Global auto maker Ford plans to manufacture in India two families of

engines by 2017, a 2.2 litre diesel engine code-named Panther, and a 1.2
litre petrol engine code-named Dragon, which are expected to power
270,000 Ford vehicles globally.
 The world's largest air bag suppliers Autoliv Inc, Takata Corp, TRW
Automotive Inc and Toyoda Gosei Co are setting up plants and
increasing capacity in India.
 General Motors plans to invest US$1 billion in India by 2020, mainly to
increase the capacity at the Talegaon plant in Maharashtra from
130,000 units a year to 220,000 by 2025.
 US-based car maker Chrysler has planned to invest Rs 3,500 crore
(US$525 million) in Maharashtra, to manufacture Jeep Grand Cherokee
model.
 Mercedes Benz has decided to manufacture the GLA entry SUV in India.
The company has doubled its India assembly capacity to 20,000 units
per annum.
 Germany-based luxury car maker Bayerische Motoren Werke AG's
(BMW) local unit has announced to procure components from seven
India-based auto parts makers.
 Mahindra Two Wheelers Limited (MTWL) acquired 51 per cent shares
in France-based Peugeot Motorcycles (PMTC).
Company profile of
Mahindra
 COMPANY PROFILE

Background

Mahindra & Mahindra Limited (M&M), the flagship company of the US$ 3
billion Mahindra Group, was set up in 1945 to make general-purpose utility
vehicles for the Indian market. It soon branched out into manufacturing
agricultural tractors and LCV and later expanded its operations from
automobiles and tractors to other sectors. The company has recently
started a new division, Mahindra Systems and Automotive Technologies
(MSAT) in order to focus on developing components and to offer
engineering services.
M&M has two main operating divisions – Automotive division and Farm
Equipment division.The company entered into collaboration with Willys
Overland Corporation (now part of the Daimler Chrysler group) to import
and assemble the Willys Jeep for the Indian market.Thereafter, in 1965 the
company started producing LCV. It went on to develop its manufacturing
technology to indigenously produce vehicles within a short time of signing
the collaboration agreement with Willys.Today, the Automotive Division of
M&M manufactures and markets MUV, LCV and three-wheelers.
In 2005, the company entered into a joint venture with Renault of France
for the manufacture of a mid-sized sedan, Logan, a newly developed vehicle
that meets all the European regulations for emissions and safety.The Logan
is expected to be launched in the Indian market in 2007. M&M has also
launched a joint venture with International Truck & Engine Corporation,
one of the leading commercial vehicle producers in the USA, for
manufacture of trucks and buses in India.
 The Farm Equipment division was established in 1963 in the form of a
joint venture with International Harvester Inc., and Voltas Limited, and
christened as the International Tractor Company of India (ITCI). In 1977,
ITCI merged with M&M and became its Tractor Division. After M&M's
organisational restructuring in 1994, this division was re-christened the
Farm Equipment Sector Division.Today M&M is the largest manufacturer of
tractors in India. It designs, develops, manufactures and markets tractors
as well as implements which are used in conjunction with tractors.

Company Products Established Founder Distribution Production

plant
M&M Automobiles 1945 K.C Europe, Asia, India
Tractors, Mahindra, Russia,
Auto J.C Africa, U.S.A,
Components Mahindra South
America
In addition to these two divisions, M&M has a defence system division.The
Mahindra Defence System (MDS) was set up in mid-2000 with a view to
providing a sharp focus to service the Defence sector. With the
announcement by the Government regarding participation of private sector
in defence, MDS intends to become a major defence equipment/ product
manufacturer and supplier. The company now plans to set up Mahindra
Research Valley, a facility that will house the company's engineering
research and product development wings under one roof. M&M's
operations are also supported by its subsidiary Mahindra and Mahindra
Financial Services Ltd, that finances around 40 per cent of the company's
MUV sales and 20 per cent of the tractor sales.

The Automotive division of M&M has manufacturing plants at Mumbai,

Nashik and Igatpuri in the state of Maharashtra, at Zaheerabad (Andhra
Pradesh) and at Haridwar (Uttaranchal).The Farm Equipment division has
two main tractor manufacturing plants located at Mumbai and Nagpur in
Maharashtra and satellite plants located at Rudrapur (Uttarachal), Jaipur
(Rajasthan) and Jiangling (China).

The promoters of the company along with persons acting in concert hold
22.97% of the Company’s shares. The total foreign investment in equity
constitutes 46.91%, the largest contributor being FIIs with 34.45%
(excluding Aranda Investments Mauritius Pte. Ltd, as it is included in
persons acting in concert). Domestic Financial Institutions including
insurance companies hold 15.26% of the equity with the remaining being
held by public and other corporate bodies.
 We Have Always Been
global
Since our beginning in 1945, we've been connected with the world through
partnerships, growing presence in multiple geographies, a diverse and
multinational workforce, and the boundless ambition to integrate ourselves
with global communities.

Asia
With our roots firmly planted in India, we began reaching out to the farthest
corners of the Asian continent early with our automotive and farm equipment
products. Today, we finance rural prosperity; build sustainable cities; defend
land, water and air; help families get together on memorable vacations; and
drive prosperity through strategic partnerships with leading Asian and
Australian companies
Europe
Our diverse businesses are playing a key role in supporting Europe's vibrant
economy. We have recently deployed our fleet of electric cars in the region and
our subsidiaries, SsangYong Motors and Peugeot MotoCycles, have been a part of
Europe's automotive industries for several decades. Mahindra Racing competes
with Europe's best in the Moto3 and Formula E racing arenas and our IT business
is at the forefront of the digital revolution. From manufacturing a wide range of
high quality parts for European companies including Volvo, Land Rover, Daimler
and Renault, to transforming lives and landscapes in Serbia, Turkey and
Macedonia, we are helping write the next chapters in Europe’s comeback story

Middle East & Africa

'Potential'. Perhaps no word can capture the essence of this region better and
we are committed to helping these markets realize their capabilities. Our
Powerol diesel generator sets are delivering reliable power supply to
businesses and homes, raising economic vitality and living standards.
Mahindra tractors have replaced camels and horses in Nigeria, Mali, Chad,
Gambia, Angola, Ghana, and Morocco, helping raise agricultural efficiency
and productivity. Our vehicles and airplanes are bringing affordable mobility to
people and our operations provide employment to thousands. As the region
develops, we will be there as responsible partners, employers, and providers
of essential products and services, empowering people to Rise.
North & South America
Our association with North America dates back to 1945 when we took the
iconic Willy's jeep to India. Several decades later, Mahindra USA opened its
doors in Houston, Texas, selling tough tractors to hobby farmers. We have
come a long way since then and today, our presence spans several industries
including information technology and mobility. Genze, our electric two
wheeler, is revolutionizing urban mobility in the United States of America and
our IT business is a key service provider to many companies including Exxon
Mobil, Shell, Motorola, Nike, LSI Logic and Bell Operating Co. We also supply
components to and consult with prominent American companies including
Caterpillar, John Deere, General Electric and General Motors.

Our products are driving positive change in the lives of consumers across the
South America. Take a stroll through the roads of Central and South America
and you might just witness a Mahindra Reva Electric car buzzing past you on
its way to a sustainable future. Visit a dignitary in Guyana and you might
notice our Rakshak armoured vehicles standing guard. In Chile and Brazil, our
tractors tackle the tricky local topography to deliver a whole host of farming
functions and solutions and our Powerol diesel generators ensure
uninterrupted power supply in areas with unreliable electric grids. We also sell
a whole range of diesel vehicles across the continent and provide IT solutions
to South America’s rapidly globalizing economy.
 Mahindra’s Leaders
Mahindra’s leaders set the tone and lead the charge in our aspiration to be
one of the world’s 50 most admired global brands by 2021. They direct our
focus on technology and innovation, chart our global expansion, and lay the
markers for our growth.

Our leadership’s ability to manage our operations and finances the world over,
build and groom our global talent pool, and lead our endeavours in new
markets and geographies help us to constantly move forward and offer our
customers only the very best.

Handpicked to contribute their formidable skills to our collective purpose of

enabling people everywhere to Rise, our leadership’s depth and breadth has
been designed to allow us to reach for the skies - with our feet firmly on the
ground.
Research methodology
 REASERCH METHODOLOGY

In everyday life human being has to face many problems viz. social,
economical, financial problems. These problems in life call for acceptable
and effective solutions and for this purpose, research is required and a
methodology applied for the solutions can be found out.

Research was carried out at MAHINDRA & MAHINDRA Pvt .Ltd to

find out the
“Financial analysis”.

DATA COLLECTION:

Primary Data:

Primary data was collected through survey method by distributing

questionnaires to branch manager and other sales manager. The
questionnaires were carefully designed by taking into account the
parameters of my study.

Secondary Data:

Data was collected from books, magazines, web sites, going through the
records of the organization, etc. It is the data which has been collected by
individual or someone else for the purpose of other than those of our
particular research study. Or in other words we can say that secondary
data is the data used previously for the analysis and the results are
undertaken for the next process.
Secondary data consists of data collected from secondary source such as:

Newspaper

Magazines

Journals

Books and Various publications

Public records and statistics

And the sources of unpublished data are many they may be found in diaries
letters scholars” research must be very careful in using secondary data.

The research methodology was based or done on the basis of questionnaire,

which was made for the objectives to be achieved and thus the questionnaire
covers the questions regarding the objectives of the survey.

Meaning
Research methodology is a careful investigation or inquiry and especially
for search for new fact in any branch of knowledge is called a research
methodology.

The research work is a combined word of two words first is re and second
is Search means to search again and search means to search so the total meaning
means search for the new factor to modify and facts in any branch of
knowledge. The main function of research is to add new knowledge in simple
words research can be defined as critical investigation search for truth factor for
certainty.
Step in Research Process:-
RESEARCH DESIGN

A research design is purely & simply the framework or plan for a study that
guides the collection and analysis of the data. A good research design has the
characteristics problem definition, specific methods of data collection and
analysis time required for research project and estimate of expenses to be
incurred.

Research design is the arrangement of conditions for collection and

analyzing data in a manner that aims to combine relevance to research
purpose with economy in procedure. The present project is an exploratory
type of research. It helps to gain a new insight into the problem.

There are two types of research design

1. Exploratory research:-

This is a preliminary phase and is essential in order to

obtain a proper definition of problem at hand. The major emphasis is on
the discovery of ideas and insights.

2. Descriptive research design:-

Descriptive research design is the one that simply describes

something such as demographic characteristics of customers who use the sample.
This study is typically guided by an initial hypothesis.

3. Sampling plan:-

Sampling plan is the method is which I had taken a sample of

respondents.
 4. Sample unit:-

All categories of people are taken as the Service is used by everyone.

Many customers are studied questionnaire forms and also personal
interviewing of various related people.

5. Sample size:-

The present project has been completed taking 10 units in Sagar city. The
unit taken completely reflects the total class of people Woking in MUL in
sagar city.

6. Sampling method:-

Sampling method is of two types :

(A) Probability sampling

(B) Non Probability sampling

In non-probability sampling the chance of any particular unit

In the population being selected is unknown since randomness is not involved in
the selection process on estimates of the sampling cannot be made.

6. Sampling procedure:-

Sampling procedure depends upon the research objectives to

be accomplished through the investigation.
QUESTIONNAIRES :
The questionnaire has been designed in such a way so as to get the good
results from the persons. The questionnaires are filled by the person and
on its basis a proper analysis and interpretation of the data done. The
research methodology was totally based on the method of questionnaires.
The method of data collection is quite popular particularly in case of big
enquiries. It is been adopted by private individuals research workers
private enquiries. In this method a questionnaire in sent the persons
concerned with a request to answer the questions and return the
questionnaire. A questionnaire consists of a number of questions printed.
The questionnaire in mailed to respondents who are expected to read and
understand the questions and write the reply in the space meet for the
purpose in the questionnaire itself. The respondents have to answer the
questions or their own.

There is low coast even then the universe is large and is widely spread
geographically.

QUESTIONNAIRE DESIGN/ FORMULATION

Questions being used in questionnaires are both open ended and close
ended questions.

SAMPLE DESIGN

 Sample element/ Sample unit

Our sample consists of HR department employees of Maruti

Suzuki India Limited.
  Sample Extent: - MSIL, Sagar.

 Time Frame: - 45 Days

 Sampling Technique:-non-probability-Convenience and

judgmental sampling.

Sample Size: - 10 employees of MSIL. Sagar. (M.P).

LIMITATIONS OF RESEARCH

 Less availability of time limit.

 Some of the employees were unwilling to fill the questionnaires.

 Information was confidential , due to which empoloyees were not

able to tell the fact.
Financial Analysis
 FINABCIAL ANALYSIS

Financial Analysis is the process of determining the

operating & financial characteristics of a firm from
accounting data & financial statement. The goal of such
analysis is to determine efficiency & performance of the
firm management, as reflected in the financial records and
reports. Its main aim is to measure the firm’s liquidity,
profitability and other indications that business is
conducted in a rational and orderly way.
The basic financial statement
Of the various reports that the companies issue to their
shareholder, the annual report is by far the most
important. Two types of information are given in this
report, first there is a text that describes the firms
operating results during the past year and discusses new
development that will affect future operations. Second
there are few basic financial statements –the income
statement, the balance sheet, the statement of retained
earnings and the sources and uses of funds statements.
The financial statement taken together gives an
accounting picture of the firm’s operation and financial
positions.
“Financial statement analysis is largely a study of relationship
among the various financial factors in a business as disclosed by a
single set of statements, and a study of trends of these factors as
shown in a series of statements”
--- John N. Myer

“The analysis and interpretation of financial statement are an

attempt to determine the significance and meaning of the
financial statement data so that the forecast may be made of the
prospects for future earnings, ability to pay interest and debt
maturities (both current & long term) and profitability of a sound
dividend policy”
--- R.D. and S. % Mc Muller

Thus, analysis of financial statement means such a treatment of the

information contained in the financial statement as to afford a full
diagnosis of the profitability and financial position of the firm concerned.

Understanding financial statements is key to fundamental stock analysis

and overall investment research. Financial statements provide an account
of a company’s past performance, a picture of its current financial strength
and a glimpse into the future potential of a firm.

This is the first in a new AAII Journal series on financial statement analysis.
The goal is to enhance your ability to make a sound judgment about a
company’s financial strength and future prospects by showing you the
benefits of using financial statements in your personal investment
research.

Given the varied financial knowledge of our readers, I will address many
topics that some may find very basic. However, to build a strong
understanding of advanced topics, you need a solid foundation. As we
progress through this series, I expect to touch on more advanced topics
when explaining how I personally use financial statements to analyze a
firm. In this introductory article, I explain the major components of each
financial statement and why they matter in security analysis.
What is 'Financial Analysis?
Financial analysis is the process of evaluating businesses,
projects, budgets and other finance-related entities to determine
their performance and suitability. Typically, financial analysis is
used to analyse whether an entity is stable, solvent, liquid or
profitable enough to warrant a monetary investment. When
looking at a specific company, a financial analyst conducts
analysis by focusing on the income statement, balance
sheet and cash flow statement.

BREAKING DOWN 'Financial Analysis

Financial analysis is used to evaluate economic trends, set
financial policy, build long-term plans for business activity, and
identify projects or companies for investment. This is done
through the synthesis of financial numbers and data.

One of the most common ways to analyse financial data is to

calculate ratios from the data to compare against those of other
companies or against the company's own historical performance.
For example, return on assets (ROA) is a common ratio used to
determine how efficient a company is at using its assets and as a
measure of profitability. This ratio could be calculated for several
similar companies and compared as part of a larger analysis.

Corporate Finance and Investment Finance

Financial analysis can be conducted in both corporate finance and
investment finance settings. In corporate finance, the analysis is
conducted internally, using such ratios as net present value (NPV)
and internal rate of return (IRR) to find projects worth executing.
A key area of corporate financial analysis involves extrapolating a
company's past performance, such as gross revenue or profit
margin, into an estimate of the company's future performance.
This allows the business to forecast budgets and make decisions
based on past trends, such as inventory levels.
In investment finance, an outside financial analyst conducts
financial analysis for investment purposes. Analysts can either
conduct a top-down or bottom-up investment approach. A top-
down approach first looks for macroeconomic opportunities, such
as high-performing sectors, and then drills down to find the best
companies within that sector. A bottom-up approach, on the other
hand, looks at a specific company and conducts similar ratio
analysis to corporate financial analysis, looking at past
performance and expected future performance as investment
indicators.

Technical and Fundamental Analysis

There are two types of financial analysis: technical analysis and
fundamental analysis. Technical analysis looks at quantitative
charts, such as moving averages, while fundamental analysis uses
ratios, such as a company's earnings per share (EPS).

For example, technical analysis was conducted on the GBP/USD

exchange rate after the results of the Brexit vote in June 2016.
Looking at the exchange rate chart, it was determined that the
rate dropped significantly after the vote on June 23, 2016, and
then it recovered over a 48-hour period by 375 basis points (bps).

As an example of fundamental analysis, Discover Financial

Services reported first-quarter 2016 results on July 19, 2016. The
company had an EPS of $1.40, up from an EPS of $1.33 for the
same quarter in 2015, which was a good sign.

Method

Financial analysts often compare financial ratios (of solvency, profitability,

growth, etc.):

 Past Performance - Across historical time periods for the same firm
(the last 5 years for example),
 Future Performance - Using historical figures and certain
mathematical and statistical techniques, including present and future
values, This extrapolation method is the main source of errors in
 financial analysis as past statistics can be poor predictors of future
prospects.
 Comparative Performance - Comparison between similar firms.
These ratios are calculated by dividing a (group of) account balance(s),
taken from the balance sheet and / or the income statement, by another, for
example :
Net income / equity = return on equity (ROE)
Net income / total assets = return on assets (ROA)
Stock price / earnings per share = P/E ratio
Comparing financial ratios is merely one way of conducting
financial analysis. Financial ratios face several theoretical
challenges:

 They say little about the firm's prospects in an absolute sense.

Their insights about relative performance require a reference
point from other time periods or similar firms.
 One ratio holds little meaning. As indicators, ratios can be
logically interpreted in at least two ways. One can partially
overcome this problem by combining several related ratios to
paint a more comprehensive picture of the firm's
performance.
 Seasonal factors may prevent year-end values from being
representative. A ratio's values may be distorted as account
balances change from the beginning to the end of an
accounting period. Use average values for such accounts
whenever possible.
 Financial ratios are no more objective than the accounting
methods employed. Changes in accounting policies or choices
can yield drastically different ratio values.
 Fundamental analysis.
Financial analysts can also use percentage analysis which
involves reducing a series of figures as a percentage of some base
amount. For example, a group of items can be expressed as a
percentage of net income. When proportionate changes in the
same figure over a given time period expressed as a percentage is
known as horizontal analysis.Vertical or common-size analysis,
reduces all items on a statement to a “common size” as a
percentage of some base value which assists in comparability
with other companies of different sizes. As a result, all Income
Statement items are divided by Sales, and all Balance Sheet items
are divided by Total Assets.
Another method is comparative analysis. This provides a better
way to determine trends. Comparative analysis presents the same
information for two or more time periods and is presented side-
by-side to allow for easy analysis.
Ratio Analysis
 Ratio Analysis

1. RETURN ON INVESTMENT RATIO

Ratio 2015-16 (%) 2014-15 (%)

Return on Assets 12.92 12.98

Return on Invested Capital 18.04 17.83

Return on Net Worth 22.87 23.65

Return on Investment Ratio

25 23.65
22.87

20
18.04 17.83

15
12.92 12.98

10

0
Return on Assets Return on Invested Capital Return on Net Worth

20115-16 2014-2015
2. ACTIVITY/ TURNOVER RATIO

Ratio 2015-16(%) 2014-15(%)

Total Asset Turnover Ratio 1.48 1.332
Invested Capital Turnover Ratio 2.067 1.92
Inventory Turnover Ratio 13.01 10.36
Working Capital Turnover Ratio 50.3 50.51

Activity/Turnover Ratio

60
50.3 50.51
50

40

30

20
13.01
10.36
10
1.48 1.332 2.067 1.92
0
Total Asset Turnover Invested Capital Inventory Turnover Working Capital
Ratio Turnover Ratio Ratio Turnover Ratio

2015-16 2014-15

Ratio 2015-16 2014-15

(Days) (Days)
Average Collection Period 20.20 22.78
Day’s Inventory 28.06 35.23
 40
Activity/Turnover Ratio 35.23
35

30 28.06

D 25 22.78
20.2
A
20
Y
S 15

10

0
Average Collection Period Day’s Inventory

2015-16 2014-15

3. LIQUIDITY RATIO

Ratio 2015-16 2014-2015

Current Ratio 1.10 1.09
Acid Test Ratio 0.80 0.77

Liquidity Ratio
1.2 1.1 1.09

1
0.8 0.77
0.8

0.6

0.4

0.2

0
Current Ratio Acid Test Ratio

2015-16 2014-15
4. SOLVENCY RATIO
Ratio 2015-16 2014-15
Debt Equity Ratio 0.317 1.23
Debt to Total Invested Capital 0.24 0.52
Interest Coverage Ratio 34.86 24.57

Solvency Ratio
40
34.86
35
30
24.57
25
20
15
10
5 1.23
0.317 0.24 0.52
0
Debt Equity Ratio Debt to Total Invested Interest Coverage Ratio
Capital
2015-16 2014-15

5. CAPITAL MARKET RATIO

Ratio 2015-16 2014-15

Earnings per Share 56.85 48.97
 Earnings per Share
58 56.85
56

54

52

50 48.97

48

46

44
2015-16 2014-15

2015-16 2014-15

Ratio 2015-16 2014-15

Price Earnings Ratio 14.29 18.03

Price Earning Ratio

20
18.03
18
16 14.29
14
12
10
8
6
4
2
0
2015-16 2014-15

2015-15 2015-16

Ratio 2015-16 2014-15

Cash Realization 1.236 0.95
 Cash Realization
1.4
1.236
1.2

1 0.95

0.8

0.6

0.4

0.2

0
2015-16 2014-15

2015-16 2014-15

6. PROFITABILITY RATIO

Ratio 2015-16(%) 2014-15(%)

Gross Profit Ratio 21.09 23.26
Net Profit Ratio 6.62 8.15
Operating Profit Ratio 11.69 12.62

PROFITABILITY RATIO
25 23.26
21.09
20

15
12.62
11.69

10 8.15
6.62

0
Gross Profit Ratio Net Profit Ratio Operating Profit Ratio

2015-16 2014-15
 Main Revenue Generating Activities

The main revenue generating activities of Mahindra & Mahindra Ltd. are:

 Automotive sector: The automotive sector launched several new

products and also received numerous awards and accolades. Company’s
market share of the total Indian automotive market increased to 13.2% in
the Financial Year 2012-13 as compared to 11.5% in the previous year.

 Farm Equipment sector: With its quest to deliver ‘Farm Tech

Prosperity’ to the Indian farmer, the Financial Year 2012-13 saw
numerous initiatives by the Farm Equipment Sector in the area of farm
mechanisation and across the agriculture value chain.

Major Growth Drivers of the Company

Opportunity to Cross-Sale
a) The company’s farm division recorded sales of 236666 tractors against
the 214325 tractors sold in the previous year, recording a growth of
10.4%.
b) The Mahindra Powered Brand, the company achieved a gross revenue of
Rs.1000 crore. This achievement was despite the fact that the telecom
segment DG sales accounting for only 19% of revenues.

Given a wider client base

o Mahindra and Mahindra in order to strengthen its product portfolio have
entered new segments and the company has successfully launched many
new products over the past two years. In the overseas market, the
company registered a volume growth of 11.2% over the previous year.
The growth was driven by volume in SAARC countries, Chile and South
Africa.

Better Cost Management

o The company continues with a rigorous cost restricting exercise and
efficiency improvements which have resulted in significant saving
through continued focus on cost controls, process efficiencies and product
 innovations thereby enabling the company to maintain profitable growth
in current economic scenario.

Good Performance in Weak Economic Times

o In these challenging times, the Automotive and Farm Divisions of your
Company have secured good performance reflection in substantial growth
in the net income of the Company by 26.8% from Rs.32319 crores in the
previous year to from Rs. 40990 crores in the current year.

Performance of the Subsidiary Companies

o Subsidiary companies continue to contribute to the overall growth of the
company. The major subsidiary such as Mahindra & Mahindra Financial
Services Limited with a 44% growth in its consolidated profits and
Mahindra Life space Developers limited with a 19% growth.

Cash Flow Statement Analysis

While analysing the cash flow statement, the activities of the company are
divided into 3 categories:

1. Operating Activities: Principle revenue generating activities of

the company

Cash flow generated from operating activities helps the firm to maintain its
operating capabilities, repay loans and make new investments without accessing
to external/alternative source of financing.
The cash flows generated from operating activities have increased
approximately by 52% i.e. increased from Rs.2734.95 to Rs.4145.71 due to
following reasons:

 Cash receipts from sale of goods and rendering services i.e. sales revenue
increased by Rs.8511.09 from 2011-12 to 2012-13.
 Cash payments to and behalf of employees i.e. Employee benefit expense
increased by Rs.164.67 from 2011-12 to 2012-13.

2. Investing Activities: Acquisition and disposal of long term

assets and other investments.
Cash flow generated from investing activities is a key indicator of the extent to
which organisation has made expenditure for resources intended to generate
future income and cash flows. The cash used in investing activities have
increased approximately by 53% i.e. increased from Rs.1885.33 to 2895.95 due
to following reasons:

 Cash payments to acquire fixed assets worth Rs.1374.69 in 2011-12 and Rs.1435.62
in 2012-13.
 Cash receipts from disposal of fixed assets worth Rs.34.27 in2011-12 and Rs.46.32 in
2012-13.
 Cash payments to acquire investments both current and non-cuurent worth
Rs.22271.87 in 2011-12 and Rs.41769.42 in 2012-13.
 Cash receipts from sale of both current and non-current investments worth
Rs.21207.57 in 2011-12 and Rs.40486.87 in 2012-13.
 Interest and dividend received on investments of Rs.270.28 in 2011-12 and Rs.325.22
in 2012-13.

3. Financing Activities: Change in the size and composition of the

owner’s capital and borrowings;

Cash flow generated from financing activities helps in predicting the claims of
fund providers on future cash flows. The cash used in financing activities have
increased approximately by 300% i.e. increased from Rs.306.15 to Rs.1221.89
due to following reasons:

 Cash proceeds from issuing shares or other similar instruments worth

Rs.0.64 in 2012-13.
 Cash proceeds from issuing debentures, bonds and short/long term
borrowings worth Rs.900.97 in 2011-12 and Rs.227.48 in 2012-13.
 Cash repayments of amounts borrowed i.e. Rs.249.72 in 2011-12 and
Rs.380.73 in 2012-13.
 Dividend paid of Rs.800.78 in 2011-12 and Rs.866.97 in 2012-13.
 Interest and finance charges paid of Rs.149.57 in 2011-12 and Rs.201.50
in 2012-13.

Particulars 2015-16 2014-15

Operating Activities 4145.71 2734.95
Investing Activities -2895.95 -1885.33
Financing Activities 1163.96 1136.11
 Cash Flow Statement Analysis
5000

4145.71
4000

3000 2734.95

2000
Net Flow of funds

1163.96 1136.11
1000

0
Operating Activities Investing Activities Financing Activities

-1000

-2000
-1885.33

-3000
-2895.95

-4000

2015-16 2014-15
 Financial Health of the Company

1. Shareholders (Present & Potential)

The present and potential shareholders of the company predicts the financial
health with the help of ratios like return on invested capital, return on net worth,
debt equity ratio, debt to total invested capital, earning per share and
profitability ratio. There has been a marginal decrease in return on investment
and profitability ratio but earning per share has shown a significant increase
which the most important ratio is considered by the present and potential
shareholders. The earnings per share has increased by Rs.7.88 i.e.
approximately by 16% whereas the profitability ratio has shown a decrease of 5-
10%.

2. Managers (Efficiency)
The managers are concerned about the return on investment, activity ratio,
liquidity ratio and profitability ratio in order to measure the degree of efficiency
of their operations. The return on investment has decreased marginally which
plays an important role in wealth creation for shareholders. The activity ratios
like total asset turnover ratio and inventory turnover ratio have shown a increase
of 15-20% which indicates that the management is able to use its assets
effectively and activity ratios like average collection period and day’s inventory
have decreased which implies that the operational activities of the management
are effective as they are able to generate good revenues from its resources.

3. Lenders (Long term and Short term)

The lenders are concerned with the each ratio so as to analyze the credibility
and liquidity of the company. The short term fund providers i.e. working capital
fund providers are majorly concerned about the liquidity and activity ratio. The
company’s liquidity has increased marginally by 1-2% over a period of time i.e.
the company has the ability to meet any emergency arising out of uneven flow
of funds. The long term fund providers are concerned about the return on
investment, solvency ratio and profitability ratio. The return on investment and
profitability ratio have decreased by 5-10% which is matter of concern for the
lenders as their funds are at risk but the increase in interest coverage ratio shows
the safety of payment of interest charges to the lenders.
Accounting Policies
 Accounting Policies

(A) Basis of Accounting:

The financial statements are prepared in accordance with the generally accepted
accounting principles in India and comply with the Accounting Standards
notified under sub-section (3C) of Section 211 of the Companies Act, 1956 and
the relevant provisions thereof.

(B) Tangible Assets:

(i) Tangible assets are carried at cost less depreciation except as stated in
below. Cost includes financing cost relating to borrowed funds attributable to
the construction or acquisition of qualifying tangible assets upto the date the
assets are ready for use. Where the acquisition of depreciable tangible assets are
financed through long term foreign currency loans (having a term of 12 months
or more at the time of their origination) the exchange differences on such loans
are added to or subtracted from the cost of such depreciable tangible assets.
When an asset is scrapped or otherwise disposed of, the cost and related
depreciation are removed from the books of account and resultant profit
(including capital profit) or loss, if any, is reflected in the Statement of Profit
and Loss.
(ii) Land and Buildings had been revalued as at 31st October, 1984 at
depreciated replacement values on the basis of a valuation made by a firm of
Chartered Surveyors and Values.
(i) Leasehold land is amortised over the period of the lease.
(ii) Depreciation on assets is calculated on Straight Line Method over their
estimated useful lives, or lives based on the rates specified in Schedule XIV to
the Companies Act, 1956, whichever is higher.
Accordingly depreciation is provided on:
(1) Certain items of Plant and Machinery individually costing more than Rs.
5,000 - over their useful lives (2 years, 3 years, 5 years or 7 years, as the case
may be).
(2) Cars and Vehicles – at 15% of cost.
(iii) Depreciation charge for each year is after deducting the amount
representing the depreciation on the increase due to revaluation of Land and
Buildings, transferred from the Revaluation Reserve.

(C) Intangible Assets:

Intangible assets are initially measured at cost and amortised so as to reflect the
pattern in which the asset’s economic benefits are consumed.
(a) Technical Knowhow: The expenditure incurred is amortised over the
estimated period of benefit, not exceeding six years commencing with the year
of purchase of the technology.
(b)Development Expenditure: The expenditure incurred on technical services
and other project/product related expenses are amortised over the estimated
period of benefit, not exceeding five years.
(c) Software Expenditure: The expenditure incurred is amortised over three
financial years equally commencing from the year in which the expenditure is
incurred.

(D) Impairment of Assets:

The carrying value of assets/cash generating units at each balance sheet date is
reviewed for impairment. If any indication of impairment exists, the recoverable
amount of such assets is estimated and impairment is recognised, if the carrying
amount of these assets exceeds their recoverable amount.

(E) Investments:
Long term investments are valued at cost. Current investments are valued at the
lower of cost and fair value, determined by category of investment.

(F) Inventories:
Inventories comprise all costs of purchase, conversion and other costs incurred
in bringing the inventories to their present location and condition.

 Raw materials and bought out components are valued at the lower of cost
or net realisable value. Cost is determined on the basis of the weighted
average method.
 Finished goods produced and purchased for sale, manufactured
components and work-in progress are carried at cost or net realisable
value whichever is lower. Excise duty is included in the value of finished
goods inventory.
 Stores, spares and tools other than obsolete and slow moving items are
carried at cost. Obsolete and slow moving items are valued at cost or
estimated net realisable value, whichever is lower.
 (G) Foreign Exchange Transactions:
Transactions in foreign currencies (other than firm commitments and highly
probable forecast transactions) are recorded at the exchange rates prevailing on
the date of transaction. Monetary items are translated at the year-end rates.

(H) Derivative Instruments and Hedge Accounting:

The Company uses foreign currency forward contracts and currency options to
hedge its risks associated with foreign currency fluctuations relating to certain
firm commitments and highly probable forecast transactions. The Company has
applied to such contracts the hedge accounting principles set out in Accounting
Standard 30 ‘Financial Instruments: Recognition and Measurement’ (AS 30) by
marking them to market at each reportingdate.

(I) Revenue Recognition:

Sales of products and services including export benefits thereon are recognised
when the products are shipped or services rendered. Excise duty recovered on
sales is included in “Revenue from Operations”. Dividends from investments
are recognised in the Statement of Profit and Loss when the right to receive
payment is established.

(J) Government Grants:

The Company, directly or indirectly through a consortium of Mahindra Group
Companies, is entitled to various incentives from government authorities in
respect of manufacturing units located in developing regions. The Company
accounts for its entitlement as income on accrual basis.

(K) Employee Benefits:

In respect of Defined Contribution Plans/Defined Benefit Plans/Long term
Compensated Absences.

(L) Borrowing Costs:

All borrowing costs are charged to the Statement of Profit and Loss except
expenses incurred on raising long term borrowings are amortised over the
period of borrowings.
 (M) Product Warranty:

In respect of warranties given by the Company on sale of certain products, the

estimated costs of these warranties are accrued at the time of sale.

(N) Leases:
The Company’s significant leasing arrangements are in respect of operating
leases for premises (residential, office, stores, godowns, computer hardware
etc.). The aggregate lease rentals payable are charged as rent.

(O) Taxes on Income:

Current tax is determined as the amount of tax payable in respect of taxable
income for the year. Deferred tax is recognised, subject to consideration of
prudence, on timing differences, being the difference between taxable incomes
and accounting income that originate in one period and are capable of reversal
in one or more subsequent periods.

(P) Segment Reporting:

Segments are identified having regard to the dominant source and nature of
risks and returns and internal organisation and management structure. Revenues
and expenses have been identified to the segment based on their relationship to
the business activity of the segment.
CONCLUSION
 CONCLUSION

Significant growth is made by the company during the ten years under study as
depicted in above chart showing profitability ratio of the company. This
indicates good profit margins on products of the company.
Company has witnessed steady growth in its profit margins with an exception of
Financial Year 2007-08 & 2008-09. This may be due to various reasons such as:

1. Operational Inefficiencies
2. Lowering of profit margins
3. High cost of funds
4. High taxation

Nonetheless, company has created significant wealth for its stakeholders and
provided handsome return on investment. Return on net worth has grown from
6.83 in 2001-02 to an average of 21.47 and has touched the highest of 30.10 in
2006-07.

Company, despite of having a good track record, has a challenging task ahead to
maintain the profitability. Profitability of the company is bound to grow
manifolds if it company manages to control the aforesaid factors successfully.
BIBLIOGRAPHY
 BIBLIOGRAPHY

 Official website of Mahindra and Mahindra Ltd.: www.mahindra.com.

 For current market price of Mahindra and Mahindra Ltd. Shares:

www.moneycontrol.com.

 Book reference: Financial Accounting for management by N

Ramachandran and Ram.

 Kumar Kakani published by Tata McGraw Hill Education Private

Limited.

 For company information: en.wikipedia.org.

 Hadouts provided in the class by the faculty ( Dr. Pawan Jain).

 Research Methodology - C. R. Kothari