A PROJECT REPORT

ON
“SECURITIES ANALYSIS ON OF FOUR WHEELER
COMPANIES (MARUTI SUZUKI LTD, MAHINDRA &
MAHINDRA LTD, TATA MOTERS LTD) IN
AUTOMOBILE INDUSTRY
SUBMITTED FOR PARTIAL FULFILMENT OF
MBA

SUBMITTED BY
UNDER GUIDANCE OF

1
 BODY OF REPORT:-

The whole study has been divided into various parts:

1. The First chapter includes the introduction about derivatives and history of
kotak securities ltd. its awards and recognitions and its business in online trading.
2. The Second chapter includes the objectives, significance, and research
methodology and data collection.
3. The Third chapter has reported facts and information gathered by student in
the course of study of topic.
4. The Fourth chapter is about finding verious information about the company’s ( Maruti
Suzuki, M&M, Tata Motors.
5. TheFift h chapter is about the SWOT Analysis, with the help of compatrative study of
all 3 companies and their findings..
6. The Sixth chapter includes the Suggestions and Recommendation for the further
development and pointing out the weak points so that changes can be made.
Lastly, there is a Bibliography of the books, which was used by the researcher

2
 DECLARATION:-

I, the undersigned, hereby declare that the Project Report entitled “Anaylisis of
Automobile Sector in India ” written and submitted by me to the University of Pune, in
partial fulfillment of the requirement for the award of degree of Master of Business
Administration under the guidance of is my original work and the
conclusions drawn therein are based on the material collected by myself

Place: Date :
Signature of Student

3
 CERTIFICATE:-

This is to certify that the Project Report entitled “Anaylisis of Automobile Sector in
India” which is being submitted herewith for the award of the degree of Master of
Business Administration of University of Pune, Pune is the result of the original research
work completed by (Name of the student) under my supervision and guidance.

To the best of my knowledge and belief the work embodied in this Project Report has
not formed earlier the basis for the award of any degree or similar title of this or any
other University or examining body.

Place:

Date: Signature of Research Guide

4
 INDEX
Sr No Particulars Pg No

1 Acknowledgement

2 Preface

3 Objective of Study

4 Introduction.

5 Company Profile.

6 Research Methodology

7 Data Finding and anaylisis.

8 Conclusion.

5
 ACKNOWLEDGEMENT

The success of any project study depends upon a number of factors among which the proper
guidance from the faculty in the institute plays an important role.

I take this opportunity to convey my sincere thanks and gratitude to all those who have directly or
indirectly helped and contributed towards the completion of this project.

I take here a great opportunity to express my sincere and deep sense of gratitude to H.O.D. for
giving us an opportunity to work on this project. The support & guidance from madam, was of
great help & it was extremely valuable. I would like to express my gratitude to madam for her
constant support and encouragement. Without his outright support and prompt response, it would
not be possible to do any justice as well as bring authenticity to the project.

6
EXECUTIVE
SUMMARY

7
The primary purpose of this report is to identify and analyze the dominant companies in the
automobile industry and determine the strongest performer as an investment opportunity. Maruti
Suzuki, Tata Motors, & Mahindra& Mahindra has been competing in the automobile sector for
over a century and both companies enjoy a high degree of brand consciousness globally. In this
project, the comparison among these companies has been done using the following criteria: (a)
Key Ratios (b) Cash Flow Statement

For the purpose of my report, all relevant financial data on these companies was derived from the
reliable and authenticated website and the accompanying annual reports (2009- 2010) of these
companies.

The comparative analysis of these companies has been done in very appropriate manner. All data
findings and analysis in this project has been done on the basis of these automobile companies’
annual reports. The Conclusion has been stated in the project along with Bibliography and
annexure. The project depicts the financial comparison among the various companies in the
automobile industry.

8
OBJECTIVE
OF THE
STUDY

9
The basic objective of doing the project is to analyze the financial statements of various
automobile companies and evaluate their performance in the market over the last 3 years (2008-
2009, 2009-2010)

The objective of this project is to describe the growth trends in the automobile industry and to
present an analysis of different parameters by studying the relationship among the various
financial factors as disclosed in the financial statements of various companies in the Indian
automobile market.

Major objectives are:

1. Know the Financial Position: The basic objective of studying the financial
statements of the company is to know the financial position of the company.

2. Know the Borrowing & Liquidity Position: The objective is to know the
borrowings of the company as well as the liquidity position of the company.

Minor Objectives are:

1. Study the Current Assets & Liability Position: The objective of study is to review the
position of the current assets and current liabilities of the company during the relevant years.

2. Help in planning: Financial Analysis helps in planning and forecasting. Over a

period of time, a firm or industry develops certain norms that indicate future success
& failure. If the relationship changes in firm’s data over different time periods, the
various tools of financial analysis such as ratios may provide clues on trends and
future problems.

3. Represent Inter-firm Comparison: Financial Analysis provides the data for inter-
firm comparison. Ratios highlight the factors associated with successful and
unsuccessful firms. They also reveal strong firms & weak firms, over-valued and
under-valued firms. The various tools of financial analysis provides inter-firm and
intra-firm comparison.

10
INTRODUCTION TO THE
AUTOMOBILE SECTOR

11
 AUTOMOBILES
Slowdown within, recession overseas

Only India and China, among the world's larger markets and car-producing economies, can look

back upon 2009 as a year of growth, writes V. Sumantran

The global auto industry would sooner forget the past 24 months. The decline In demand that be-

gan in the middle of 2008 persisted through much of 2009. The recovery that was seen in certain

sectors and certain markets came only after considerable intervention in one form or another. The

year 2009 was marked by several critical milestones. For one, China, with sales of about 11.6

million vehicles in 2009, surpassed the U.S. i[2009 sales of about 10.4 million) as the world's

largest vehicle market — something that would have been unimaginable five years ago. Equally,

China surpassed both Japan and the U.S. as the leading global producer of light vehicles. Further,

Toyota's brief-reign at the top of the automotive global order was brought to an unexpectedly

early end by the Volkswagen Group, which assumed the top spot during the year both in terras of

market capitalisation and global group sales.

In this downturn, we saw institutions such as GM and Chrysler suffer bankruptcies, only to

emerge in a much smaller, leaner form. The period has not been kind to the auto component

industry as well. Here too, many among the global top 10 have suffered devastating financial

performance. Corporations such as Delphi and Visteon have been broken up, ending a period of

industry consolidation and focus on system integration.

Domestic industry

Against this backdrop, the Indian auto industry has fared considerably better. Only India and

China, among the world's larger markets and car-producing economies, can look back upon 2009

12
as a year of growth. For the calendar year, the Indian passenger car industry recorded a growth of

about 13 per cent and is expected to close the year with sales in excess of 1.7 million units. That

consumers were getting more discriminating and willing to move up market, was evident.

The marketplace has been dominated by a number of new product releases and expectediy we

have seen levels of quality and specification increase very rapidly. The importance of the small

car (A2) segment was further underscored accounting for over 81 per cent of all vehicles sold

compared to 76 per cent for the previous year. Models such as Hyundai's ilO, i20, Maruti's A-

Star, Ritz, Wagon R and the slew of new models from Tata, Fiat, GM Honda and Skoda, have all

contributed to a tremendous amount of vitality in this segment, which seems to hit the spot for the

Indian consumer in terms of price, affordability, size and functionality. So much so, the erstwhile

importance of the entry level segment has further diminished, contracting from 5 per cent of the

market to less than three per cent.

These patterns seem to indicate that India is moving rapidly towards vehicle demographics as

seen in countries like Malaysia and Turkey. Of course, the recent launch of the Tata Nano may be

expected to increase the market share of the entry level segment given India's very large

population of two-wheelers and aspiring entry-level car owners.

The two-wheeler business also staged a smart recovery in 2009 a"s the credit crunch witnessed in

2008 and early 2009 began to ease. The industry grew by 17 per cent and finished 2009 with sales

in excess of 8.6 million. Of this, motorcycles accounted for almost 80 per cent. The two-wheeler

business has also acquired the characteristics of a matured market, driven by momentum of new

product launches, offer of a large variety of models for customers and very competitive marketing

and financing. Notably, premium motorcycles consolidated their importance both in terms of

brand image and relatively good market share. Manufacturers such as Yamaha and Suzuki grew

faster than industry average, albeit from a small base, as they focussed on premium products.

13
Scooter sales have also started to pick up again underscoring some resurgence of this sector after

almost a decade of decline. This parallels a global trend where scooters are becoming more

popular as chic, stylish and practical urban commuter vehicles. The dynamics here are obviously

closely linked to buyer priorities and road traffic conditions.

Slowdown in commercial vehicles

In comparison, commercial vehicles have fared poorly and by the end of the year registered a

decline of almost 10 per cent as compared to 2008. This was in spite of the light commercial

vehicle (LCV) sector growing by almost 20 per cent. This sector is closely linked to industrial

output and trade, and as a result suffered for much of 2009. The medium and heavy commercial

vehicle (M/ HCV) segment saw a decline of almost 2 5 per cent and is expected to finish 2009 at

a level of about 1.8C lakh units.

Some of this under-performance may be attributed to the difficulty for commercial credit,

depressed freight rates caused by fleet under-utilisation and some of the relatively lower

economic activity linked to industrial production. The impact of various stimuli from the gov-

ernment including excise duty cuts (dropped in stages from 14 per cent to 8 per cent), efforts to

ease liquidity and the offer of accelerated depreciation, failed to make much of an impact for

most of the year.

Although, the last few months of the year had begun: to register a pick up in sales, this has come

too late to allow the industry to demonstrate any growth over 2008. In the LCV business,

however, the story has been quite different. The evolution of freight transport towards a hub-and-

spoke structure has created strong demand for light commercial vehicles that are typically

engaged in last mile distribution or urban small-lot logistics. To promote this sector, the drop in

excise duty from 12 per cent to 8 per cent helped the typically small-entrepreneur owner-operator.

14
Even in a difficult year, the LCV segment has registered a growth of almost 20 per cent over a

base of 2 lakh units in 2008.

Fortunately, many of the larger commercial vehicle makers in the country also have a healthy

portfolio of buses and passenger vehicles. This sector was helped by the government's urban

investment policy, as we shall. see later. As a result, the government, under the Jawaharlai Nehru

National Urban Renewal Mission (JNNURM), provided significant incentives for purchase of

buses for public transport. For the chosen 65 Mission cities, a total of over 15,000 buses have

been approved for procurement under a Central assistance scheme that is expected to disburse in

excess of Rs. 31,000 crore. As a result, orders from various State transport authorities have

helped to boost the meagre order pipeline for India's heavy vehicle manufacturers. In spite of this

intervention, the sale of buses declined by almost nine per cent finishing the year at an overall

sale of about 70,000 units. The decline might have been more severe in the absence of such

intervention.

The year 2009 may also be considered notable for emergence of the following trends.

Export hub for small cars

A few years ago, the government had wisely decided to provide incentives to the small car

segment, defined by products limited to an overall length of less than 4 metres and a relatively

small displacement petrol and

diesel engine, The major benefits stem from a drop in excise duty for such vehicles to 8 per cent

compared to 20 per cent applicable for larger cars. The move was intended to encourage demand

for such small cars, recognis,-ing our crowded cities and very high vehicle density, , A second

motive was to progressively encourage larger scale investment for such products in India, This

was linked to the hope that India might emerge as an important export hub for small cars. One

15
may say that this strategy has indeed played out quite successfully. As noted earlier, today small

cars constitute over 83 per cent of Lhe car market indicating its considerable popularity with

consumers. This segment witnessed the most acute competition and consumers have an ever

increasing choice of contemporary and efficient models.

Logically, this demand has led to considerable investment for capacity for such vehicles and most

of these investments have been tailored to cater not only to the domestic market, but also for

export opportunities. Prominently established players such as Maruti, Hyundai and Tata have

expanded their capacity for such small cars. Furthermore, global manufacturers such as General

Motors (through its brand Chevrolet), Ford, Fiat, Volkswagen and Nissan have created consid-

erable new capacity that will be dedicated to new models from their global portfolio.

This small car strategy

enjoyed an unexpected boost in 2009. As an element of their economic stimulus package, many

governments in Europe rushed to offer incentives to consumers who would scrap older vehicles

and replace them with newer more fuel efficient and more environmentally friendly small

cars. The consequent market dynamics proved to be a huge boon to manufacturers such as Maruti

and Hyundai. Models,such as Hyundai's /10 and Maruti's A-Star are exclusively produced in

India for Hyundai and Suzuki. Backed by ocher stable mates — the Hyundai /20 and other Maruti

models, both Maruti and Hyundai clocked very impressive gains on the export front. For the

fiscal year, passenger car exports from India increased by 30 per cent and will be in excess of 3

lakh units. More impressively, exports of small cars from India increased by 38 per cent.

In the process, the consequences of this policy have been manifold. First, it provided a natural

incentive for manufacturers to adopt contemporary product technologies to meet the demands of

consumers, not only in the Indian market, but for the global market. This acceleration of

16
technology adoption has been a big benefit to India's auto component industry, which were,

likewise compelled to rapidly move up the technology ladder.

The concurrent increase in scale and improvement in economies also portend well for the future

of these sectors.

The other consequences of government policy that have begun to have an impact on the industry

are related to the Indian government's stimulus package encompassed within the JNNURM.

Many MGOs spread throughout the country and many local administrations have already picked

up growing public dissatisfaction with the country's transportation infrastructure. Not-

withstanding ever increasing budgets being allocated to highways, and urban and rural road

projects — including flyovers and grade separators — the problems of traffic congestion,

increasing transit times, declining standards in road safety, and noise and smoke pollution have

been more visible and increasingly irksome.

India is a country that is seeing rapid urbanisation and has cities with very high population

densities and rapidly rising vehicle densities (per km of roadway). Any long term solution will

need to address cost effective, user friendly and energy effective public transport modes.

The government's focus has logically been on investments in metro rail systems for many cities,

backed by grants and incentives to State transport undertakings to improve and modernise their

bus fleets. This applies not only through the emergent Bus Rapid Transit Systems (BRTS) but

also through fleet modernisation, route optimisation and improved infrastructure (bus terminals,

bus bays, bus lanes, etc.) The government has clearly signalled a resolve towards addressing

commuter dis satisfaction. In this regard the grants to States for purchases of new buses have

been an important shot in the arm for the auto industry.

It is important to nte that this initiative has not

17
only accelerated a move towards more modern convenient buses, but has also led to adoption of

new technologies for electronic ticketing, passenger information systems, fleet tracking and

optimisation.

Global bus manufacturers have gone through very difficult times. In Western economies, there

has been considerable decay of this industry driven by non-profit able transit authorities, high

degree of manually-intensive customisation, lack of scale and high labour costs. Indeed one has

seen the trend where Chinese bus makers have quickly positioned themselves to take on many of

these vulnerable global markets.

Like the policy adoption towards small cars, the government would do well to target the bus

sector as well for global scale and growth.

The combination of contemporary emission standards, adoption of modern electronic aids and the

advantage of low labour and customisation costs are natural advantages in India. With the benefit

of standardisation, the country can quickly generate advan

tages of scale and with this can position India's competitiveness in global markets more securely,

Auto components

The fast growing auto components sector also hit a speed bump in 2008-09. There were many

reasons for optimism going into this period. The domestic industry was maintaining a decent

growth rate, justifying addition of capacity. Increasing product content and sophistication,

coupled with the employment of systems rather than components, saw more value addition flow

from auto manufacturers to their suppliers. Added to this, the global industry embraced the

concept of low-cost country sourcing and after China, India became a preferred destination.

Capacity creation to feed these export opportunities was undertaken with vigour. Finally, the idea

that not only could India be a source of low-cost components, but also a development base for

18
"frugal engineering", motivated many global tier-one suppliers to invest in product R&D and

technical centres in India. In a sense, the more connected the auto components sector became to

the global industry, the more it was vulnerable to the global downturn. After growing in double

digits until 2008, growth skwed to 6 per cent in FY09, with a turnover of Rs. 76,000 crore, and

further declined in the first half of FY10. Importantly, exports dropped to 15 per cent of turnover

after having sustained levels of over 20 per cent for the period 2004-08. Added to this, deferment

by auto makers of production start or scaling back of investment in the face of the slowdown have

hit the industry hard. Many component manufacturers have had to significantly alter their plans

due to change of course by the automakers. Fortunately, the second half of 2009 began to see the

industry recover as volume growth in the domestic market became visible. The growth over the

second half of 2009 was around 20 per cent for some component manufacturers. However, a

more circumspect outlook for further investment is visible.

Goals and outlook

In a world where the auto sector is plunged in gloom. it is perhaps understandable if the mood in

India is positive. As one of the few bright spots of the global auto industry over the past year, the

BSE auto stocks index doubled in 2009 after having lost 57 per cent in 2008.

The Automotive Mission Plan 2006-16 compiled by the industry in cooperation with the

government has targeted a turnover of $ 145 billion by 2016, This plan includs the goal of

providing jobs for over 25 million persons and accounting for a contribution to the country's GDP

to the tune of 10 per cent. Considering that the industry turnover was a little over $ 45 billion by

the end of the last fiscal, and that there was relatively modest growth over the current fiscal, a lot

of acceleration will be needed if these goals are to be met. The global trend of this industry

moving eastward will provide some tailwind for this journey. ■

The author is Executive Vice-Chairman Hinduja Automotive Ltd

19
 SMALL CARS

Huge untapped potential

This extraordinary growth that the small car industry has witnessed is the result of a few major

factors, namely, improvement in living standards of the middle class, writes Mayank Pareek

Moving from "Roti, kapda aur makaan to "Roti, kapda, makaan aur gadi "clearly says the Indian

passenger car story. From being a product owned by a select few 25 years back it is now a

necessity for most of us. The Indian automobile industry has grown by leaps and bounds since

1898, when a car had touched Indian streets for the first time.

At present India is one of the fastest growing car markets in the world, it holds a promising ninth

position in the entire world and growing with a CAGR of about 14 per cent, ready to surpass

many developed markets. Maruti Suzuki entered the market in 1983 at a time when scooters were

in keen demand and motorcycles were rare. It took lot a of patience and hard work to develop the

market. Today almost every major car maker of the world is present in India where Maru Li

Suzuki Is the market leader with over 50 per cent market share.

Small is big in India

Good things come in small packages and so is it with cars in India. Small cars definitely have

their special place amongst Indians where a majority of car buyers are from the middle income

group. One has a plethora of options in India when it comes to buying a small car.

20
The small car market constitutes almost 72 per cent of the Indian passenger car industry, in other

words it is the core of passenger cars in India. The reason for such stupendous success of small

cars in India is its growing middle class.

When Maruti launched its M800 in 1983 it was the middle class which was excited the most, and

today also small cars are preferred as the family size is small {nuclear families).

The Indian consumer is extremely value conscious and evaluates factors such as acquisition cost,

maintenance

Fig.1: Passenger car sales 2008-09

A1 & A2
A3
A4
A5
A6

Figure 1

cost, fuel cost, registration charges and the like. Hence, the small car fits well in Indias' mindset

for small things as it is easy to drive in and out of busy city roads. The car has always been as

aspirational and emotional product for Indians. It binds Indian families and makes the bond

stronger between distant relatives.

21
Growth opportunities

This extraordinary growth that the small car industry has witnessed is the result of a few major

factors, namely, improvement in living standard? of the middle class and easy availability of

finance - about 65 per cent of cars are bought through hire purchase. Banks have been aggressive

with attractive schemes for customers. There are many more opportunities and the future growth

looks very promising. Some of them are:

Low penetration: Even today car penetration in India is quite low at. 10 per thousand. It is 12 in

Sri Lanka and 5 50 plus in developed economies, There is thus huge opportunity to tap a

huge potential market.

Value growth: India today is the second largest market for two wheelers

Fig.2 Maruti Suzuki rural penetration

with annual sales around seven million. A natural upgrade for a two wheeler owner is a car and

sooner or later every he or she -likes to drive a car. Going for a drive is an expression of freedom,

independence and achievement. Today 50 per cent of the buyers are first time buyers.

Economic growth: India is one of the fastest growing economies growing at 7.5 per cent a year.

But the per capita income is still small in comparison with other nations, and hence the small car

will continue to be the first choice of most consumers.

Demographic advantage: India has one*of the youngest populations with 65 (in, %) per cent

below 3 5 years. The average age of buying cars has come down to 29 years.

This generation is ready to experiment without any baggage of the past, and this is gold mine of

opportunities for the industry.

22
Rural market-Big Sales in Small Town;

Only 40 per cent of the rural economy depends on agriculture and

rural consumers not very different in their aspirations from their urban brothern.

They watch the same serials on TV, use similar mobile phones and buys a similar

cars. Car makers are crafting new strategies to tap this mass market. Maruti Suzumi started its

initiative few years back and its rural penetration has risen irom 3 per cent in 2007 to 16 per cent

in 2009.

There have been buyers outside the Tire I cities even before liberalization. After all India is a

land of traders who have flourished in most remote corners of the country.. The more remote the

area the better traders margin. The economy is growing at 9 % but not only in metros. Bihar is

growing at 11.6%. Wherever the road goes the development follows & people in the interior

have money. Car makers in India have evolved myriad practices to generate growing demand

beyond metros up to Hinderland.

Once Mr Mayang Pareek ( Managing Executive Officer- Marketing & Sales Maruti Suzuki)said

that ‘ For wooing customers in Rural areas we target Sarpancj and School Teachers who look up

in rural parts.

18
16
14
12
10 East
8
6
4
2
0
0 1 2 3 4 5

Maruti Suzuki Rural Penetration 1

23
Selling Beyond India’s Metro’s:-

N.M % TOP 3 N.M RURAL TOP RURAL AFTER N.M

SHARE MARKE MARKETS SALES SHOWROOMS

T AS % COVERAGE

SALE

MARUTI 60 Cuttact, Jammu, 17 Buldana, Navsari, Presence in 695

SUZUKI Nagpur Kangra 1350 tehsils

HYUNDAI 54 Pune,Ahmedabad 29 Manglore, 324 in rural 324

MOTORS , Cochi Aurangabad,Meerut markets.

INDIA ,Hissar, Ambala

GENERAL 60 Surat, Vodadara, NA Kolhapur, 200 207

MOTORS Calicut Gwaliour, Itnagar,

24
 Vapi
SOURCE:- COMPANIES

AFTER SALES COVERAGE:-

COMPANY N.M MARKET AFTER SALES Non metro PRODUCTS

% SALES COVERAGE showrooms

M&M 55 460 Districts 750* Belero, Xylo,

Logan.

TATA 70 450 Service 300 Nano, Indica,

MOTORS Outlets Indigo, Sumo

FORD MOTOR 50 NA >90 Figo, Ikon

INDIA

*INCLUDES SECONDARY OUTLET SOURCE:- OUTLOOK BUSINESS INTERVIEW.

SALES IN RURAL AREAS:-

COMPANY 2008 2009 2010

MARUTI 24900 64993 143680

SUZUKI*

HYUNDAI 57666 83550 43249( UPTO

INDIA** MAY)

GM INDIA 5600 8800 8000(UPTO

JUNE)
* FISCAL YEAR ENDING 31ST MARCH, ** CALENDER YEAR ENTRY DEC 31

25
Poor public transport system : Transportation is an important part of the nation’s economy.

With a large land area and one billion plus population transport in India is a necessity as well as a

convenience.

Since the economic liberalisation of the 1990s, development of infrastructure in the country has

progressed at a rapid pace, but still India has a long way to go to build world class public

transport.

Fuel economy: Fuel efficiency of the vehicle is a significant 'influencer' in a buyer's purchase

decision and small cars will always have an advantage because of their better mileage. In future

too, with rapid urbanisation, small cars will be preferred over big gas guzzlesrs.

Major Challenges

Poor infrastructure: The automobile industry however has to contend with the following

challenges while planning its growth strategy. Poor infrastructure may be an impediment to the

growth of the auto industry in India, especially in big cities where car sales have been rising

rapidly. This is one area where Indiato catch up with other countries for sustained growth. Value

seeker: With rising input costs, it is already tough for all OEMs to maintain the current price

value equation. Indian small car buyers are extremely value conscious and shift products and

variants based on the features and prices offered.

26
 Dependancy of Rural Economy

100%

80%

60%
Service
40%
Industry
20% Agriculture

0%
1970's 2007-
08
YEAR

Distribution: India is the seventh largest country by size with a production of more than one

billion people spread over a vast area. It will be Herculean task to cover the length and breadth of

the country and reach consumers.

Changing lifestyle, psychographics: Today's Indian consumer is different from the one a decade

ago. Tastes are changing rapidly, in terms of design, style, colours, and features. It will be a

challenge for all marketers to understand the tastes of consumers ftnd satisfy them to perfection.

The Indian market has taken a U-turn in the past one year. There is lot of vibrancy in the market

and consumers are back with a bang. The overall sentiment is positive and many brands vying

with each other to grab the consumer's attention. People are spending on right valued products.

India will see more product launches in a year than what it saw in several years. There is

integration of Bharat with India and the future looks extremely promising, e

The author is Executive Officer (Marketing & Sales), Maruti Suzuki India.

27
 PASSENGER CARS

Gears up to accelerate, again

After initial hiccups, a series of new launches over the past few months from various

manufacturers tell the tale of a sector revving up, writes H. W. Park

A
nyone who has experienced driving in North Indian winters knows it is not easy to

negotiate a mixture of fog and smog. In 2009 fiscal, the automobile industry did just that,

drive through the haze and smog of the global recession.

The consequent slowdown in the Indian economy, and the circumspection of the disposable

income-rich middle-class, made sales figures immobile for automobile manufacturers even in the

generally festive third quarter in 2008, But exactly a year later, the fog seems to have cleared. The

cheer factor here is the Indian car companies never saw the blinding fog that enveloped . their

counterparts worldwide, especially in the U.S.

U.S. majors' plight

When Barack Obama took over as the President of the U.S. in January 2009, the giants of the

U.S. auto industry were flat on their back: Chrysler was in bankruptcy, General Motors inching

close to it with every passing day, and both taking billions of dollars from Washington in

government help. With the twin issues of climate change and global warming beginning to

assume gigantic proportions, the U.S. Congress made it clear as early as 2008 that it had little

interest to back the Detroit majors any more.

28
The rules reversed, the auto companies were now, simply put, powerless — they needed

government aid, and decided to sit across the table. And with it came in the Obama

administration's plan to bring in more fuel-efficient cars on America's roads.

The U.S. auto manufacturers, mostly known for churning out fuel-guzzlers and weakened even

before the global meltdown, were hit hard by a significant increase in fuel prices following the

2003-08 energy crisis; they had little choice but to agree.

In India too, in the full throes of a global economic downturn, the year 2009 was a rough ride for

many Indian automobile manufacturers.

A collapse in consumer demand, combined with rising prices of raw materials, placed strong

pressure on profitability and employment in a sector already burdened by challenges of a

competition-intense market.

India revving up

However, with adversity comes opportunity, and even though it has undoubtedly been a tough

year for Indian automobile manufacturers, companies are not only demonstrating resilience, but

are remaining positive and focussed on recovery.

After initial hiccups, a series of new launches over the past few months from various

manufacturers tell the tale of a sector revving up. So many launches in such a short period prove

that the scene is changing rapidly, from the era.of Ambassadors to Maruti 800.

Hyundai Motor India Limited (HMIL) ended 2008 with the launch of its much awaited premium

hatchback the i20. The company also started 2009 with the launch of the upgraded version of its

internationally acclaimed luxury sedan, the Sonata Transform, with dynamic styling and

luxurious interiors, and followed it up with the launch of power-packed Verna with elegant

interiors and improved exterior features to further enhance its appeal to customers. Thereafter, the

29
company introduced the much-awaited diesel version of its popular hatchback i20 along with an

automatic transmission variant. Hyundai also launched the refurbished all new Santro that has

been designed with luxurious interiors and improved exterior features. Santro has been a

phenomenal success in India right from the time of its launch up till now. At the same time,

Hyundai supported the growth of the Indian automobile industry. Even in the difficult scenario, it

launched several variants to suit the customer requirements across all price brackets.

Despite the downturn, the major carmakers posted a record 63 per cent growth in November. The

top eight car manufacturers, responsible for about nine-tenths of the entire domestic car sales,

sold 1.54 lakh units that month in sharp contrast to 94,295 cars sold in the same month in 2008.

Hyundai, in continuance with the tradition of being the fastest growing passenger car

manufacturer, registered record sales in November 2009. The domestic market was the biggest

gainer as the company almost doubled its sales to 28,162 units or a 92.8-per cent growth over the

same month in the previous year.

Several car finance companies and auto makers feel that 2009 has been by far the best year for

vehicle sales. In the first seven months of 2009-10 (April to October), over 10.5 lakh passenger

vehicles (cars and MUVs) have been sold. This is a growth of 1.6 per cent, with the compact car

segment recording maximum growth. Car manufacturers are bullish that 2009-10 will continue to

see an average 15 per cent growth in passenger vehicles targeting total sales of 2 million vehicles.

However, India is a big market for small cars. The sales of compact cars far exceed those of

luxury ones. Sensing this opportunity, foreign car companies that had earlier launched luxury cars

are now banking on small cars to drive up their sales volume. While for the automobile sector the

Indian road ahead definitely looks better in terms of sales.

The export story

30
Over the years, India has emerged as one of. the world's largest manufacturers of small cars. The

strong engineering base and expertise in manufacturing low-cost, fuel-efficient cars has resulted

in the expansion of production facilities.

In the export arena, though India's auto market is 19 per cent of China's — the neighbour's auto

sales hit record 1.11 million in March — the country enjoys the edge over China in exports.

Helped by cheap labour and a surging local market, India overtook China in auto exports and is

challenging Thailand and South Korea as an alternative production centre in Asia.

In 2008, Hyundai, the largest exporter of passenger cars from India, exported 2,44 lakh units and

by 2009-end, had raised this to 2.70 lakh units.

The company recently crossed another significant milestone as it rolled out over 25 lakh cars

from its state-of-the-art production facility in Chennai. Of this grand total, about 16 lakh units

were sold in the country and the remaining 9 lakh were exported. The models exported include

Santro, ilO, i20 and the Accent.

Most recently, Hyundai in the U.K. received the prestigious 'What Car' magazine's Best Buy

Award in the 8,000-10,000-pound category. Also, to meet the burgeoning demand, it has also

expanded its exports base to tap over 110 countries across the world.

Before HMIL. commenced exports, 'Made in India' cars had minimal presence in the international

market but today they are present in over 110 countries. This only shows that Indian made cars

are at last acceptable and competitive worldwide — both in terms of quality and performance.

HMIL can claim this significant achievement for the whole Indian automotive industry with a

market share of almost 67 per cent of the total passenger car exports out of India.

The car major's aspirations only exhibit that households worldwide are now feeling more

confident and that consumer sentiment is rebounding from the lows seen a year ago.

31
The great Indian middle class

India's growing middle class — estimated at anything between 350 million and-400 million

people — is as large as the entire population pf the U.S., and it is growing. According to the

Indian Council for Research on International Economic Relations, the number of this "consuming

class" is expected to swell to more than 600 million by 2012.

Another recent study done for the National Council of Applied Economic Research (NCAER)

says 20 Indian cities account for 10 per cent of the country's population but generate 31 per

cent .of Its disposable income.

While the massive economic gains in China haye come from a fast rise in investment and

manufactured

exports, the protagonist in the Indian growth story is the buoyant domestic demand centred on

middles-class consumers. And th|s butgeoning segment has been one of the main driving forces

behind the rapid growth of the Indian economy in recent years. Even in the lean period over the

past few months, this vast disposable income rate helped keep the GDP growth rate up.

According to estimates released on November 30 by the Central Statistical Organisation (CSO)

for the second quarter (July-September 2009) of the 2009-10 fiscal, the GDP grew by an

astonishing 7-9 per cent over the same quarter in 2008,

This, at a time when economies in the developed world are still reeling under the after-effects of

previous year's global meltdown.

While salaried professionals in the private sector have had a good run over the past few years vis-

a-vis salary hikes, the boom among the consuming'class got a surge with the implementation of

the Sixth Pay Commission recommendations for most government employees. This resulted in

32
more disposable income, and more spending. What also helped the middle-class is the slash in

interest rates amid the slowdown.

Govt.-industry partnership

However, despite the signs of a return to economic growth, conditions remain tentative and

driven largely by government and fiscal stimulus measures.

While sales of cars and utility vehicles are expected to be around 1.8 million units for the fiscal

ending March 31, 2010, the fact that the industry did not see much of a hiccup, even as the U.S.

auto majors held their hand out for Washington's help during the peak slowdown months, has a

lot to do with the government's initiatives,

In particular, the automotive industry has been a significant beneficiary of the stimulus packages

which saw a strong boost for sales particularly in the middle of 1st year and this is expected to

continue for some time. The government saw the effects of the meltdown in the latter half of

2008 in the U.S. and other economies and lifted the industry with its stimulus measures, com-

bining tax cuts and easier credit terms. Among the stimulants are excise duty sops and a cutback

in service tax and bank lending rates. These helped the domestic automobile manufacturing

companies to limit job losses and stage a recovery.

This was significant, for last year's Economic Survey estimated that the automobile industry

generates direct and indirect employment for 10.5 million people. Taxes on small cars and trucks

were cut to 8 per cent, the lowest in many years While many expected the government to roll

back the excise duty cuts, the Prime Minister : indicated in October that the stimulus package

would go on for some more months, easing the pressure for many car manufacturers.

New plans

33
Driven by strong consumer sentiment, all automobile manufacturers are launching a slew of

products to lure customers. With the Indian small car market slated to get more crowded in the

next few years, Hyundai aims to aggressively defend its market share. The company now ships

abroad one in every two cars produced at its Sriperumbudur plant, and expects' to export around

40 per cent of total production next year.

With small cars accounting for 78 per cent of the 1.4 million passenger vehicles' sold in

India, HMIL plans to launch a car smaller than: its entry-level Santro model. It expects

the first of those cars to roll out in 2011.

Notwithstanding the current challenging backdrop, there are grounds for optimism for all

automobile manufacturers. For 2009; the company's sales grew at 13-14 the same pace as

the industry.

Other initiatives

Most automobile manufacturers have introduced the CNG or LPG variants of their best

selling models. Keeping with the trend. Hyundai has taken the initiative to introduce

alternative fuel vehicles such as the Accent CNG and LPG the Santro CNG and LPG and

the i10 CNG, to target consumers where fuel economy is considered important along with

power and performance.

The industry is already in the process of introducing better performing CNG vehicles,

which has always been an ongoing process for the next stage of emission norms

scheduled from April 1, 2010. These engines will be developed to meet Bharat Stage IV

emission norm's to be applicable from April 1, 2910

The industry has always endeavoured to continuously improve vehicle technology for

better performance lower emissions and improved fuel efficiency. Now these

developments are being done across the board for CNG three-wheelers, cars, small trucks

34
and buses. '

At the New Delhi Auto Expo 2010, in Jalluary, Hyuri, dai showcased the company's

technology by displaying the electric version of its popular ilO.

Future perfect?

While ratings agency Moody's says the worst of the automotive industry crisis is over and

world sales are set to stabilise this year, car manufacturers in India expect sales to remain

heading northward. Experts 'also do not foresee the government making any moves to

withdraw the stimulus packages immediately, which will be welcome news for the

industry.

The passenger vehicle market, which cbnstitutes around 80 per cent of automobile s(~les

in lii'(iia, is expected to grow ata CAGR of ar6und 11 percent from 2009-10 to 2012-13.

With almost all global manufacturers betting big on India and China, to drive towards a

better r:oad, liter;;rlly; competition is going to be the buzzword. And with that comes

better choice for consurners, especially 'with the number of models launched aUhe. Alito

Expo.

In sum, the road may not he con1'pletely free of sp,eed 'breakers, but there is expectedto

be no hint of a blinding

fog. At least not in the near futUre.

The author is Managing Director and Chief Executive Officer, Hyundai Motor India

35
COMPANY
PROFILE

36
37
 PROFILE:-
Maruti Suzuki is one of India's leading automobile manufacturers and the market leader
in the car segment, both in terms of volume of vehicles sold and revenue earned. Until
recently, 18.28% of the company was owned by the Indian government, and 54.2% by
Suzuki of Japan. The Indian government held an initial public offering of 25% of the
company in June 2003. As of 10 May 2007, Govt. of India sold its complete share to
Indian financial institutions. With this, Govt. of India no longer has stake in Maruti
Udyog.

Maruti Udyog Limited (MUL) was established in February 1981, though the actual
production commenced in 1983 with the Maruti 800, based on the Suzuki Alto kei car
which at the time was the only modern car available in India, its only competitors- the
Hindustan Ambassador and Premier Padmini were both around 25 years out of date at
that point. Through 2004, Maruti Suzuki has produced over 5 Million vehicles. Maruti
Suzukis are sold in India and various several other countries, depending upon export
orders. Models similar to Maruti Suzukis (but not manufactured by Maruti Udyog) are
sold by Suzuki Motor Corporation and manufactured in Pakistan and other South Asian
countries.

The company annually exports more than 50,000 cars and has an extremely large
domestic market in India selling over 730,000 cars annually. Maruti 800, till 2004, was
the India's largest selling compact car ever since it was launched in 1983. More than a
million units of this car have been sold worldwide so far. Currently, Maruti Suzuki Alto
tops the sales charts and Maruti Suzuki Swift is the largest selling in A2 segment.

Due to the large number of Maruti 800s sold in the Indian market, the term "Maruti" is
commonly used to refer to this compact car model. Till recently the term "Maruti", in
popular Indian culture, in India Hindu's lord Hanuman is known as "maruti", was
associated to the Maruti 800 model.

Maruti Suzuki has been the leader of the Indian car market for over two decades.

Its manufacturing facilities are located at two facilities Gurgaon and Manesar south of
Delhi. Maruti Suzuki’s Gurgaon facility has an installed capacity of 350,000 units per
annum. The Manesar facilities, launched in February 2007 comprise a vehicle assembly
plant with a capacity of 100,000 units per year and a Diesel Engine plant with an annual
capacity of 100,000 engines and transmissions. Manesar and Gurgaon facilities have a
combined capability to produce over 700,000 units annually.

More than half the cars sold in India are Maruti Suzuki cars. The company is a subsidiary
of Suzuki Motor Corporation, Japan, which owns 54.2 per cent of Maruti Suzuki. The
rest is owned by the public and financial institutions. It is listed on the Bombay Stock
Exchange and National Stock Exchange in India.

38
During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024 were exported. In all,
over six million Maruti Suzuki cars are on Indian roads since the first car was rolled out
on 14 December 1983.

Maruti Suzuki offers 15 models, Maruti 800, Alto, WagonR, Estilo, A-star, Ritz, Swift,
Swift DZire, SX4, Omni, Eeco, Gypsy, Grand Vitara. Swift, Swift DZire, A-star and SX4
are manufactured in Manesar, Grand Vitara is imported from Japan as a completely built
unit (CBU), remaining all models are manufactured in Maruti Suzuki's Gurgaon Plant.

Suzuki Motor Corporation, the parent company, is 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.

Nearly 75,000 people are employed directly by Maruti Suzuki and its partners. It has
been rated first in customer satisfaction among all car makers in India from 1999 to 2009
by J D Power Asia Pacific.[2]

Further information: Timeline of Maruti Suzuki

[edit] Partner for the joint venture

Pressure started mounting on Indira and Sanjay Gandhi to share the details of the
progress on the Maruti Project. Since country's resources were made available by mother
to her son's pet project. A delegation of Indian technocrats was assigned to hunt a
collaborator for the project. Initial rounds of discussion were held with the giants of the
automobile industry in Japan including Toyota, Nissan and Honda. Suzuki Motor
Corporation was at that time a small player in the four wheeler automobile sector and had
major share in the two wheeler segment. Suzuki's bid was considered negligible.

In the initial rounds of discussion the giants had their bosses present and in the later
rounds related to the technical discussions executives of these automobile giants were
present. Osamu Suzuki, Chairman and CEO of the company ensured that he was present
in all the rounds of discussion. Osamu in an article writes that it subtly massaged their
(Indian delegation) egos and also convinced them about the sincerity of Suzuki's bid. In
the initial days Suzuki took all steps to ensure the government about its sincerity on the
project. Suzuki in return received a lot of help from the government in such matters as
import clearances for manufacturing equipment (against the wishes of the Indian machine
tool industry then and its own socialistic ideology), land purchase at government prices
for setting up the factory Gurgaon and reduced or removal of excise tariffs. This helped
Suzuki conscientiously nurse Maruti Suzuki through its infancy to become one of its
flagship ventures.[3]

Joint venture related issues

39
Maruti Suzuki's A-Star vehicle during its unveiling in Pragati Maidan, Delhi. A-Star,
Suzuki's fifth global car model, was designed and is made only in India.[4] Besides being
Suzuki's largest subsidiary in terms of car sales, Maruti Suzuki is also Suzuki's leading
research and development arm outside Japan

Relationship between the Government of India, under the United Front (India) coalition
and Suzuki Motor Corporation over the joint venture was a point of heated debate in the
Indian media till Suzuki Motor Corporation gained the controlling stake. This highly
profitable joint venture that had a near monopolistic trade in the Indian automobile
market and the nature of the partnership built up till then was the underlying reason for
most issues. The success of the joint venture led Suzuki to increase its equity from 26%
to 40% in 1987, and further to 50% in 1992. In 1982 both the venture partners had
entered into an agreement to nominate their candidate for the post of Managing Director
and every Managing Director will have a tenure of five years[5]

Initially R.C.Bhargava, was the managing director of the company since the inception of
the joint venture. Till today he is regarded as instrumental for the success of Maruti
Suzuki. Joining in 1982 he held several key positions in the company before heading the
company as Managing Director. Currently he is on the Board of Directors.[6] After
completing his five year tenure, Mr. Bhargava later assumed the office of Part-Time
Chairman. The Government nominated Mr. S.S.L.N. Bhaskarudu as the Managing
Director on 27 August 1997. Mr. Bhaskarudu had joined Maruti Suzuki in 1983 after
spending 21 years in the Public sector undertaking Bharat Heavy Electricals Limited as
General Manager. Later in 1987 he was promoted as Chief General Manager, 1988 as
Director, Productions and Projects, 1989 Director, Materials and in 1993 as Joint
Managing Director.

Suzuki Motor Corporation didn't attend the Annual General Meeting of the Board with
the reason of it being called on a short notice.[7] Later Suzuki Motor Corporation went on
record to state that Mr. Bhaskarudu was "incompetent" and wanted someone else.
However, the Ministry of Industries, Government of India refuted the charges. Media
stated from the Maruti Suzuki sources that Bhaskarudu was interested to indigenise most
of components for the models including gear boxes especially for Maruti 800. Suzuki
also felt that Bhaskarudu was a proxy for the Government and would not let it increase its
stake in the venture.[8] If Maruti Suzuki would have been able to indigenise gear boxes
then Maruti Suzuki would have been able to manufacture all the models without the

40
technical assistance from Suzuki. Till today the issue of localization of gear boxes is
highlighted in the press.[9]

The relation strained when Suzuki Motor Corporation moved to Delhi High Court to
bring a stay order against the appointment of Mr. Bhaskarudu. The issue was resolved in
an out-of-court settlement and both the parties agreed that R S S L N Bhaskarudu would
serve up to 31 December 1999, and from 1 January 2000, Jagdish Khattar, Executive
Director of Maruti Udyog Limited would assume charges as the Managing Director.[10]
Many politicians believed, and had stated in parliament that the Suzuki Motor
Corporation is unwilling to localize manufacturing and reduce imports. This remains true,
even today the gear boxes are still imported from Japan and are assembled at the Gurgaon
facility.

Industrial relations

41
 PRODUCTS:-
1. Maruti 800.

2. Omni.

3. Gypsy.

4. Eeco

5. Alto.

6. Wagon R.

7. Zen Estilo.

8. A Star.

9. Ritz

10.Swift

11.Swift Desire.

12.SX4.

13.Grand Vitara

TO BE LAUNCHED.

1. Maruti Kizashi.

2. Maruti Cervo.

3. Maruti Jimny

4. Maruti XL7

BALANCESHEET:-
42
Balance Sheet of Maruti ------------------- in Rs. Cr. -------------------

Suzuki India
Mar '06 Mar '07 Mar '08 Mar '09 M

12 mths 12 mths 12 mths 12 mths

Sources Of Funds

Total Share Capital 144.50 144.50 144.50 144.50

Equity Share Capital 144.50 144.50 144.50 144.50

Share Application Money 0.00 0.00 0.00 0.00

Preference Share Capital 0.00 0.00 0.00 0.00

Reserves 5,308.10 6,709.40 8,270.90 9,200.40 11

Revaluation Reserves 0.00 0.00 0.00 0.00

Net worth 5,452.60 6,853.90 8,415.40 9,344.90 11

Secured Loans 71.70 63.50 0.10 0.10

Unsecured Loans 0.00 567.30 900.10 698.80

Total Debt 71.70 630.80 900.20 698.90

Total Liabilities 5,524.30 7,484.70 9,315.60 10,043.80 12

Mar '06 Mar '07 Mar '08 Mar '09 M

12 mths 12 mths 12 mths 12 mths

Application Of Funds

F.A

Gross Block 4,954.60 6,146.80 7,285.30 8,720.60 10

Less: Accum. Depreciation 3,259.40 3,487.10 3,988.80 4,649.80 5

Net Block 1,695.20 2,659.70 3,296.50 4,070.80 5

Capital Work in Progress 92.00 238.90 736.30 861.30

3,173.30
Investments 2,051.20 3,409.20 5,180.70 7

Inventories 881.20 713.20 1,038.00 902.30 1

Sundry Debtors 654.80 747.40 655.50 918.90

43
Cash and Bank Balance 51.60 114.80 324.00 239.00

Total Current Assets 1,587.60 1,575.40 2,017.50 2,060.20 2

Loans and Advances 933.10 1,072.60 1,173.00 1,809.80 1

Fixed Deposits 1,350.00 1,308.00 0.00 1,700.00

Total CA, Loans & Advances 3,870.70 3,956.00 3,190.50 5,570.00 3

Deffered Credit 0.00 0.00 0.00 0.00

Current Liabilities 1,704.80 2,288.60 2,718.90 3,250.90 3

Provisions 480.00 490.50 369.50 380.70

Total CL & Provisions 2,184.80 2,779.10 3,088.40 3,631.60 3

Net Current Assets 1,685.90 1,176.90 102.10 1,938.40

Miscellaneous Expenses 0.00 0.00 0.00 0.00

Total Assets 5,524.30 7,484.70 9,315.60 10,043.80 12

Contingent Liabilities 1,289.70 2,094.60 2,734.20 1,901.70 4

Book Value (Rs) 188.73 237.23 291.28 323.45

44
 Ratios.
RATIO ANALYSIS

A Ratio gives the mathematical relationship between one variable and

another. Ratio analysis helps in valuing the firm in quantitative terms. Ratios
are classified as follows:

1. Liquidity Ratios
2. Turnover Ratios
3. Profitability Ratios
4. Ownership Ratios

1. Liquidity Ratios

Liquidity implies firm’s ability to pay its debts in short run. This ability can
be measured by Liquidity Ratios. Current Ratio and Quick Ratio are the two
ratios which directly measure Liquidity. Receivables turnover Ratio and
Inventory Turnover Ratio are the two ratios which in directly measure
Liquidity.

A. Current ratio = Current Assets

Current Liabilities

45
Current assets which are converted into cash within one year.
Current liabilities are liabilities which are to be repaid within a period of 1
year.

Current Assets Current Liabilities

Cash Loans And Advances

Marketable Securities Trade Creditors

Debtors O.S. Expenses
Inventories Provisions
Loans and Advances Pre Received incomes
Prepaid Expenses

O/S Incomes

IDEAL RATIO = 2:1

B. Quick ratio or Liquid ratio or Acid Test ratio = Quick Assets/Liquid

Assets
Current Liabilities
Quick Assets = Current Assets – Inventories- Prepaid expenses

Ratio of quick assets to quick liabilities. Quick assets which can be

converted into cash very quickly. Quick liabilities are liabilities which have
to be necessarily paid with in 1 year.

IDEAL RATIO = 1:1

C Debt Equity Ratio = Debt

Equity

46
 = Long Term Liabilities + Current Liabilities

Share Holders Funds

2. Turnover Ratios (Activity Ratios)

The turnover ratio is a process of measuring the number of times that

holdings are sold within a specified period of time. Generally, a turnover
ratio is calculated to cover either a calendar year or a period encompassing
twelve consecutive calendar months. The same formula may be used to
evaluate shorter or longer periods of time.

A. Fixed Assets Turnover Ratio = Cost of Sales

Average Net Fixed Assets

B. Inventory Turnover Ratio = Cost of goods Sold

Average Inventory

It indicates no. of times stock has been turned into sales in a year.

Ideal Ratio = 8

Cost of goods sold = Sales – gross profit

Average Inventory = Opening Stock + Closing Stock

2

Stock Conversion Period = Cost of goods Sold * No of days in a

year/Average Inventory

3. Profitability or Efficiency Ratios

47
These Ratios measure the efficiency of forms activities and its ability to
generate profits.

(i) Gross Profit Margin Ratio

(ii) Net Profit Margin Ratio
(iii) Return On Equity

These are elucidate as follows:

(i) Gross Profit Margin Ratio =

Revenue – Cost of Sales - Depreciation
Revenue

Gross Profit = Sales – Cost of goods sold

Net Sales = Sales – Sales Return - Excise Duty
There is no Ideal Ratio. Higher the ratio better will be the performance of the
business.

(ii) Net Profit Margin Ratio = Net Profit

Net Sales

It measures the overall efficiency of production, administration, selling,

financing, pricing and tax management. It shows the result of overall
operation of the firm.

(iii) Return on Equity = Net Income

Average Equity

Net income = PAT (Profit after Tax) is an important profit indicator to share
holders of the firm.

a)

Ratio 2 or Less – Exposes Its Creditors Lesser Risk

48
Ratio >2 – Exposes Its Creditors Higher Risk

b) Debt Assets Ratio = Debt

Assets

49
 I) Liquidity Ratio:-

Mar 06 Mar 07 Mar 08 Mar 09 Mar 10

Current 1.77 1.40 0.91 1.51 1.02
Ratio
Quick 1.31 1.13 0.66 1.26 0.68
Ratio
Debt 0.01 0.09 0.11 0.07 0.07
Equity
Ratio
COMMENTS:-

1) Current Ratio:- C.R from mar 2006 to Mar 2008 are decreasing
that means the liabilities are increasing in proportion to current
assets. And vice versa in the next two years. In fact, The current
ratios are favorable, as execpt Mar 2008 current ratio > 1(i.e
assets are greater than liabilities).

2)Quick Ratio :- Same as current ratio till Mar 2008 Quick ratio id
decreasing and then increasing comparatively.That means the flow
of liquid asset is greater than payments to be made.Execpt in
march 2008.

3) D/E Ratio:- D/E ratio is also increasing from 0.01 in Mar 2006
to 0.11 in Mar 2008 and subsequently reduced to 0.07 in the
following years.That means the firm is equity based firm . In fact ,
the firm maximizes the investor’s fund much greater than the cost
of debt.

II) Management Efficiency Ratios:-

Mar 06 Mar 07 Mar 08 Mar 09 Mar 10

Fixed Asset 6.59 6.32 2.48 2.38 2.80
turnover
50
Ratio.
Inventory 14.15 21.27 22.93 30.46 26.43
Turnover
Ratio.
Debtor 19.45 21.12 25.76 26.33 33.65
Turnover
Ratio.

COMMENTs:-

1)Fixed asset turnover ratio:- Fixed assets are much more greater in Mar 2006 an
2007 than the remaining years . In short firm is trying to maximize the sale and
reduce the fixed assets so that to achieve higher operating leverage i . e
contribution in fact the operating risk has been reduced.

2) Inventory turnover ratio:- The inventory t.o. ratio is increasing continuously

from 14.15 in year march 2006 to 26.43 in march 2010.Tha shows that firm is
increasing the investment in working capital of inventory in relation to the sales
hence the inventory carrying risk is reduced but the carrying cost is increased so
that sufficient inventory is maintained.

3)Db turnover ratio:- Same as inventory t.o. ratio the investment in working capital
for debtors is increased consistently from March 2005 to 2010 in relation to sales
i.e the credit policy has been liberalized.

51
 III) Profitability Ratios:-

Mar 06 Mar 07 Mar 08 Mar 09 Mar 10

Gross Profit 16.95 16.66 10.97 5.77 8.85
Margin Ratio

Net Profit 9.53 10.29 9.34 5.72 8.29

Margin Ratio

Return On 33.46 30.65 26.18 17.37 28.41

Capital
Employed

COMMENT:-
1)Gross profit margin ratio:- As per the profitability matter is concerned G.P has been reduced to
great level ( i.e almost half ) in comparision to March 2006 and March 2009 but G.P has been
increased to 8.85% again March 2010 .

2)Net Profit ratio:- Not in relation to G.P ratio net profit has been tried to be kept at consistentant
level.Exept in march 2009 so that the investors earning is secured by reducing the indirect expenses.

3) Return on Capital Empoyed:- Same as net profit ratio EPS has been kept at its optimum level except
in year 2009 . Though it is decreased from 33.46% in March 2005 to 28.41% in March 2010, the firm has
tried to maintain the share holders interest ( i.e EPS) not withstanding the G.P ratio.In fact as the debt
equity ratio is far less than 1 , investors wealth is maximized by keeping consistant return on capital.

52
 STOCK HOLDING PATTERN:-

Share holding

Share holding pattern as on : 30/06/2010 31/03/2010 31/12/2009

Face value 5.00 5.00 5.00
No. Of % No. Of % No. Of %
Shares Holding Shares Holding Shares Holding
Promoter's holding
Foreign Promoters 156618440 54.21 156618440 54.21 156618440 54.21
Sub total 156618440 54.21 156618440 54.21 156618440 54.21
Non promoter's holding
Institutional investors
Banks Fin. Inst. and
40723803 14.10 40250313 13.93 39391796 13.63
Insurance
FII's 58028722 20.09 61017822 21.12 65921478 22.82
Sub total 107187371 37.10 109173024 37.79 113081570 39.14
Other investors
Private Corporate
17321036 6.00 16280136 5.64 13254917 4.59
Bodies
NRI's/OCB's/Foreig
202430 0.07 163096 0.06 120741 0.04
n Others
Others 440067 0.15 166817 0.06 354610 0.12
Sub total 17963069 6.22 16609585 5.75 13729804 4.75
General public 7140716 2.47 6508547 2.25 5479782 1.90
Grand total 288909596 100.00 288909596 100.00 288909596 100.00

COMPARISION OF QUATERLY RESULTS:-

Jun ' 10 Mar ' 10 Dec ' 09 Sep ' 09 Jun ' 09

53
 Jun ' 10 Mar ' 10 Dec ' 09 Sep ' 09 Jun ' 09
Operating profit 792.51 1,111.07 1,133.91 916.14 793.17
Interest 7.98 12.85 8.37 5.97 6.31
Gross profit 884.73 1,177.19 1,216.79 1,020.18 1,003.39
EPS (Rs) 16.11 22.72 23.80 19.73 20.20

Quarterly results in details

Jun ' 10 Mar ' 10 Dec ' 09 Sep ' 09 Jun ' 09
Other income 100.20 78.97 91.25 110.01 216.53
Stock adjustment 54.94 12.85 -131.15 -15.39 -59.62
Raw material 6,079.7 6,127.64 5,491.8 5,254.8 4,827.3
2 6 9 4
Power and fuel - - - - -
Employee expenses 160.96 153.36 132.45 126.27 133.56
Excise - - - - -
Admin and selling expenses - - - - -
Research and development expenses - - - - -
Expenses capitalised - - - - -
Other expenses 1,143.4 1,019.63 875.78 920.70 798.55
0
Provisions made - - - - -
Depreciation 241.70 223.04 202.78 203.11 196.09
Taxation 177.67 297.60 326.48 247.07 223.76
Net profit / loss 465.36 656.55 687.53 570.00 583.54
Extra ordinary item - - - - -
Prior year adjustments - - - - -
Equity capital 144.46 144.46 144.46 144.46 144.46
Equity dividend rate - - - - -
Agg.of non-prom. shares (Lacs) 1322.92 1322.92 1322.92 1322.92 1322.92
Agg.of non promotoholding (%) 45.79 45.79 45.79 45.79 45.79
OPM (%) 9.63 13.19 15.11 12.72 12.22
GPM (%) 10.62 13.84 16.02 13.95 14.95
NPM (%) 5.59 7.72 9.05 7.79 8.70

54
SALES & EXPORT:-

Maruti Suzuki sales in August 2010

New Delhi, September 01, 2010

55
Maruti Suzuki India Limited, India's car market leader, sold a total of 104,791 vehicles in August 2010, growing 23.6 per cent in the month. This
includes exports of 12,117units. This is the highest ever monthly sales recorded by the company.

The company had sold a total of 84,808 vehicles in August 2009.

Maruti Suzuki's volume in the domestic A2 segment grew by 25.7 per cent and in the A3 segment the sales volume grew by 34 per cent during the
month as compared to sales in August 2009.

During the month the company launched Alto-K10 with 1-litre K-series engine and five CNG models across segments. Customers ranked Maruti
Suzuki as the No.1 company in the annual Sales Satisfaction Survey conducted independently by JD Power, a leading global research agency.

The sales figures for August 2010 are given below:

In August Till August

Segment Models April'09 - March'10
2010 2009 % Change 2010-11 2009-10 % Change

A1 M800 1919 2734 -29.8% 10505 12649 -16.9% 33028

C Omni, versa, Eeco* 14157 6601 114.5% 61295 36136 69.6% 101325

Alto, A-Star, WagonR,

A2 65953 52473 25.7% 300545 247321 21.5% 633190
Ritz, Estilo, Swift

A3 SX4, D'zire 10479 7821 34.0% 49789 36869 35.0% 99315

Total Passenger Cars 92508 69629 32.9% 422134 332975 26.8% 866858

MUV Gypsy, Grand Vitara 166 332 -50.0% 3541 1929 83.6% 3932

Domestic 92674 69961 32.5% 425675 334904 27.1% 870790

Export 12117 14847 -18.4% 63297 54707 15.7% 147575

Total Sales 104791 84808 23.6% 488972 389611 25.5% 1018365

* Eeco was launched in Jan 2010.

Currently Maruti drives 40 % of sales from large fast growing cities and 17% from villages the reat in small town and cities.

SALES IN RURAL INDIA

56
 % OF UNITS SOLD IN RURAL MARKET
2007-08 2008-09 2009-10

MARUTI SUZUKI 3.5 9.0 16.5

MARUTI SALES BY DEMOGRAPHY

20

15
SALES,
10
SALE2000-
S, SALES,
5 SALES 5000,5000-
1000- 18
SALES, SALE S, 500-
, 200-
999,2000,
6 1110000, 11 SALES
L0 500, 4
ESSTHAN
200,
LESS1 500- 2000-
THAN 999 5000
200

57
STOCK ANAYLYSIS

58
CURRENT MARKET PRICE:-

NSE:- 1307.50

BSE:- 1308.50

59
TATA MOTORS LTD

Tata Motors Limited

Date of Listing (NSE) : 22-Jul-1998
Face Value : 10.00
ISIN : INE155A01014
Industry : AUTOMOBILES - 4 WHEELERS
Constituent Indices : NIFTY,CNX 100,CNX 500

60
PROFILE:-
Tata Motors Limited is India's largest automobile company, with consolidated revenues of Rs. 92,519 crores (USD 20 billion)
in 2009-10. 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 24,000 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. Over 5.9 million Tata vehicles
ply on Indian roads, since the first rolled out in 1954. The company's manufacturing base in India is spread across Jamshedpur
(Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand) and Dharwad (Karnataka). Following a
strategic alliance with Fiat in 2005, it has set up an industrial joint venture with Fiat Group Automobiles at Ranjangaon
(Maharashtra) to produce both Fiat and Tata cars and Fiat powertrains. The company is establishing a new plant at Sanand
(Gujarat). The company's dealership, sales, services and spare parts network comprises over 3500 touch points; Tata Motors
also distributes and markets Fiat branded cars in India.

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. In 2004, it acquired the Daewoo Commercial Vehicles Company, South
Korea's second largest truck maker. The rechristened Tata Daewoo Commercial Vehicles Company has launched several new
products in the Korean market, while also exporting these products to several international markets. Today two-thirds of heavy
commercial vehicle exports out of South Korea are from Tata Daewoo. In 2005, Tata Motors acquired a 21% stake in Hispano
Carrocera, a reputed Spanish bus and coach manufacturer, and subsequently the remaining stake in 2009. Hispano's presence is
being expanded in other markets. In 2006, Tata Motors formed a joint venture with the Brazil-based Marcopolo, a global leader
in body-building for buses and coaches to manufacture fully-built buses and coaches for India and select international markets.
In 2006, Tata Motors entered into joint venture with Thonburi Automotive Assembly Plant Company of Thailand to
manufacture and market the company's pickup vehicles in Thailand. The new plant of Tata Motors (Thailand) has begun
production of the Xenon pickup truck, with the Xenon having been launched in Thailand in 2008.

Tata Motors is also expanding its international footprint, established through exports since 1961. The company's commercial
and passenger vehicles are already being marketed in several countries in Europe, Africa, the Middle East, South East Asia,
South Asia and South America. It has franchisee/joint venture assembly operations in Kenya, Bangladesh, Ukraine, Russia,
Senegal and South Africa.

The foundation of the company's growth over the last 50 years is a deep understanding of economic stimuli and customer
needs, and the ability to translate them into customer-desired offerings through leading edge R&D. With over 3,000 engineers
and scientists, the company's Engineering Research Centre, established in 1966, has enabled pioneering technologies and
products. The company today has R&D centres in Pune, Jamshedpur, Lucknow, Dharwad in India, and in South Korea, Spain,

61
and the UK. It was Tata Motors, which developed the first indigenously developed Light Commercial Vehicle, India's 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 India's 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. A development, which signifies a first
for the global automobile industry, the Nano brings the comfort and safety of a car within the reach of thousands of families.
The standard version has been priced at Rs.100,000 (excluding VAT and transportation cost).

Designed with a family in mind, it has a roomy passenger compartment with generous leg space and head room. It can
comfortably seat four persons. Its mono-volume design will set a new benchmark among small cars. Its safety performance
exceeds regulatory requirements in India. Its tailpipe emission performance too exceeds regulatory requirements. In terms of
overall pollutants, it has a lower pollution level than two-wheelers being manufactured in India today. The lean design strategy
has helped minimise weight, which helps maximise performance per unit of energy consumed and delivers high fuel efficiency.
The high fuel efficiency also ensures that the car has low carbon dioxide emissions, thereby providing the twin benefits of an
affordable transportation solution with a low carbon footprint.

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 their power, speed, carrying capacity, operating
economy and trims, they will introduce new benchmarks in India and match the best in the world in performance at a lower
life-cycle cost.

Tata Motors is equally focussed on environment-friendly technologies in emissions and alternative fuels. . It has developed
electric and hybrid vehicles both for personal and public transportation. It has also been implementing several environment-
friendly technologies in manufacturing processes, significantly enhancing resource conservation

Through its subsidiaries, the company is engaged in engineering and automotive solutions, construction equipment
manufacturing, automotive vehicle components manufacturing and supply chain activities, machine tools and factory
automation solutions, high-precision tooling and plastic and electronic components for automotive and computer applications,
and automotive retailing and service operations.

Tata Motors is committed to improving the quality of life of communities by working on four thrust areas – employability,
education, health and environment. The activities touch the lives of more than a million citizens. The company's support on
education and employability is focused on youth and women. They range from schools to technical education institutes to
actual facilitation of income generation. In health, our intervention is in both preventive and curative health care. The goal of
environment protection is achieved through tree plantation, conserving water and creating new water bodies and, last but not
the least, by introducing appropriate technologies in our vehicles and operations for constantly enhancing environment care.

With the foundation of its rich heritage, Tata Motors today is etching a refulgent future.

PRODUCTS:-

62
 TATA MOTORS

COMMERCIAL
PASSENGER CAR UTILITY VEHICALS TRUCKS
PASSENGER CARRIERS

INDICA V2 INDICA V2 XETA SAFIRI DICOR SUMO GRANDE MK II SUMO BUSES WINGER MAGIC

INDICA VISTA INDIGO CS

INDIGO MARINA INDIGO XL

INDIGO MANZA NANO

63
BALANCESHEET:-

Balance Sheet of Tata ------------------- in Rs. Cr. -------------------

Motors
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds
Total Share Capital 382.87 385.41 385.54 514.05 570.60
Equity Share Capital 382.87 385.41 385.54 514.05 570.60
Share Application Money 0.00 0.00 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 5,127.81 6,458.39 7,428.45 11,855.15 14,394.87
Revaluation Reserves 26.39 25.95 25.51 25.07 0.00
Networth 5,537.07 6,869.75 7,839.50 12,394.27 14,965.47
Secured Loans 822.76 2,022.04 2,461.99 5,251.65 7,742.60
Unsecured Loans 2,114.08 1,987.10 3,818.53 7,913.91 8,883.31
Total Debt 2,936.84 4,009.14 6,280.52 13,165.56 16,625.91
Total Liabilities 8,473.91 10,878.89 14,120.02 25,559.83 31,591.38
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

12 mths 12 mths 12 mths 12 mths 12 mths

Application Of Funds
Gross Block 7,971.55 8,775.80 10,830.83 13,905.17 18,416.81
Less: Accum. Depreciation 4,401.51 4,894.54 5,443.52 6,259.90 7,212.92
Net Block 3,570.04 3,881.26 5,387.31 7,645.27 11,203.89
Capital Work in Progress 951.19 2,513.32 5,064.96 6,954.04 5,232.15
Investments 2,015.15 2,477.00 4,910.27 12,968.13 22,336.90
Inventories 2,012.24 2,500.95 2,421.83 2,229.81 2,935.59
Sundry Debtors 715.78 782.18 1,130.73 1,555.20 2,391.92
Cash and Bank Balance 327.66 535.78 750.14 638.17 1,753.26
Total Current Assets 3,055.68 3,818.91 4,302.70 4,423.18 7,080.77
Loans and Advances 5,964.61 6,208.53 4,831.36 5,909.75 4,618.90
Fixed Deposits 791.77 290.98 1,647.17 503.65 0.00
Total CA, Loans & Advances 9,812.06 10,318.42 10,781.23 10,836.58 11,699.67
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 6,673.61 6,956.88 10,040.37 10,968.95 16,117.80

64
Provisions 1,215.04 1,364.32 1,989.43 1,877.26 2,763.43
Total CL & Provisions 7,888.65 8,321.20 12,029.80 12,846.21 18,881.23
Net Current Assets 1,923.41 1,997.22 -1,248.57 -2,009.63 -7,181.56
Miscellaneous Expenses 14.12 10.09 6.05 2.02 0.00
Total Assets 8,473.91 10,878.89 14,120.02 25,559.83 31,591.38

Contingent Liabilities 2,185.63 5,196.07 5,590.83 5,433.07 3,447.50

Book Value (Rs) 143.94 177.59 202.70 240.64 262.30

65
 Ratios.
I) Liquidity Ratio:-

Mar 06 Mar 07 Mar 08 Mar 09 Mar 10

Current 1.07 0.86 0.64 0.44 0.62
Ratio
Quick 0.97 0.92 0.66 0.58 0.46
Ratio
Debt 0.53 0.54 0.80 1.06 1.11
Equity
Ratio

II) Management Efficiency Ratio:-

Mar 06 Mar 07 Mar 08 Mar 09 Mar 10

Fixed Asset 5.0 5.01 2.96 1.88 1.93
turnover
Ratio.
Inventory 10.32 11.02 14.44 13.47 13.07
Turnover
Ratio.
Debtor 26.31 35.06 30.08 19.11 18.02
Turnover
Ratio.

66
 III) Profitability Ratios:-

Mar 06 Mar 07 Mar 08 Mar 09 Mar 10

Gross Profit 12.21 11.19 8.26 3.30 8.84
Margin Ratio

Net Profit 7.35 6.94 6.96 3.77 6.28

Margin Ratio

Return On 26.47 25.82 18.96 6.41 9.66

Capital
Employed

COMMENT:-

67
 STOCK HOLDING PATTERN:-
Share holding
Share holding pattern as on : 30/06/2010 31/03/2010 31/12/2009
Face value 10.00 10.00 10.00
No. Of % No. Of % No. Of %
Shares Holding Shares Holding Shares Holding
Promoter's holding
Indian Promoters 187450911 37.02 187376876 37.00 182666241 38.08
Sub total 187450911 37.02 187376876 37.00 182666241 38.08
Non promoter's holding
Institutional investors
Banks Fin. Inst. and
78760987 15.55 79506752 15.70 72352755 15.08
Insurance
FII's 113303189 22.38 90736036 17.92 79801995 16.63
Sub total 205828260 40.65 181123079 35.77 162862945 33.95
Other investors
Private Corporate Bodies 3659280 0.72 2978660 0.59 2988981 0.62
NRI's/OCB's/Foreign
5728469 1.13 27471578 5.43 28637088 5.97
Others
Direcctors/Employees 239972 0.05 239972 0.05 238172 0.05
Govt 407181 0.08 407181 0.08 407181 0.08
Others 60879708 12.02 62719713 12.39 59565497 12.42
Sub total 70914610 14.00 93817104 18.53 91835419 19.14
General public 42187575 8.33 44064111 8.70 42371799 8.83
Grand total 506381356 100.00 506381170 100.00 479736404 100.00

68
Comment:-

69
SALES & EXPORT:-

Tata Motors’ total sales (including exports) of Tata commercial and passenger vehicles in August 2010 were 65,938 vehicles, a
growth of 32% over 49,810 vehicles sold in August 2009. The company’s domestic sales of Tata commercial and passenger
vehicles for August 2010 were 60,781 nos., a 29% growth over 47,126 nos. sold in August last year.

Cumulative sales (including exports) for the company for the fiscal are 315,445 nos., a growth of 43% over 220,978 nos. sold last
year.

Commercial Vehicles
The company’s sales of commercial vehicles in August 2010 in the domestic market were 35,585 nos., a 20% growth compared
to 29,762 vehicles sold in August last year. LCV sales were 20,734 nos., a growth of 11% over August last year. M&HCV sales
stood at 14,851 nos., a growth of 34% over August last year.

Cumulative sales of commercial vehicles in the domestic market for the fiscal are 168,508 nos., a growth of 29% over last year.
Cumulative LCV sales are 96,245 nos., a growth of 18%, while M&HCV sales stood at 72,263 nos., a growth of 49%.

Passenger Vehicles
The passenger vehicles business reported a total sale and distribution offtake of 27,008 nos. (25,196 Tata + 1,812 Fiat) in the
domestic market in August 2010, a 34% increase compared to 20,146 nos. (17,364 Tata + 2,782 Fiat) in August last year. Sales of
Tata passenger vehicles are 25,196 nos., a growth of 45% over August 2009. Sales of the Tata Nano were 8103 nos., higher by
224% over August last year. The Indica range sales were 7,531 nos., lower by 22% over August last year. The Indigo range
recorded sales of 6,678 nos., a growth of 151% over August last year. The Sumo/Safari range accounted for sales of 2,884 nos.,
higher by 11% over August last year.

Jaguar Land Rover sales continued their upward trend.

Cumulative sales and distribution offtake of passenger vehicles in the domestic market for the fiscal are 135,509 nos. (125,296
Tata + 10,213 Fiat), against 90,718 nos. (80,392 Tata + 10,326 Fiat) last year, a growth of 49%.

Cumulative sales of Tata passenger vehicles were 125,296 nos., a 56% increase compared to 80,392 nos., last year. Cumulative
sales of the Nano are 31,882 nos., a 541% increase. Cumulative sales of the Indica range are 42,644 nos., lower by 9%.
Cumulative sales of the Indigo family are 34,988 nos., higher by 132%. Cumulative sales of the Sumo/Safari range are 15,782
nos., higher by 18%. Currently Tata motors its top 6 cities contribute 30 % of sale and with small town and villages account for
40 %According to Mr Krishna of Tata Motors demand is much higher I Tire II and Tire III cities.Metro may eventually come to
20 % of revenue
.
Exports
The company's sales from exports at 5,157 vehicles in August 2010 registered a growth of 92% compared to 2,684 vehicles in
August last year. The cumulative sales from exports for the fiscal at 21,641 nos. are higher by 109% over 10,360 nos., last year

Chart
70
CURRENT MARKET PRICE:-
BSE:-1031.80
NSE:-1032.90

71
72
MAHENDRA & MAHENDRA:-

73
PROFILE:-
Mahindra & Mahindra Limited (BSE: 500520) is part of the Indian Industrial Conglomerate
Mahindra Group based in Mumbai. The company was set up in 1945 in Ludhiana as Mahindra &
Mohammed by brothers K.C. Mahindra and J.C. Mahindra along with Malik Ghulam
Mohammed[2]. After India gained independence and Pakistan was formed; Malik Ghulam
Mohammed moved to Pakistan where he became the nation's first finance minister. Now, with
the Mahindra brothers as the whole sole of the company, its name was changed to Mahindra &
Mahindra in 1948.[3]

Initially set up to manufacture general-purpose utility vehicles, Mahindra & Mahindra (M&M)
was first known for assembly under licence of the iconic Willys Jeep in India. M&M introduced
Jeeps to India and in no time they established themselves as the Jeep manufacturers of India. The
company later branched out into the manufacture of light commercial vehicles (LCVs) and
agricultural tractors, rapidly growing from being a manufacturer of army vehicles and tractors to
an automobile major with a growing global market presence. At present, M&M is the leader in
the utility vehicle segment in India with its flagship UV Scorpio.

In recent times the company is engaged in spreading its reach beyond its traditional markets.
They entered into the two-wheeler segment by taking over the Kinetic Motors in India[4]. M&M
also has controlling stake in REVA Electric Car Company.[5] M&M has also been selected as the
preferred bidder for the acquisition of South Korea's SsangYong Motor Company

Mahindra & Mahindra grew from being a maker of army vehicles to a major automobile and
tractor manufacturer. It has acquired plants in China[7] and the United Kingdom,[8] and has three
assembly plants in the USA. M&M has partnerships with international companies like Renault
SA, France[9] and International Truck and Engine Corporation, USA.

M&M has a global presence[10] and its products are exported to several countries.[11] Its global
subsidiaries include Mahindra Europe Srl. based in Italy,[12] Mahindra USA Inc., Mahindra South
Africa[13] and Mahindra (China) Tractor Co. Ltd.

M&M is one of the leading tractor brands in the world. It is also the largest manufacturer of
tractors in India [14] with sustained market leadership of over 25 years. It designs, develops,
manufactures and markets tractors as well as farm implements. Mahindra Tractors(China) Co.
Ltd. manufactures tractors for the growing Chinese market and is a hub for tractor exports to the
USA and other nations. M&M has a 100% subsidiary, Mahindra USA, which assembles products
for the American market.

M&M made its entry into the passenger car segment with the Logan in April 2007 under the
Mahindra Renault joint venture.[15] M&M will make its maiden entry into the heavy trucks
segment with Mahindra Navistar, the joint venture with International Truck, USA.[16]

74
M&M's automotive division makes a wide range of vehicles including MUVs, LCVs and three
wheelers. It offers over 20 models including new generation multi-utility vehicles like the
Scorpio and the Bolero. It formerly had a joint venture with Ford called Ford India Private
Limited to build passenger cars.

At the 2008 Delhi Auto Show, Mahindra executives said the company is pursuing an aggressive
product expansion program that would see the launch of several new platforms and vehicles over
the next three years, including an entry-level SUV designed to seat five passengers and powered
by a small turbodiesel engine.[17] True to their word, Mahindra & Mahindra launched the
Mahindra Xylo in January 2009, and as of June 2009, the Xylo has sold over 15000 units.[18]

Also in early 2008, Mahindra commenced its first overseas CKD operations with the launch of
the Mahindra Scorpio in Egypt,[19] in partnership with the Bavarian Auto Group. This was soon
followed by assembly facilities in Brazil. Vehicles assembled at the plant in Bramont, Manaus,
include Scorpio Pik Ups in single and double cab pick-up body styles as well as SUVs.[20]

The US based Reputation Institute recently ranked Mahindra among the top 10 Indian companies
in its 'Global 200: The World's Best Corporate Reputations' list.[21]

Mahindra & Mahindra has controlling stakes in Reva electric and has submitted letter of Intent
for South Korea's Ssangyong [22]

Mahindra is currently preparing to sell the diesel SUVs and pickup trucks starting in Fall 2010 in
North America[23], through an independent distributor, Global Vehicles USA, based in
Alpharetta, Georgia.[24] Mahindrahas announced it will import pickup trucks from India in
knockdown kit (CKD) form to circumvent the Chicken tax.[25] CKDs are complete vehicles that
will be assembled in the U.S. from kits of parts shipped in crates.[25]

NEW DEVELOPMENT:-
Although created in 1994 following an organizational restructuring, the Automotive Sector can trace its
antecedents back to 1954. The iconic Jeep that led American G.I.s to victory in World War II is the very
same vehicle that drove the Mahindra Group to success in
the Automotive Sector. Mahindra & Mahindra Limited, the flagship company of the Group, was set up as
a franchise for assembling general purpose utility vehicles from Willys, USA.

Over the years, the Group has developed a large product portfolio
catering to a diverse customer base spanning rural and semi-urban
customers, defense requirements and luxurious urban utility
vehicles. In 2002, it launched the indigenously engineered world-
class sports utility vehicle-Scorpio, which bridges the gap between
style and

75
adventure, luxury and ruggedness, and performance and economy.

The Group exports its products to several countries in Europe, Africa, South America, South Asia and
the Middle East.

The Automotive Sector continues to be a leader in the utility vehicle segment with a diverse portfolio
that includes mass transport as well as new generation vehicles like Scorpio, Bolero and the recently
launched Xylo.

Mahindra & Mahindra’s foray into the three wheeler segment with Alpha and Champion has also made it
a leader in its category.

The International Operations of the Automotive Sector focuses on the international business.

Mahindra Renault (MRPL) announced the launch of Logan, India’s first wide body car, sporting a host
of class-defying features at an aggressive price. The Logan redefines its segment in terms of
spaciousness as well as performance, technology with the latest generation dci common rail engine. It
has been designed for the Indian market incorporating a contemporary styling and design.

Mahindra Navistar Automotives Ltd. (MNAL), a joint venture between Mahindra & Mahindra Limited
and International Truck and Engine Corporation, will manufacture trucks and buses for India and export
markets. It will also provide component sourcing and engineering services to International Truck and
Engine Corporation.

Mahindra Navistar (MNEPL) a second joint venture agreement with Mahindra & Mahindra, Ltd. focuses
on producing diesel engines for Medium and heavy Commercial vehicles in India. Beginning in 2009,
MNEPL’s advanced diesel engines will power the full line of trucks and buses produced by MNAL.

76
 PRODUCTS:-

PRODUCTS

‘3/4 WHEELERS PICK UP LCV’S SUV’S

BELORO
PASSENGER CARGO GIO MAXIMO LOGAN ZYLO SCORPIO BELERO
MAXITRUCK

77
Balance Sheet of ------------------- in Rs. Cr. -------------------
Mahindra and Mahindra
Mar '06 Mar '07 Mar '08 Mar '09 Mar

12 mths 12 mths 12 mths 12 mths 12 m

Sources Of Funds
Total Share Capital 233.40 238.03 239.07 272.62 282
Equity Share Capital 233.40 238.03 239.07 272.62 282
Share Application Money 0.00 0.00 0.00 0.00 8
Preference Share Capital 0.00 0.00 0.00 0.00 0
Reserves 2,662.14 3,302.01 4,098.53 4,959.26 7,527
Revaluation Reserves 13.33 12.86 12.47 12.09 11
Networth 2,908.87 3,552.90 4,350.07 5,243.97 7,830
Secured Loans 216.68 106.65 617.26 981.00 602
Unsecured Loans 666.71 1,529.35 1,969.80 3,071.76 2,277
Total Debt 883.39 1,636.00 2,587.06 4,052.76 2,880
Total Liabilities 3,792.26 5,188.90 6,937.13 9,296.73 10,710
Mar '06 Mar '07 Mar '08 Mar '09 Mar
12 mths 12 mths 12 mths 12 mths 12 m
Application Of Funds
Gross Block 2,859.25 3,180.57 3,552.64 4,653.66 4,866
Less: Accum. Depreciation 1,510.27 1,639.12 1,841.68 2,326.29 2,537
Net Block 1,348.98 1,541.45 1,710.96 2,327.37 2,328
Capital Work in Progress 205.46 329.72 649.94 886.96 1,374
Investments 1,669.09 2,237.46 4,215.06 5,786.41 6,398
Inventories 878.74 878.48 1,084.11 1,060.67 1,188
Sundry Debtors 637.97 700.89 1,004.88 1,043.65 1,258
Cash and Bank Balance 258.39 415.89 310.58 635.61 475
Total Current Assets 1,775.10 1,995.26 2,399.57 2,739.93 2,922
Loans and Advances 558.02 1,011.50 866.19 1,402.45 2,034
Fixed Deposits 471.92 910.18 550.65 938.82 1,268
Total CA, Loans & Advances 2,805.04 3,916.94 3,816.41 5,081.20 6,224
Deffered Credit 0.00 0.00 0.00 0.00 0

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Current Liabilities 1,711.23 2,138.77 2,525.31 3,520.20 3,822
Provisions 543.14 715.43 943.46 1,277.56 1,796
Total CL & Provisions 2,254.37 2,854.20 3,468.77 4,797.76 5,619
Net Current Assets 550.67 1,062.74 347.64 283.44 605
Miscellaneous Expenses 18.05 17.55 13.53 12.55 4
Total Assets 3,792.25 5,188.92 6,937.13 9,296.73 10,710
Contingent Liabilities 946.36 1,008.27 985.35 1,220.39 2,020
Book Value (Rs) 124.06 148.72 181.43 191.91 138

Source : Religare Technova

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RATIOS:-
I) Liquidity Ratio:-

Mar 06 Mar 07 Mar 08 Mar 09 Mar 10

Current 1.21 1.31 0.86 0.90 1.11
Ratio
Quick 0.84 1.01 0.74 0.83 0.86
Ratio
Debt 0.31 0.46 0.60 0.77 0.37
Equity
Ratio

II) Management Efficiency Ratio:-

Mar 06 Mar 07 Mar 08 Mar 09 Mar 10

Fixed Asset 5.44 5.88 3.22 2.84 3.85
turnover
Ratio.
Inventory 9.48 11.75 12.49 14.56 17.91
Turnover
Ratio.
Debtor 14.16 14.82 13.26 12.77 16.09
Turnover
Ratio.

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 III) Profitability Ratios:-

Mar 06 Mar 07 Mar 08 Mar 09 Mar 10

Gross Profit 12.48 14.73 8.12 7.59 14.29
Margin Ratio

Net Profit 10.28 10.34 9.45 6.25 11.08

Margin Ratio

Return On 22.94 25.71 18.52 13.99 27.70

Capital
Employed

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SHAREHOLDING PATTERN:-

Comment:-

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SHARE PRICES

83
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