MARUTI SUZUKI

FINANCIAL ANALYSIS

SUBMITTED BY
JATIN ARORA
MBA INFRA
INTRODUCTION
Maruti Suzuki India Limited, formerly known as Maruti Udyog Limited, is an
automobile manufacturer in India(1981-MUL 2007-MSIL)
It is a subsidiary of Japanese automobile and motorcycle manufacturer Suzuki Motor
Corporation.
Maruti was established in February 1981, though the actual production commenced only
in 1983.
The company's headquarters are on Nelson Mandela Road, New Delhi.
Originally, 74% of the company was owned by the Indian government, and 26% by
Suzuki of Japan. As of May 2007, the government of India sold its complete share
to Indian financial institutions and no longer has any stake in Maruti Udyog.
Key people : RC Bharagava (Chairman)
Kenichi Ayukawa (CEO & MD)
As of January 2017, it had a market share of 51% of the Indian passenger car
market.
Maruti Suzuki manufactures and sells popular cars such as the Ciaz, Ertiga, Alto,
Swift, Celerio, Swift Dzire and Omni.
CORPORATE INFORMATION
Visions of any company are those values on which company works.
The Leader in the Indian Automobile Industry, Creating Customer Delight and
Shareholder's Wealth; eventually become a pride of India
Mission is the statement of an organizations purpose, what it want to
accomplish in the larger environment and its goals which are specific,
realistic and motivating.
- Modernization of the Indian Automobile Industry.
- Developing cars faster and selling them for less.
- Production of fuel-efficient vehicles to conserve scarce resources.
- Production of large number of motor vehicles which was necessary for
economic growth.
- Market Penetration, Market Development Similarly Product Development and
Diversification.
- Partner relationship management, Value chain, Value delivery network .
CORE VALUES
MARKET SHARE
MARKET SHARE OF PASSENGER CARS

Industry
24%

Maruti Suzuki
48%

Toyota Kirloskar
5%

Mahindra
7%

Hyundai
16%

Maruti Suzuki Hyundai Mahindra Toyota Kirloskar Industry

MAJOR COMPETITORS

.
Ratio Analysis
Factors considered while doing financial analysis:
Liquidity
Solvency
Profitability
Ratio analysis is a tool used to determine the financial health and operational
efficiency of a company. Top management utilizes it to gauge the performance of
the company and it helps investors analyze the business from various angles
and make an informed choice before investing in it.
There are two types of Ratio Analysis:
Inter-Company Comparison: It is used for companies to benchmark their
performances against the best in the business.
Intra-company Comparison: It is used to compare the companys
performance with previous year.
Liquidity Ratio Analysis
Liquidity refers to a business's ability to meet its payment
obligations, in terms of possessing sufficient liquid assets.
Money, or cash on hand, is the most liquid asset.
Liquidity is measured using following ratios
I. Current Ratio
II. Quick Ratio
CURRENT RATIO :
This ratio measures a companys ability to meet short-term obligations with current
assets.
Current Ratio = Current Asset/Current Liabilities
CURRENT RATIO

2.50

2.00

1.50

1.00

0.50

0.00
2012 2013 2014 2015 2016

Maruti Suzuki M&M Hyundai Toyota INDUSTRY

The current ratio can give a sense of the efficiency of a company's operating cycle or
its ability to turn its product into cash.Maruti Suzuki is not able to meet its short term
obligation.
QUICK RATIO :
It is a sign of liquidity and the ability to meet current obligations easily.

Quick Ratio = (Current Asset Inventory)/Current Liabilities

Quick Ratio
1.80

1.60

1.40

1.20

1.00

0.80

0.60

0.40

0.20

0.00
2012 2013 2014 2015 2016

Maruti Suzuki M&M Hyundai Toyota INDUSTRY

Quick ratio is less that the previous year.

It may indicates that Maruti relies much on Inventory or other Assets to pay short-
term liability & may face difficulty in paying current liability.
Solvency Ratio Analysis
Solvency is the ability of an entity or individual to pay debts.

Solvency is measured using following ratios

Debt Equity Ratio
Total Debt Ratio
 DEBT TO EQUITY RATIO :
It indicates how much debt a company is using to finance its assets relative to the
amount of value represented in shareholders' equity.
Debt to Equity = Total Liabilities/Equity

DEBT EQUITY RATIO

4.00

3.50

3.00

2.50
Debt equity

2.00

1.50

1.00

0.50

0.00
2012 2013 2014 2015 2016
years

Maruti Suzuki M&M Hyundai Toyota INDUSTRY

Profitability Ratio
Profit generally is the making of gain in business activity for the benefit of the
owners of the business. The word comes from Latin meaning "to make
progress", and is defined in two different ways, one for economics and one for
accounting.

Profitability is measured using following ratios:

Gross Profit Ratio
Net Profit ratio
Return on Asset
Return on Equity
Earning Per Share
Comparison of Profitability Ratio
PROFIT MARGIN:
It measures the amount of net income earned with each unit of sales generated.
Profit Margin = Net Profit/Net Sales

9.00% OPERATING PROFIT MARGIN

PROFIT MARGIN
8.00%
18.00%
7.00%
16.00%

OPERATING PROFIT MARGIN

6.00% 14.00%
PROFIT MARGIN

5.00% 12.00%
4.00% 10.00%
3.00% 8.00%
2.00% 6.00%
1.00% 4.00%
0.00% 2.00%
INDUSTRY
-1.00% 0.00%
YEARS 2012 2013 2014 2015 2016
YEARS

Maruti Suzuki M&M Hyundai Toyota INDUSTRY Maruti Suzuki M&M Hyundai Toyota INDUSTRY

High profit margin indicates that Maruti has higher sales than the industry.
A higher operating margin is more favorable compared with a lower ratio because this shows that
the company is making enough money from its ongoing operations to pay for its variable costs as
well as its fixed costs.
Comparison of Profitability Ratio
RETURN ON EQUITY:
It measures the ability of a firm to generate profits from its shareholders investments
in the company.
Return on Equity = (PAT Preferential
ROE Dividend)/Equity
40.00%

35.00%

30.00%

25.00%

20.00%
ROE

15.00%

10.00%

5.00%

0.00%
2012 2013 2014 2015 2016
-5.00%

-10.00%
years

Maruti Suzuki M&M Hyundai Toyota INDUSTRY

The firm is able to generate profits from its shareholders investment.

DEGREE OF FINANCIAL LEVERAGE
DOFL :A ratio that measures the sensitivity of a companys earnings per share (EPS) to
fluctuations in its operating income, as a result of changes in its capital structure
DOFL
3.00

2.46
2.50

2.00 1.91
1.81 1.82
1.67

1.50

1.03 1.05 1.08 1.00 1.06 1.04 1.01 1.00 1.05 1.06 1.01 1.04 1.05 1.01 1.06 1.04 1.04 1.011.002
1.00
0.69

0.50

0.00
2012 2013 2014 2015 2016

Maruti Suzuki M&M Hyundai Toyota INDUSTRY

Higher DOFL indicates that a firm has Higher Operating Risk.