Maruti Udyog

Limited

Submitted to:
Submitted to:
Prof. Jayanta Chakraborty
Prof. Jayanta chakraborty

Prepared by:
Dipesh Solanki Karna Mehta
Ronak Salecha Muzammil
Poonawala
Gurpreet Singh Chhabra Vishal
ACKNOWLEDGEMENT
We would like to express our heartfelt gratitude to
all who have lent their hand in making this project a
success.

Initially we would like to extend our warm thanks to

Prof. Jayanta Chakraborty for guiding us and giving his
valuable support and helping us with every minute
aspect on this project. Sir really made this project a
great learning experience.

We are also thankful to our institute “INDIAN

INSTITUTE OF PLANNING AND MANAGEMENT” for
providing us an opportunity to work on this project and
gain valuable experience and hindsight on conducting a
research project.

Lastly we would like to extend a very warm thanks

to all the respondents who gave us their valuable inputs
to make this project a success. It would not have been
possible without them.

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 AUTOMOBILE INDUSTRY
The automotive sector makes up a relatively small
share of India's economy: in fiscal year 2002/03 (April-
March) domestic sales of all cars, trucks and related
equipment totalled (US$15bn), or 2.2% of GDP.

The gross turnover of the automotive industry,

which includes some ancillary businesses, was 15bn$ in
2006/07, according to the Society of Indian Automobile
Manufacturers. The ancillaries market is around 3bn $
Of a total labour force of an estimated 472m in 2003,
the automotive industry provides direct and indirect
employment to 10.2m people.

In calendar year 2004, 3.54m passenger cars and

multi-utility vehicles were sold domestically. Although
this represented around an18% increase in sales year
on year, the stock of cars in India is still only 13 per
1,000populations.

Indian car buyers focus chiefly on price and fuel

economy, and small, cheap cars make up the bulk of
sales. Maruti is the market leader. In 2006-07 thirty-
one companies were producing passenger vehicles—
nineteen manufactured two- and three-wheelers and
twelve produced light, medium and heavy commercial
vehicles. They manufactured a total of 8.7m vehicles.
Most of this production was for domestic consumption,
with exports forming a marginal (11%) but rapidly
growing share.

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 MARUTI SUZUKI INDIA LTD
Company History
Maruti Suzuki India Ltd is one of India's leading
automobile manufacturers. Maruti Suzuki India Limited
(MUL) was established in Feb 1981 through an Act of
Parliament, as a Government company with Suzuki
Motor Corporation of Japan holding 26 per cent stake.

The Joint Venture agreement was signed between

Government of India and Suzuki Motor Company (now
Suzuki Motor Corporation of Japan) in Oct 1982.

The objectives of MUL then were:

• Modernization of the Indian Automobile Industry.

• Production of fuel-efficient vehicles to conserve scarce
resources
• Production of large number of motor vehicles which
was necessary for economic growth.

The company went into production in a record time of

13 months and the first car was rolled out from Maruti
Suzuki India Limited Gurgaon, in December, 1983. It is
a subsidiary of Suzuki Motor Corporation of Japan.
Suzuki Motor Corporation increased its stake on two
occasions (26>> 40 >> 50 >> controlling stake and
brought it to 50 per cent in the mid 1990s (and to 54%
with privatization in 2002).

FINANCIAL SUMMARY
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 (Year End - March)

BALANCE SHEET (Rs Cr)

YEAR FY06 FY07
SHARE CAPITAL 1445 1445
RESERVES & SURPLUS 53081 67094
TOTAL SHAREHOLDERS FUND 54526 68539
SECURED LOANS 717 635
TOTAL DEBT 717 6308
TOTAL LIABILITY 56022 76522
NET BLOCK 17872 28986
CAPITAL WORK IN PROGRESS 920 2389
INVESTMENTS 20512 34092
TOTAL CURRENT ASSETS 37409 38459
TOTAL CURRENT LIABILITIES 19771 25015
NET CURRENT ASSETS 17638 13444
TOTAL ASSETS 56022 76522

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PROFIT & LOSS ACCOUNT (Rs Cr)
YEAR FY06 FY07
NET SALES 120034 145922
OTHER INCOME 4292 5984
TOTAL EXPENDITURE 106320 124771
PBT 20538 25888
TAX 6251 7178
PAT 11891 15620
BALANCE FROM LAST YEAR 34421 43939
PROFIT AVAILABLE 43939 56573

CASH FLOW STATEMENT

PARTICULARS 2007 2006
Net profit before tax 22798 17500
Operating profit before working
22340 18845
capital changes
Cash generated from operating
26632 18030
activities
Net cash from operating activities 20280 12226
Net cash from investing activities (24368) (5307)
Net cash from financing activities 4300 (3197)
Net increase in cash and cash
212 3722
equivalents
Cash and Cash Equivalents as at
1st April (Opening Balance) 14016 10294

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 RATIO ANALYSIS
Key Ratios

FOR FY O7 COMPANY INDUSTRY

CURRENT RATIO 1.54 1.37
NET WORKING CAPITAL (Rs
13444
Mn)
DEBT/EQUITY 0.08 0.46
INTEREST COVERAGE RATIO 68.85 77.85
GROSS PROFIT MARGIN (%) 13.05 9.33
NET PROFIT MARGIN (%) 10.29 10.34%
ROI (%) 0.45
ROA (%) 20.41
ROCE (%) 34.59 26.09
RONW (%) 20.89 30.33
EPS 54.06 24.89
DIVIDEND PAYOUT RATIO 0.08
PE RATIO 14.90
INVENTORY TURNOVER
24.03
RATIO
ASSETS TURNOVER RATIO 1.44
DEBTOR TURNOVER RATIO 17.58

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 COMPARISONS
PARTICULARS Y-O-Y P – P* Remarks
FY O6 FY 07
CURRENT RATIO 1.77 1.54 1.37 Better
NET WORKING CAPITAL (Rs
17638 13444
Mn)
DEBT/EQUITY 0.01 0.08 0.53
INTEREST COVERAGE
104.61 68.85 77.85
RATIO
GROSS PROFIT MARGIN Better
12.95 13.05 9.33
(%)
NET PROFIT MARGIN (%) 9.53 10.29 10.34 Same
ROI (%) 0.58 0.45
ROA (%) 21.22 20.41
ROCE (%) 37.21 34.59 26.09 Better
RONW (%) 19.95 20.89 30.33 Lower
EPS 43.87 54.06 40.38 Better
PE RATIO 14.90 14.33 Same
INVENTORY TURNOVER Better
18.78 24.03 13.42
RATIO
Near
ASSETS TURNOVER RATIO 2.46 1.44 3.14
About
DEBTOR TURNOVER RATIO 18.72 17.58
MARKET CAPITALISATION Better
23488.9 14221.08
(Rs Cr)

*P-P: - Peer Company – Mahindra &

Mahindra

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 DIVIDEND ANALYSIS
Maruti Suzuki Mahindra and Daewoo Hindustan
Company
India ltd Mahindra motors motors

Dividend
4.5 11.5 0 0
/share (rs.)

As per the table above, we can see that Mahindra and

Mahindra is giving the highest dividend i.e. 11.5 Rs. Per
share, and Maruti is giving 4.5 Rs. Per share. If we see
from the customer point of view then Maruti is not
providing good returns, but if we see the other way
round then it is possible that the company might be
retaining the profits for expansion or future plans, which
is positive.

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EARNING PER SHARE ANALYSIS

EPS 2006 2007 INDUSTRY

MARUTI 43.87 54.06 24.89
SUZUKI

Maruti Suzuki had given 54.06 EPS as compared with

the industry standard which is 24.89, which is positive
for the company and its shareholders. And year on year
comparison also shows a tremendous growth from
43.87% in 2006 to 54.06% in 2007, which is also
positive for the company.

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 P/E ANALYSIS
P/E RATIO 2007 PEER TO PEER
MARUTI SUZUKI 14.90 14.33

From the above table we can see that P/E ratio of.
Maruti is ideal in comparison with peer to peer i.e.
Maruti Suzuki is having 14.90 in comparison with 14.33
. And also the P/E ratio of the automobile industry
should be between 14-15, so Maruti even matches with
that.

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PRIMARY RESEARCH FINDINGS

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QUALITATIVE ANALYSIS

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 VALUATION OF THE COMPANY
AS PER EARNING MULTIPLE METHOD:

V/PBIT =MARKET VALUE

PBIT

MARKET VALUE = DEBT + EQUITY

=6308 + 68539

= 74847

PBIT = 25888

VALUATION = MARKET VALUE/PBIT

= 74847/25888

= 2.89

Compa Maruti Suzuki Mahindra &

ny India Ltd Mahindra
Ratio 2.89 4.53

Comparing with the Peer Company it is

found that M & M has a better
valuation then Maruti Suzuki and the
investors are more bullish about
Mahindra. It is also because Mahindra

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has 28 subsidiary companies under
Mahindra & Mahindra Ltd.
Return on Capital Employed (ROCE) :-
34.59
Weighted Average Cost of Capital :-
Capital Structure
Weighted
Particulars Rs Mn
Avg.
Equity 1445 0.019
Debt 630.8 0.896
Reserves &
67094 0.084
Surplus

Cost of Equity & Retained Earnings :-

Ke = D + g
Pm
= 0.085

Cost Of Debt :-
Kd = I(1-t)
= 0.09(1-0.30)
= 0.063

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WACC =
(0.019×0.085)+(0.896×0.063)+(0.084×0.
085)
= 8.63
ROCE> WACC = 34.59> 8.63
The company is a profitable one.

BIBLIOGRAPHY

SOURCES OF SECONDARY INFORMATION:

 www.ibef.org

 www.siam.com

 www.autoindia.com

 www.marutiudyog.com

 www.indiaearnings.com

 www.moneycontrol.com

 www.business-standard.com

 www.acmainfo.com

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 Limitations

 Since the sample size for the survey was small, we cannot
make generalizations.

 People were not comfortable divulging information.

 Discounting factor was not considered as sometimes wrong

responses may have been received due to lack of
understanding of the question.

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 Questionnaire
our academic course, we are conducting a research to
As a part of
gauge the perception of Maruti Udyog Ltd. in the public domain.
Please let us know your unbiased and spontaneous response to
the questions given below. The data provided by you shall be
kept confidential and used for academic purposes only

Q-1 Do you invest in stock markets?

Yes ( ) No ( )

Q-2 Which sectors do you invests?

_____________________________________________________________________________________
_____________________________________________________________________________

Q-3 Which companies do you invests?

__________________________________________________________________
___________________________________________________________________
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Q-4 Why do you invest in that particular company?

__________________________________________________________________
__________________________________________________________________

Q-5 Have you ever invested in Maruti Udyog Limited?

Yes ( ) No ( )

Q-6 If yes Why?

___________________________________________________________________
___________________________________________________________________

Q-7 If not, Why not?

______________________________________________________________
__________________________________________________________________

Q-8 What is your perception about Maruti Udyog Ltd?

□ It’s a World Class Company

□ It’s a Rising Star

□ Consistent Performer

□ Market Leader

□ Coping up well in competition

Q-9 What is the current share price of Maruti Udyog Ltd?

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 □ 400 – 600 □ 600 – 800 □ 800 – 1000 □ 1000 –
1200

Q-10 What will be the share price of Maruti Udyog Ltd?

After 1 month :-__________

After 6 months : - __________

After 1 year :- __________

After 5 years :- __________

Q-11 Who is the current CEO of Maruti Udyog Ltd?

_______________________

Q-12 What is your view on the CEO of Maruti Udyog Ltd?

Very Dynamic

Inspiring

Stable

Low Profile

Uninspiring

Q-13 What is your view on the management team of Maruti

Udyog Ltd?

 □ Very Dynamic

 □ Inspiring

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  □ Stable

 □ Low Profile

 □ Uninspiring

Q-14 What do you think about the two models which are been
launched recently like SX4 & Grand Vitara would increase the
demand of the shares of Maruti Udyog Ltd?

Yes ( ) No ( ) No Idea ( )

Q-15 Does Maruti Udyog Ltd. confirm to Corporate Governance

norms?

Yes ( ) No ( ) No Idea ( )

Q-16 Does Maruti Udyog Ltd. also contributes to the CSR

(Corporate Social Responsibility) Projects?

Yes ( ) No ( ) No Idea ( )

Q-17 How is Maruti Udyog Ltd. placed with the respect to

Employee Satisfaction & Retention?

□ High Satisfaction, Low Attrition

□ Moderate Satisfaction, Moderate Attrition

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 □ Low Satisfaction, High Attrition

Q-18 What are the opportunities lying ahead for Maruti Udyog Ltd?

___________________________________________________________________
___________________________________________________________________

Q-19 What are the threats lying before Maruti Udyog Ltd?

___________________________________________________________________
___________________________________________________________________

PERSONAL INFORMATION

Name :___________________________________________________
_____

Age : □ 18-25 □ 25-30 □ 30-40 □ 40-50 □ 50 & Above

Annual Income: □ 1-3 L □ 3-5 L □ 5-10 L □ 10 L & Above

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Occupation : □Student □ Private Service □ Government
Service □ Business

□ Housewife

E-Mail Add
:-_______________________________________________________

Contact No :-
_______________________________________________________

RESEARCH METHODOLOGY

RESEARCH OBJECTIVE

To conduct an industry analysis of Maruti Suzuki India ltd.

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RESEARCH METHODOLOGY

Descriptive research using secondary data and primary research

DATA ANALYSIS TOOLS

Questionnaire’s and auditor’s report

Time Available

4 Weeks

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