Introduction 1

INTRODUCTION

The automobile sector is the one of the core sectors, the Indian automobile market is gearing towards

international standards to meet the needs of the global automobile giants and become a global hub.

So investment in the stocks of the automobile industry is one of the attractive options.

Investing in shares of a company is highly rewarding at the same time it is highly risky. Moreover

the Indian stock market is highly volatile with large volumes being traded. Analysis of stocks is

highly helpful to reduce the risks and to make good money.

This project is aimed at analyzing the Indian automobile industry in the view of its feasibility as an

investment option. A detailed analysis of the Indian automobile industry is covered in respect of past

growth performance. The fundamental analysis is done which analyzes the economy in the broader

sense and the industry is analyzed using industry life cycle and SWOT analysis.

Three companies namely Tata motors, Mahindra& Mahindra and Maruthi Suzuki are chosen and

their financial and non financial information are analyzed. The technical analysis is also done for the

stocks using some technical indicators.

Based on the analysis done the intrinsic value of the shares of the companies were found out and

their future pricing directors were determined.

Based on the analysis the future price directions are determined and recommendations are given to

make the project more meaningful.

` 1

OBJECTIVES

Primary Objective

A comparative study of share price on automobile sector using fundamental valuation model taken at

angel Broking Company limited.

Secondary Objectives

Detailed analysis of Automobile industry which is gearing towards international standard

Fundamental analysis of automobile sector

Comparative analysis of three tough competitors TATA Motors, Maruti Suzuki and

Mahindra and Mahindra through fundamental analysis.

` 2

NEED OF THE STUDY

The automobile industry is one of the core industries in India and is optimistic of posting good sales

in the coming years. So, the investment in shares and securities of automobile companies seems to

be profitable.

Investing is one of the most crucial decisions that every earning individual has to make at one point

of the time or the other. One of alluring options available is the investment in the shares and

securities of companies. The investment in share market is highly rewarding but highly risky.

The concept of analysis comes into the picture when decision has to be made on the choosing a

particular company’s shares for investment. A proper analysis helps in reducing the risks on

investment in the share markets less risky and highly rewarding.

This project is aimed at finding the analyzing the securities of select companies in the automobile

industries and to assist investment decisions.

` 3

SCOPE OF THE STUDY

The scope of the study is identified after and during the study is conducted. The project is based on

tools like fundamental analysis and ratio analysis. Further, the study is based on information of last

five years.

The analysis is made by taking into consideration three companies i.e. TATA Motors,

Maruti Suzuki and Mahindra and Mahindra.

The scope of the study is limited for a period of five years.

The scope is limited to only the fundamental analysis of the chosen stocks.

` 4

METHODOLOGY

Research design or research methodology is the procedure of collecting, analyzing and interpreting

the data to diagnose the problem and react to the opportunity in such a way where the costs can be

minimized and the desired level of accuracy can be achieved to arrive at a particular conclusion.

The methodology used in the study for the completion of the project and the fulfillment of the

project objectives.

The sample of the stocks for the purpose of collecting secondary data has been selected on the basis

of Random Sampling. The stocks are chosen in an unbiased manner and each stock is chosen

independent of the other stocks chosen. The stocks are chosen from the automobile sector.

` 5

INDUSTRIAL PROFILE

OVERVIEW

The Indian retail brokerage industry consists of companies that primarily act as agents for the buying

and selling of securities (e.g. stocks, shares, and similar financial instruments) on a commission or

transaction fee basis.

It has two main interdependent segments: Primary market and the Secondary market.

Evolution of the Indian Brokerage Market

The Indian broking industry is one of the oldest trading industries that had been around even before

the establishment of the BSE in 1875. Despite passing through a number of changes in the post

liberalization period, the industry has found its way towards sustainable growth. The evolution of the

brokerage market is explained in three phases: pre1990, 1990-2000, post 2000.

Early Years

The equity brokerage industry in India is one of the oldest in the Asia region. India had an active

stock market for about 150 years that played a significant role in developing risk markets as also

promoting enterprise and supporting the growth of industry.

The roots of a stock market in India began in the 1860s during the American Civil War that led to a

sudden surge in the demand for cotton from India resulting in setting up of a number of joint stock

companies that issued securities to raise finance. This trend was akin to the rapid growth of

securities markets in Europe and the North America in the background of expansion of railroads and

exploration of natural resources and land development.

` 6

Bombay, at that time, was a major financial centre having housed 31 banks, 20 insurance companies

and 62 joint stock companies.

In the aftermath of the crash, banks, on whose building steps share brokers used to gather to seek

stock tips and share news, disallowed them to gather there, thus forcing them to find a place of their

own, which later turned into the Dalal Street. A group of about 300 brokers formed the stock

exchange in Jul 1875, which led to the formation of a trust in 1887 known as the “Native Share and

Stock Brokers Association”.

A unique feature of the stock market development in India was that that it was entirely driven by

local enterprise, unlike the banks which during the pre-independence period were owned and run by

the British. Following the establishment of the first stock exchange in Mumbai, other stock

exchanges came into being in major cities in India, namely Ahmedabad (1894), Calcutta (1908),

Madras (1937), Uttar Pradesh and Nagpur (1940) and Hyderabad (1944). The stock markets gained

from surge and boom in several industries such as jute (1870s), tea (1880s and 1890s), coal (1904

and 1908) etc, at different points of time.

Beginning of a new equity culture

A new phase in the Indian stock markets began in the 1970s, with the introduction of Foreign

Exchange Regulation Act (FERA) that led to divestment of foreign equity by the multinational

companies, which created a surge in retail investing. The early 1980s witnessed another surge in

stock markets when major companies such as Reliance accessed equity markets for resource

mobilisation that evinced huge interest from retail investors.

` 7

A new set of economic and financial sector reforms that began in the early 1990s gave further

impetus to the growth of the stock markets in India. As a part of the reform process, it became

imperative to strengthen the role of the capital markets that could play an important role in efficient

mobilisation and allocation of financial resources to the real economy. Towards this end, several

measures were taken to streamline the processes and systems including setting up an efficient market

infrastructure to enable Indian finance to grow further and mature. The importance of an efficient

micro market infrastructure came into focus following the incidence of market abuses in securities

and banking markets in 1991 and 2001 that led to extensive investigations by two respective Joint

Parliamentary Committees.

The Securities and Exchange Board of India (SEBI), which was set up in 1988 as an administrative

arrangement, was given statutory powers with the enactment of the SEBI Act, 1992. The broad

objectives of the SEBI include

to protect the interests of the investors in securities

to promote the development of securities markets and to regulate the securities markets

The scope and functioning of the SEBI has greatly expanded with the rapid growth of securities

markets in India in the last fifteen years.

Following the recommendations of the High Powered Study Group on Establishment of New Stock

Exchanges, the National Stock Exchange of India (NSE) was promoted by financial institutions with

an aim to provide access to investors all over the country. NSE was incorporated in Nov 1992 as a

tax paying company, the first of such stock exchanges in India, since stock exchanges earlier were

trusts, being run on no-profit basis. NSE was recognized as a stock exchange under the Securities

` 8

Contracts (Regulations) Act 1956 in Apr 1993. It commenced operations in wholesale debt segment

in Jun 1994 and capital market segment (equities) in Nov 1994. The setting up of the National Stock

Exchange brought to Indian capital markets several innovations and modern practices and

procedures such as nationwide trading network, electronic trading, greater transparency in price

discovery and process driven operations that had significant bearing on further growth of the stock

markets in India.

Faster and efficient securities settlement system is an important ingredient of a successful stock

market. To speed the securities settlement process, The Depositories Act 1996 was passed that

allowed for dematerialisation (and rematerialisation) of securities in depositories and the transfer of

securities through electronic book entry. The National Securities Depository Limited (NSDL) set up

by leading financial institutions, commenced operations in Oct 1996. Regulations governing

selection of various types of market intermediaries as depository participations were made.

Subsequently, Central Depository Services (India) Limited promoted by Bombay Stock Exchange

and other financial institutions came into being.

Indian Brokerage Industry

India in Global Markets

The stature and significance of India is growing in the world capital markets. India is not only

attracting greater interest from world markets, but is also assuming increasing importance in global

finance.

India is a major recipient of foreign institutional flows amongst the emerging markets. Since

the opening up of domestic stock markets to foreign investors, cumulative net FII

investments reached Rs 517 Bn by 2008 end.

` 9

India is major destination of private equity flows into the emerging markets

India was host to the annual meetings/conference of the World Federation of Exchanges

(2005) and International Organization of Securities Commission (IOSCO) (2007)

India emerged a trillion dollar market capitalization market in 2007, and was among the top

10 stock exchanges in the world in terms of market capitalization

India is amongst the top fifteen stock exchanges in the world in respect of equity turnover

India emerged as a leading player in commodities futures market

India is amongst the top five in the number of transactions

India is among the top five in respect of volume traded in Stock Index Futures and Stock

Futures

India is one of the few markets with extensive dematerialisation of shares

India’s T+2 securities settlement cycle is at par with the global standards

Indian stock markets have the largest number of listings, with trading taking place in about

2,500-3,000 stocks

India’s most popular stock index (Sensex) is constructed on the basis of full float

methodology, one of the firsts in the Asian region and a global standard

Indian market indices such as Sensex and CNX Nifty are listed in foreign exchanges for

trading as ETFs.

` 10

COMPANY PROFILE

Angel Broking's tryst with excellence in customer relations began in 1987. Today, Angel has

emerged as one of the most respected Stock-Broking and Wealth Management Companies in India.

With its unique retail-focused stock trading business model, Angel is committed to providing ‘Real

Value for Money’ to all its clients.

The Angel Group is a member of the Bombay Stock Exchange (BSE), National Stock Exchange

(NSE) and the two leading Commodity Exchanges in the country: NCDEX & MCX. Angel is also

registered as a Depository Participant with CDSL.

Product Profile:

Online Trading

Commodities

DP Services

PMS (Portfolio Management Services)

Insurance

IPO Advisory

Mutual Fund

Personal loans

Quality Assurance

Online- Trading:

Specially designed for the net savvy traders and investors who prefer operating from their home or

office through the internet. The investor can access state of the art Technology with three different e-

broking products and voila trading on BSE, NSE, F &O, MCX and NCDEX.

` 11

Commodities:

A commodity is a basic good representing a monetary value. Commodities are most often as inputs

in the production of other goods or services. With the advent of new online Exchange, commodities

can now be traded in futures markets. When they are traded on an Exchange, Commodities must also

meet specified minimum standards known as basic grade.

Types of Commodities

Precious Metals: Gold and Silver

Base Metals: Copper, Zinc, Steel and Aluminum

Energy: Crude Oil, Brent Crude and Natural Gas

Pluses: Chana, Urad and Tur

Spices: Black Pepper, Jeera, Turmeric, Red Chili

Others: Guar Complex, Soy Complex, Wheat and Sugar

IPO DISTRIBUTION AND ADVISORY:

✔ Wide network of branches for better customer reach

✔ Dedicated Research Teams generating sector related reports.

✔ Ease in investing with informed decision making.

✔ Advisory Help Desk for all IPO related queries.

Nature of Business

The Angel Group has emerged as one of the top 3 retail broking houses in India. Incorporated in

December 1997 in Mumbai, India, Angel Broking provides retail related services encompassing

Ebroking, Investment Advisory, Portfolio Management Services, Wealth Management Services and

Commodities Trading. It is a member of Bombay Stock Exchange and National Stock Exchange. It

is also a registered depository participant with CDSL.

` 12

History & Milestones

Angel Broking's tryst with excellence in customer relations began in 1987. Today, Angel has

emerged as one of the most respected Stock-Broking and Wealth Management Companies in India.

With its unique retail-focused stock trading business model, Angel is committed to providing ‘Real

Value for Money’ to all its clients. The Angel Group is a member of the Bombay Stock Exchange

(BSE), National Stock Exchange (NSE) and the two leading Commodity Exchanges in the country:

NCDEX & MCX. Angel is also registered as a Depository Participant with CDSL.

Awarded with 'Broking House with Largest Distribution Network' and 'Best Retail Broking House'

at Dun & Bred street Equity Broking Awards 2009· August, 2008 Crossed 500000 trading accounts

● November, 2007 ‘Major Volume Driver’ for 2007

● December, 2006 Created 2500 business associates

● September, 2006 Launched Mutual Fund and IPO business

● July, 2006 launched the PMS function

● October, 2005 ‘Major Volume Driver’ award for 2005

● September, 2004 Launched Online Trading Platform

● April, 2004 Initiated Commodities Broking division

● April, 2003 first published research report

● November, 2002 Angel’s first investor seminar

● March, 2002 developed web-enabled back office software

● November, 1998 Angel Capital and Debt Market Ltd. Incorporated

● December, 1997 Angel Broking Ltd. Incorporated

Future Outlook:

` 13

Angel broking Limited has to decrease its margin money up to Rs. 3000 it Attracts more new clients

and for sub-brokership company should decrease its Security up to Rs. 50,000 Company has to more

aggressive toward its existing client’s feedback and for their services after giving them products

because it can increase company loyalty as well its brand name

` 14

ANALYSIS OF AUTOMOBILE INDUSTRY

Over a period of more than two decades the Indian Automobile industry has been driving its own

growth through phases. With comparatively higher rate of economic growth rate index against that

of great global powers, India has become a hub of domestic and exports business. The automobile

sector has been contributing its share to the shining economic performance of India in the recent

years.

To understand this industry for the purpose of investment we need to analyze it by the following

approach:

Fundamental Analysis (E.I.C Approach)

a. Economy analysis

b. Industry analysis

c. Company analysis

Fundamental Analysis

Fundamental analysis is the study of economic, industry and company conditions in an effort to

determine the value of a company s stock. Fundamental analysis typically focuses on key statistics in

company s financial statements to determine if the stock price is correctly valued.

Most fundamental information focuses on economic, industry and company statistics.

The typical approach to analyzing a company involves three basic steps:

1. Determine the condition of the general economy.

2. Determine the condition of the industry.

3. Determine the condition of the company.

` 15

1. ECONOMY ANALYSIS

Economic analysis is the analysis of forces operating the overall economy a country. Economic

analysis is a process whereby strengths and weaknesses of an economy are analyzed. Economic

analysis is important in order to understand exact condition of an economy.

GDP and Automobile Industry

In absolute terms, India is 16th in the world in terms of nominal factory

output. The service sector is growing rapidly in the past few years. This is

the pie- chart showing contributions of different sectors in Indian economy.

Today, automobile sector in India is one of the key sectors of the economy in terms of the

employment. Directly and indirectly it employs more than 10 million people and if we add the

number of people employed in the auto-component and auto ancillary industry then the number goes

even higher.

` 16

As the world economy slipped into recession hitting the demand hard and the banking sector takes

conservative approach towards lending to corporate sector, the GDP growth has downgraded it to 7.1

per cent for 2008-09 and it has increased to 8.6% in 2010 by overcoming the setbacks of recession.

Recession

Auto industry in India had been hit hard by ongoing global financial recession. But it is in a good

shape now. Much of this optimism resulted from renewed interest being shown in India auto industry

by reputed overseas car makers. Nissan Motors which is a well known Japanese car making

company regarded India automobile market as a global car manufacturing hub for future and

invested huge amount in our market. There are some other automobile companies of world who have

shown interest in India auto market. Major names among these are General Motors, Skoda Auto and

Mercedes-Benz. These companies have major plans lined up for India auto industry. These are few

signs of the revolutionized auto industry after recession.

Inflation

The rise in inflation will have adverse impact on the industry that will not only see interest rates

getting further hardened but also a drop in demand due to the squeeze in purchasing power. The

effect of inflation has affected every sector which is related to car manufacturing and production.

The increase in the price of fuel and the steel due to inflation has led to a slower growth rate of the

car industry in India.

Foreign Direct Investment

` 17

The automobile sector in the Indian industry is one of the high performing sectors of the Indian

economy. This has contributed largely in making India a prime destination for many international

players in the automobile industry who wish to set up their businesses in India. Automatic approval

for foreign equity investment up to 100 per cent of manufacture of automobiles and component is

permitted.

Exports

Despite recession, the Indian automobile market continues to perform better than most of the other

industries in the economy in coming future; more and more MNC’s coming in India to setup their

ventures which clearly shows the scope of expansion. During April-January 2010, overall

automobile exports registered a growth rate of 13.24 percent.

` 18

2. INDUSTRY ANALYSIS (AUTOMOBILE)

The automobile industry in India is the ninth largest in the world with an annual production of over

2.3 million units in 2008. In 2009, India emerged as Asia's fourth largest exporter of automobiles,

behind Japan, South Korea and Thailand. The Automobile Industry is one of the fastest growing

sectors in India. The increase in the demand for cars, and other vehicles, powered by the increase in

the income is the primary growth driver of the automobile industry in India. In 2009, estimated rate

of growth of India Auto industry is going to be 9% .The Indian automobile sector is far from being

saturated, leaving ample opportunity for volume growth.

Segmentation of Automobile Industry

The automobile industry comprises of Heavy vehicles (trucks,

buses, tempos, tractors); passenger cars; Two-wheelers;

Commercial Vehicles; and Three-wheelers. Following is the

segmentation that how much each sector comprises of whole

Indian Automobile Industry.

Industry life cycle

The industrial life cycle is a term used for classifying industry life over time. Industry life cycle

classification generally groups industries into one of four stages: pioneer, growth, maturity and

decline. In the pioneer phase, the product has not been widely accepted or adopted. Business

strategies are developing, and there is high risk of failure. However, successful companies can grow

at extraordinary rates. The Indian automobile sector has passed this stage quite successfully. The

industry is growing rapidly, often at an accelerating rate of sales and earnings growth. Indian

Automotive Industry is booming with a growth rate of around 15 % annually. The growth rate of the

` 19

http://en.wikipedia.org/wiki/India

automobile industry in India is greater than the GDP growth rate of the economy, so the automobile

sector can be very well be said to be in the growth phase.

Swot analysis:

A scan of the internal and external environment is an important part of the strategic planning

process. Environmental factors internal to the firm usually can be classified as strengths (S) or

weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats (T).

Such an analysis of the strategic environment is referred to as a SWOT analysis. SWOT analysis of

the Indian automobile sector gives the following points:

1. Strengths

Large domestic market

Sustainable labor cost advantage

Competitive auto component vendor base

Government incentives for manufacturing plants

Strong engineering skills in design etc

2. Weaknesses

Low labor productivity

High interest costs and high overheads make the production uncompetitive

Various forms of taxes push up the cost of production

Low investment in Research and Development

Infrastructure bottleneck

` 20

3. Opportunities

Increasing challenges in consumer demands, technology development, and globalization.

Heavy thrust on mining and construction activity

Increase in the income level

Cut in excise duties

4. Threats

Ignorance of Research & development

Rising interest rates

Cut throat competition

3. COMPANY ANALYSIS

The company analysis shows the long-term strenght of the company that what is the financial

position of the company in the market, where it stands among its competitors and who are the key

drivers of the company, what are the future plans of the company, what are the policies of

government towards the company and how the stake of the company divested among different

groups of people.

Here, I have taken three companies namely TATA Motors, Maruti Suzuki and Mahindra and

Mahindra for the purpose of fundamental analysis.

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,

` 21

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.

Maruti Suzuki is a subsidiary of Suzuki Motor Corporation Japan. More than half the numbers of

cars sold in India wear Maruti Suzuki badge. They offer a full range of cars – from entry level

Maruti 800 & Alto to stylish hatchback Ritz, A star, Swift, Wagon R, Estillo and sedans Dzire, SX4

and Sports Utility Vehicle Grand Vitara. Since inception, it has produced and sold over 7.5 million

vehicles in India and exported over 500,000 units to Europe and other countries. Its turnover for the

fiscal 2008-09 stood at Rs. 203,583 Million & Profit after Tax at Rs. 12,187 Million.

The Mahindra Group’s Automotive Sector is in the business of manufacturing and marketing utility

vehicles and light commercial vehicles, including three-wheelers. It is the market leader in utility

vehicles in India since inception, and currently accounts for about half of India’s market for utility

vehicles. 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.

` 22

Balance sheet tata motorsMar '12 Mar '11 Mar '10 Mar '09 Mar '08

Sources Of Funds

Total Share Capital 634.75 634.65 570.60 514.05 385.54

Equity Share Capital 634.75 634.65 570.60 514.05 385.54

Share Application Money 0.00 3.06 0.00 0.00 0.00

Preference Share Capital 0.00 0.00 0.00 0.00 0.00

Reserves 18,709.16 19,351.40 14,208.55 11,855.15 7,428.45

Revaluation Reserves 23.75 24.19 24.63 25.07 25.51

Networth 19,367.66 20,013.30 14,803.78 12,394.27 7,839.50

Secured Loans 6,915.77 7,766.05 7,742.60 5,251.65 2,461.99

Unsecured Loans 4,095.86 8,132.70 8,883.31 7,913.91 3,818.53

Total Debt 11,011.63 15,898.75 16,625.91 13,165.56 6,280.52

Total Liabilities 30,379.29 35,912.05 31,429.69 25,559.83 14,120.02

Mar '12 Mar '11 Mar '10 Mar '09 Mar '08

Application Of Funds

Gross Block 27,111.76 21,883.32 18,416.81 13,905.17 10,830.83

Less: Accum. Depreciation 9,965.87 8,466.25 7,212.92 6,259.90 5,443.52

Net Block 17,145.89 13,417.07 11,203.89 7,645.27 5,387.31

Capital Work in Progress 2,073.96 4,058.56 5,232.15 6,954.04 5,064.96

Investments 20,493.55 22,624.21 22,336.90 12,968.13 4,910.27

Inventories 4,588.23 3,891.39 2,935.59 2,229.81 2,421.83

Sundry Debtors 2,708.32 2,602.88 2,391.92 1,555.20 1,130.73

Cash and Bank Balance 1,115.08 638.79 612.16 638.17 750.14

Total Current Assets 8,411.63 7,133.06 5,939.67 4,423.18 4,302.70

Loans and Advances 6,400.65 5,852.42 5,248.71 5,909.75 4,831.36

Fixed Deposits 725.88 1,790.13 1,141.10 503.65 1,647.17

Total CA, Loans & Advances 15,538.16 14,775.61 12,329.48 10,836.58 10,781.23

Deffered Credit 0.00 0.00 0.00 0.00 0.00

Current Liabilities 21,271.45 15,740.69 16,909.30 10,968.95 10,040.37

Provisions 3,600.82 3,222.71 2,763.43 1,877.26 1,989.43

Total CL & Provisions 24,872.27 18,963.40 19,672.73 12,846.21 12,029.80

Net Current Assets -9,334.11 -4,187.79 -7,343.25 -2,009.63 -1,248.57

Miscellaneous Expenses 0.00 0.00 0.00 2.02 6.05

Total Assets 30,379.29 35,912.05 31,429.69 25,559.83 14,120.02

Contingent Liabilities 3,284.12 4,798.83 3,708.33 5,433.07 5,590.83

Book Value (Rs) 60.95 314.93 259.03 240.64 202.70

` 23

P&L A/CProfit & Loss account of Tata Motors ------------------- in Rs. Cr. -------------------


Income

Sales Turnover 59,220.94 52,067.87 38,173.39 28,538.20 33,123.54

Excise Duty 5,003.72 4,110.63 2,800.10 2,877.53 4,355.63

Net Sales 54,217.22 47,957.24 35,373.29 25,660.67 28,767.91

Other Income -11.16 341.53 1,220.86 921.29 734.17

Stock Adjustments 623.84 354.22 606.63 -238.04 -40.48

Total Income 54,829.90 48,652.99 37,200.78 26,343.92 29,461.60

Expenditure

Raw Materials 41,081.79 35,047.05 25,366.12 18,801.37 20,891.33

Power & Fuel Cost 550.89 471.28 362.62 304.94 325.19

Employee Cost 2,691.45 2,294.02 1,836.13 1,551.39 1,544.57

Other Manufacturing Expenses 2,386.91 1,753.46 1,289.60 866.65 904.95

Selling and Admin Expenses 3,248.91 2,790.19 2,126.10 1,652.31 2,197.49

Miscellaneous Expenses 1,610.69 2,067.42 1,707.06 1,438.89 964.78

Preoperative Exp Capitalised -907.13 -817.68 -740.54 -916.02 -1,131.40

Total Expenses 50,663.51 43,605.74 31,947.09 23,699.53 25,696.91


Operating Profit 4,177.55 4,705.72 4,032.83 1,723.10 3,030.52

PBDIT 4,166.39 5,047.25 5,253.69 2,644.39 3,764.69

Interest 1,218.62 1,383.79 1,246.25 704.92 471.56

PBDT 2,947.77 3,663.46 4,007.44 1,939.47 3,293.13

Depreciation 1,606.74 1,360.77 1,033.87 874.54 652.31

Other Written Off 0.00 106.17 144.03 51.17 64.35

Profit Before Tax 1,341.03 2,196.52 2,829.54 1,013.76 2,576.47

Extra-ordinary items 0.00 0.00 0.00 15.29 0.00

PBT (Post Extra-ord Items) 1,341.03 2,196.52 2,829.54 1,029.05 2,576.47

Tax 98.80 384.70 589.46 12.50 547.55

Reported Net Profit 1,242.23 1,811.82 2,240.08 1,001.26 2,028.92

Total Value Addition 9,581.72 8,558.69 6,580.97 4,898.16 4,805.58

Preference Dividend 0.00 0.00 0.00 0.00 0.00

Equity Dividend 1,280.70 1,274.23 859.05 311.61 578.43

Corporate Dividend Tax 181.54 192.80 132.89 34.09 81.25

Per share data (annualised)

Shares in issue (lakhs) 31,735.47 6,346.14 5,705.58 5,140.08 3,855.04

Earning Per Share (Rs) 3.91 28.55 39.26 19.48 52.63

Equity Dividend (%) 200.00 200.00 150.00 60.00 150.00

Book Value (Rs) 60.95 314.93 259.03 240.64 202.70

` 24

Cash flow statement

Cash Flow of Tata Motors ------------------- in Rs. Cr. -------------------


12 mths 12 mths 12 mths 12 mths 12 mths

Net Profit Before Tax 1242.23 1811.82 2240.08 1001.26 2028.92

Net Cash From Operating Activities 3653.59 1505.56 6586.03 1295.02 6174.50

Net Cash (used in)/fromInvesting Activities

144.72 -2521.88 -11848.29 -10644.67 -5721.86

Net Cash (used in)/from Financing Activities -4235.59 1648.42 5348.49 8104.70 1132.46

Net (decrease)/increase In Cash and Cash Equivalents

-437.28 632.10 86.23 -1244.95 1585.10

Opening Cash & Cash Equivalents 1352.14 720.04 630.04 2386.77 806.21

Closing Cash & Cash Equivalents 914.86 1352.14 716.27 1141.82 2391.31

` 25

Balance Sheet of Maruti Suzuki India ------------------- in Rs. Cr. -------------------


Sources Of Funds





Reserves 15,042.90 13,723.00 11,690.60 9,200.40 8,270.90


Networth 15,187.40 13,867.50 11,835.10 9,344.90 8,415.40

Secured Loans 0.00 31.20 26.50 0.10 0.10

Unsecured Loans 1,078.30 278.10 794.90 698.80 900.10

Total Debt 1,078.30 309.30 821.40 698.90 900.20




Gross Block 14,734.70 11,737.70 10,406.70 8,720.60 7,285.30


Net Block 7,520.70 5,529.40 5,024.70 4,070.80 3,296.50

Capital Work in Progress 1,406.30 1,428.60 387.60 861.30 736.30

Investments 6,147.40 5,106.70 7,176.60 3,173.30 5,180.70

Inventories 1,796.50 1,415.00 1,208.80 902.30 1,038.00

Sundry Debtors 937.60 893.30 809.90 918.90 655.50

Cash and Bank Balance 1,776.10 95.50 98.20 239.00 324.00


Loans and Advances 2,140.10 1,626.30 1,739.10 1,809.80 1,173.00

Fixed Deposits 660.00 2,413.00 0.00 1,700.00 0.00


Deffered Credit 0.00 0.00 0.00 0.00 0.00


Provisions 698.50 525.80 628.40 380.70 369.50


Net Current Assets 1,191.30 2,112.10 67.60 1,938.40 102.10


Total Assets 16,265.70 14,176.80 12,656.50 10,043.80 9,315.60

Contingent Liabilities 5,925.90 5,450.60 3,657.20 1,901.70 2,734.20

Book Value (Rs) 525.68 479.99 409.65 323.45 291.28

` 26

P&L A/CProfit & Loss account of Maruti Suzuki India ------------------- in Rs. Cr. -------------------


Income

Sales Turnover 39,495.30 40,865.50 32,174.10 23,381.50 21,200.40

Excise Duty 3,937.10 4,304.00 2,856.40 2,652.10 3,133.60

Net Sales 35,558.20 36,561.50 29,317.70 20,729.40 18,066.80

Other Income 366.20 784.60 662.00 491.70 494.00

Stock Adjustments 160.10 73.20 200.90 -356.60 336.30

Total Income 36,084.50 37,419.30 30,180.60 20,864.50 18,897.10

Expenditure

Raw Materials 28,330.60 28,880.00 22,636.30 15,983.20 13,958.30

Power & Fuel Cost 229.50 210.20 216.60 193.60 147.30

Employee Cost 843.80 703.60 545.60 471.10 356.20

Other Manufacturing Expenses 1,856.20 1,949.40 1,061.60 716.10 523.30

Selling and Admin Expenses 1,209.29 1,153.87 1,032.17 817.66 521.48


Preoperative Exp Capitalised -42.70 -25.70 0.00 -22.30 -19.80

Total Expenses 32,699.01 33,161.10 25,694.00 18,396.20 15,774.40



PBDIT 3,385.49 4,258.20 4,486.60 2,468.30 3,122.70

Interest 55.20 24.40 33.50 51.00 59.60

PBDT 3,330.29 4,233.80 4,453.10 2,417.30 3,063.10

Depreciation 1,138.40 1,013.50 825.00 706.50 568.20


Profit Before Tax 2,191.89 3,220.30 3,628.10 1,710.80 2,494.90



Tax 511.00 820.20 1,094.90 457.10 763.30

Reported Net Profit 1,635.20 2,288.60 2,497.60 1,218.70 1,730.80



Equity Dividend 216.70 216.70 173.30 101.10 144.50





Equity Dividend (%) 150.00 150.00 120.00 70.00 100.00

Book Value (Rs) 525.68 479.99 409.65 323.45 291.28

` 27

Cash flow

Cash Flow of Maruti Suzuki India ------------------- in Rs. Cr. -------------------






-2918.30 73.40 -4783.30 951.40 -3061.50

Net Cash (used in)/from Financing Activities 616.50 -713.40 55.10 -536.20 132.30


-72.40 2410.30 -1840.80 1608.50 -1098.80



` 28

BALANCESHEET OF MAHINDRA & MAHINDRA

Balance Sheet of Mahindra and Mahindra ------------------- in Rs. Cr. -------------------


Sources Of Funds





Reserves 11,799.26 9,974.62 7,527.60 4,959.26 4,098.53


Networth 12,104.69 10,313.39 7,830.23 5,243.97 4,350.07

Secured Loans 400.18 407.23 602.45 981.00 617.26

Unsecured Loans 2,774.04 1,998.06 2,277.70 3,071.76 1,969.80

Total Debt 3,174.22 2,405.29 2,880.15 4,052.76 2,587.06





Gross Block 8,063.18 5,849.27 4,866.18 4,653.66 3,552.64


Net Block 4,510.82 3,007.54 2,328.41 2,327.37 1,710.96

Capital Work in Progress 922.26 1,364.31 1,374.31 886.96 649.94

Investments 10,310.46 9,325.29 6,398.02 5,786.41 4,215.06

Inventories 2,358.39 1,694.21 1,188.78 1,060.67 1,084.11

Sundry Debtors 1,988.36 1,354.72 1,258.08 1,043.65 1,004.88

Cash and Bank Balance 630.57 447.62 475.17 635.61 310.58


Loans and Advances 2,767.19 2,653.52 2,034.47 1,402.45 866.19

Fixed Deposits 557.86 167.02 1,268.06 938.82 550.65


Deffered Credit 0.00 0.00 0.00 0.00 0.00


Provisions 1,845.27 2,005.88 1,796.54 1,277.56 943.46


Net Current Assets -464.63 -978.46 605.52 283.44 347.64


Total Assets 15,278.91 12,718.68 10,710.38 9,296.73 6,937.13

Contingent Liabilities 2,633.99 2,632.10 2,307.70 1,220.39 985.35

` 29

Book Value (Rs) 205.32 174.85 138.02 191.91 181.43

P&L A/CProfit & Loss account of Mahindra and Mahindra

------------------- in Rs. Cr. -------------------


Income

Sales Turnover 34,353.63 25,569.55 20,323.63 14,668.13 12,894.94

Excise Duty 2,518.43 2,092.02 1,807.30 1,587.05 1,584.57

Net Sales 31,835.20 23,477.53 18,516.33 13,081.08 11,310.37

Other Income 574.99 563.13 285.09 132.65 575.96

Stock Adjustments 597.33 202.23 23.69 -156.29 149.11

Total Income 33,007.52 24,242.89 18,825.11 13,057.44 12,035.44

Expenditure

Raw Materials 24,258.94 16,604.88 12,461.56 9,208.71 7,963.82

Power & Fuel Cost 175.78 143.93 120.97 98.69 91.33

Employee Cost 1,603.81 1,445.56 1,199.85 1,024.52 853.65

Other Manufacturing Expenses 125.81 98.33 96.92 75.36 73.35

Selling and Admin Expenses 1,811.88 1,735.63 1,439.26 1,109.96 1,108.33


Preoperative Exp Capitalised -73.53 -50.87 -59.55 -42.83 -46.49

Total Expenses 28,662.74 20,238.56 15,523.22 11,640.24 10,301.83




PBDIT 4,344.78 4,004.33 3,301.89 1,417.20 1,733.61

Interest 162.75 70.86 156.85 134.12 87.59

PBDT 4,182.03 3,933.47 3,145.04 1,283.08 1,646.02

Depreciation 576.14 413.86 370.78 291.51 238.66


Profit Before Tax 3,605.89 3,519.61 2,774.26 991.57 1,406.77



Tax 727.00 857.51 759.00 199.69 303.40

Reported Net Profit 2,878.89 2,662.10 2,087.75 836.78 1,103.37



Equity Dividend 767.48 706.08 549.52 278.83 282.61





` 30

Equity Dividend (%) 250.00 230.00 190.00 100.00 115.00

Book Value (Rs) 205.32 174.85 138.02 191.91 181.43

Cash flow

Cash Flow of Mahindra and Mahindra ------------------- in Rs. Cr. -------------------






-1936.54 -3734.99 -1345.44 -1941.00 -2075.08

Net Cash (used in)/from Financing Activities -306.15 -383.72 -783.87 696.91 811.34


492.26 -1138.96 207.18 387.21 -437.91



RATIO ANALYSIS OF TATA MOTORS, MARUTI SUZUKI AND

MAHINDRA & MAHINDRA

` 31

Ratios:

A ratio is an arithmetical expression of relationship between two variables of the financial

statements. It helps in easy comparison. The comparison may be inter firm or inter firm. A glance at

the ratios of the company gives the complete information about the company to investor.

There are many ratios one calculate and no single ratio can tell the company story.

Ratios are generally classified as:

A) Liquidity Ratios:

Liquidity ratios are the ratios which are used to measure the short term liquidity

position of a firm. Some of the commodity used liquidity ratios are Current Ratio,

Acid Test Ratio, etc.

B) solvency Ratios:

These are the Ratios that are used to measure the long term solvency position of a

firm. These ratios are generally looked into by creditors of the companies. The

common solvency ratios are Debt Equity ratio, Proprietary Ratio and etc.

C) Profitability Ratios:

The profitability ratios measure the efficiency of a firm. Some of the common

profitability ratios are Gross profit Ratio, Net Profit Ratio, Operating Profit Ratio,

Return on Assets, Return on Investments, Return on Capital Employed, etc.

D) Activity Based ratios:

Activity Based ratios are measures the efficiency of a firm. These ratios are also

called as performance ratios. Some of the commonly used are inventory turnover

ratio, Debtors turnover Ratio, Fixed Assets Turnover Ratio, etc.

E) Market Based Ratios:

` 32

These ratios are usually calculated using the values in the financial statements and the

market value of the share. Some of the commonly used ratios are: Price Earning

Ratio, Dividend Earning Ratio, Market Price to Book Value Ratio, etc.

Some important ratios that considered in the project are:

NET PROFIT MARGIN:- The Net Profit Margin measures the relationship between net profit and

sales of the firm. This ratio is indicative of management’s ability to operate the business successfully

and expresses the cost effectiveness of the organization.

Earning After interest and tax

Net Profit Margin= ---------------------------------------- × 100

Net Sales

A high net profit margin would ensure adequate return to the owners as well as enable the firm to

withstand adverse economic conditions like falling demand, rising costs, etc. while a low net profit

margin has the opposite implications.

Debt-Equity Ratio:- This ratio is used to find out the long term solvency position of the firm.

Long Term Debts

Debt Equity Ratio= ---------------------------

Equity Funds

This ratio serves of primary use to the creditors of the company. This ratio is also used by the

investors to kwon their claim in the company.

Return on Equity:- This ratio expresses the profitability of a firm in relation to the equity

shareholders’ funds.

Net Profit after taxes—Preference Dividend

Return on Equity = ----------------------------------------------------------------------- × 100

` 33

Net worth

This is the single most important ratio to judge whether the firm has earned satisfactory return to the

equity shareholders or not.

Earnings Per Share (EPS):- This ratio measure the profit available to the equity shareholders on a

per share basis, that is the amount they can get on every share held. It is the most widely used ratio

by investors.

Net Profit available to Equity share holders

Earning Per Share = -------------------------------------------------------------------

Total No. of Shares outstanding

This ratio only shows the profits earned per share but the same amount is not received by the

shareholders.

Price Earning (P/E) Ratios:- The (P/E) Ratio reflects the currently paid by the investors for the

each rupee of the reported EPS.

Market Price Per Share

Price Earning Ratio= ---------------------------------

Earning Per Share

It measure the investors confidence in the firm’s future. The higher the ratio, the larger is the

investor’s confidence in the firm’s future.

Dividend Per Share (DPS):- This ratio shows the profits that are paid to equity shareholders on per

share basis

Dividend Paid to Equity Shareholders

Dividend Payout Ratio = -----------------------------------------------------

` 34

No. of Equity shares outstanding

The DPS is a better indicator than EPS As the former shows exactly what amount is received by the

shareholders.

Dividend Payout Ratio:- This ratio measure the relationship between the earning belonging to the

equity shareholders and the dividend paid to them.

Dividend Paid to Equity shareholders

Dividend Payout Ratio= ----------------------------------------------------------- × 100

Profits belonging to Equity Shareholders

If the dividend Payout Ratio is subtracted from 100 it shows the earning Retention Ratio, Which

shows the profits retained in the business.

Dividend Yield Ratio:- This ratio reflects the price paid by the investor for each rupee of the

dividend paid.

Dividend Per Share

Dividend Yield Ratio = --------------------------------------- × 100

Market Price Per Share

This ratio is very significant from the point of view of those investors who are interested in dividend

income.

Book Value Per Share :- Book value per share represents the claim of the shareholders on a per

share Basis. This ratio is sometimes used as a benchmark for comparison with the Market price per

share.

Net Worth

Book Value Per Share = ---------------------------------------------

` 35

No. of Equity share outstanding

` 36

Introduction 1

Documents

Transcript of Introduction 1