Maruti Suzuki

N.R. Institute Of Business Administration

GLS Campus, Maida plaza Lane,Off. C.G. Road

Ellisbridge, Ahmedabad – 380 006.

Certificate

This is to certify that the report based on 3 years published Annual Report of Maruti Suzuki ltd. Is submitted by Varasani Mahendra Devjibhai to the N. R. Institute Of Business Administration affiliated to the Gujarat University in a partial fulfillment requirement for the completion of “practical study” at the second year B.B.A. programme for the year 2007.

1 FINANCIAL REPORT N.R.I.B.A.

--------- ---------- Director’s sign Prof. In chargeDate : 22/02/2008

ACKNOWLEDGEMENT

I am highly thankful to MARUTI SUZUKI for helping me in my Practical Studies at second year B.B.A. programme. It has provided me many details and enlightens me in preparation of this financial report.

I take this opportunity to thanks our director A. B. Dixit and Pro. Seema Pandit for giving me an opportunity to prepare my financial project report. She also helped me in finding out the Ratios and some important aspects.


PREFACE

Finance management in India has substantially in scope and complexity in view of recent government policy. The modern approach to corporate finance is much more than traditional approach to financial management or with more procurement of funds. In present situational financial management is real with procurement of funds and maximum utilization of it. “Finance Is A Blood Of Any Business Body”. Less capital creates problems in the business and more capital is also creating problems.

In this report, I am trying to explain how we can find out financial result with the help of ratio analysis and some more in portent graphs with the help of Ratio Analysis. We can easily understand the profitability of the business, efficiency of business, useful in inter comparison. It is also useful for budgeting control and decision-making. Ratio analysis helps interested parties like share holders, investors, creditors, government also and analysis to make an evaluation of a certain aspect of a firm’s performances.


INDEX

Sr. no.

Title Page No.

Certificate 01Acknowledgement 02Preface 03

1. Company profileName of the companyRegistered office addressStatus in the marketSpecial achievementFinance highlightsMeaning of analysis and objectives of study

05

2. Results of operations Profits of three years GP,NP,EBIT,EBT,EATImportance of cash profit (theory)Cash flow statementConclusion

3. Ratio AnalysisMeaning and importance of ratio and classification – traditional classification & functional classification

PROFITABILITY RATIOGross profit ratio


Net profit ratioExpense ratioOperating ratioReturn on investmentReturn on share holders fundReturn on equity share capitalReturn on equity shareholders fundEarning per shareDividend per sharePrice earning ratioDividend yield ratioInterest coverage ratio

ACTIVITY / TURNOVER RATIO:Overall turnover ratioFixed asset turnover ratioDebtor turnover ratioCreditors ratioCreditors turnover ratioStock turnover ratio

LIQUIDITY RATIO :Current ratioLiquid ratioQuick / acid ratio

LEVERAGE RATIO:Proprietary ratioDebt equity ratioCapital gearing ratio

OTHERS:Long term fixed fund to fixed asset

4. Accounting policies and notesNotes of accountsMain policies pertaining the unitImplication

5. Director’s Report

6. Auditors ReportsName of the auditorsTo state weather reports is qualified or unqualifiedImplication

7. Common sized statement


P & L A/c – common sizeBalance sheet – common sizeComparison

8. ConclusionFindingsConclusionsuggestion

Maruti Udyog Limited

REGISTERED AND CORPORATE OFFICE :

11th Floor, Jeevan Prakash Building,25, Kasturba Ganghi Marg,New Delhi – 110001

Brief Introduction Of The Production Of The Business:

Maruti Udyog does the make vehicle and also produces

spares and accessories of the vehicle. States In The Market :

No.1 car producer Company in the Indian market and runner up in foreign country.

Special Achievement :

MARUTI SUZUKI HAS WON OVER 50 AWARDS SINCE YEAR 2000


NO. 1 IN THE AUTOMOBILES SECTOR IN THE INDIA MOST RESPECTED COMPANIES SURVEY, 2006.

RANKED AMONG THE TOP 5 CAR COMPANIES IN THE 2006 WORLD’S MOST REPUTED CSOMPSNIES LIST PUBLISHED BY FORBES MAGAZINE.

NO. 1 IN CUSTOMER SATISFACTION, 7 TEARS IN ROW, 2000 – 06.

NO. 1 IN SALES SATISFACTION, 3 YEARS IN ARAW, 2004 – 06.

NO. 1 INITIAL QUALITY STUDY, 2006. NO. 1 IN INDIA APEAL STUDY, 2006.

NO. 1 IN TOTAL CUSTOMER SATISFACTION, 5 YEARS IN A ROW, 2002 – 06.

NO. 1 IN GLOBAL CORPORATE SOCIAL RESPONSIBILITY STUDY, 2006.

RANKED AMONG TOP 3 IN THE CORPORATE IMAGE MONITOR, 2005


MANUFACTURER OF THE YEAR, 2005

FINANCIAL HIGHLIGHT:

YEAR 2005 – 06 2006 - 07Net Sales 120,034 145,922

Profit Before Tax. 17,500 22,798

Profit After Tax. 11,891 15,620

EPS 41.16 51.12

MEANING OF ANALYSIS AND OBJECTIVE OF STUDY :

Financial statement namely the statement of the profit & loss account and the balance sheet are indication of two signify-cant factors profitability and financial soundness analysis of statements means such a treatment of the information contained to afford a diagnosis of the profitability and financial statements analysis as the process of methodical classification comparison with other co-rising question and then seeking answer for them.

Finance is the very typical aspect in course of management. The main objective behind the study is to get precisely. It also helps us to


study the present finance scenario. The objective is such that company’s profitability, liquidity and capacity by such analysis we can interpret the position of the company. So it is very important to study.


[ 2.1] Profit of 3 years :

PARTICULARS 2004 – 05 2005 – 06 2006 - 07

Net profit 8,536 11,891 15,620

Gross Profit 19.93 % 20.51 % 24.59 %

EBIT 16.6% 17.1% 17.7%

EAT 8,536 11,891 15,620

EBT 17500 25888 20558

[ 2.2 ] IMPORTANCE OF CASH PROFIT THEORY :

MEANING

Cash flow means inflows that is, sources of cash which are at the disposable at the firm and outflows of the fire that is the use of the firm.

The difference between inflows and outflows is either net inflow or net outflow. A cash outflow statement deals with the cash fund flow, which excludes working capital movements. The Accounting standard (A53) classifies cash flows as under:

1) Cash from operating activities 2) Cash from investing activities 3) Cash from financing activities

The operating activities include receipts from sale of goods or Rendering of services receipts from royalty, fees, commission etc. Outflow is the resulting from payment to creditors for goods and services, payment for expenses such as lighting, power, rent, wages salaries etc.

Only cash from operating activities is included in this report.


IMPORTANCE OF CASH PROFIT :

The cash profit is an important measure of profitability as well as liquidity. When the cash profit differs from the profit is shown in the profit and loss account or profit and loss statement. Adjusting depreciation arrives at the cash profit, amortize action of capital expenses etc. The cash profit is much less or negative compared to the profit declared in the profit and loss account. It indicates liquidity and signals for appropriate cash management. The net cash from operations can be calculated through adjustment of non-cash items like depreciation, changes in inventory and receivable and payables , and or other items for which cash offers the investing and financing

activities.

CASH FLOW STATEMENT

FOR THE YEAR ENDED 31st MARCH 2007 (A) Cash flow from Operating Activities : Rs. In

millionNet Profit before Tax 22,798Adjustments for :Depreciation 2714Interest Expense 376Interest Income 1109Dividend Income 1528Net Loss on Sale / discarding of fixed assets 4Profit on sale of Investments 389Debts / Advances Written back 22Provisions no longer required written off 459 Opening Loss of MSAIL adjusted from opening surplus on amalgamation

84

Impact of transition provision of Accounting Standard 15 5Employee benefit -Operating profit before Working Capital changes 22340Adjustments for changes in Working Capital(increase) / decrease in sundry debtors 1035(increase) / decrease in other current Assets, Loan & advances 1523(increase) / decrease in Inventories 1680increase / (decrease) in current Liabilities and Provisions 5170Cash generated from Operating Activities 26632Taxes / received (Net of TDS) 6352Net cash from Operating Activities 20,280


(B) Cash flow from Investing Activities :Purchase of fixed assets 13955Sale of fixed Assets 123Sale of investments 109253Purchase of investments 122444Interest received 1127Dividend received 1528Net cash from Investing Activities 24368

(C) Cash flow from Financing Activities :Proceeds from Short term borrowings 233Proceeds from Long term borrowings 5675Repayment of Short term borrowings 317Interest paid 280Dividend paid 1011

Net Cash from Financing Activities 4300

Net Increase / (Decrease) in Cash & Cash Equivalents 212

Cash and Cash Equivalents as at 1st April (Opening Balance) 14016Cash and Cash Equivalents as at 31st March (Closing Balance) 14228

Cash and Cash Equivalents comprise 14228Cash, Cheques & Drafts (in hand) 946Balance with Scheduled Bank in Current Account 202Balance with Scheduled Bank in Deposit Account 13080

Interpretation

Above cash flow of Maruti Suzuki Ltd. Is shown that year 2006 – 07 net profit is higher than 2005 – 06 and this is good condition for the company. Also investing as well as financing activities cash flow describes strong condition from the previous years cash flow activities.

3.1 MEANING & IMPORTANCE OF RATIO :


An idea the financial position can be had from the balance sheet. The director’s report and chairman’s speech would assist him in foresting the future prospects of the company. However, accurate conclusions cannot be drawn from the mass of figures included in these financial statements. Hence, they are to be analyzed and interpreted with the help of a number of devices. So let us at this stage, clarify the meaning of important terms useful in our study of analysis of accounts. Ratio is a figure showing, logical relationship between any two items taken from financial statement as prepared and presented annually are of little use for guidance of prospective investors, creditors and even management. If relationships between various related items in these financial statements are established, they can provide useful dues to garage accurately the financial health and ability of business to make profit. The relation between in two related items of financial statements is known ratio.

[ 3.2 ] UTILITY OF RATIO ANALYSIS :

It is very important to find the ratio of liquidity, profitability etc. Because the ratio analysis provides useful data to the management, important uses of it are given as below:

PROFITABLITY :

Useful information about the trend of profitability is from profitability ratio. The gross profit ratio, net profit ratio and ratio of return on investment give a good idea of the profitability of the business. On the basic of this ratio, investors get an idea about overall efficiency of managers and bank as well as other creditors draw useful conclusion about repaying capacity of the borrowers.

LIQUIDITY :

In fact the use of ratio was made initially to ascertain the Liquidity of business. The current ratio, acid test ratio will tell whether the firm will be able to meet its current liabilities and when they nature. Banks and other leaders will be able to conclude from these ratios whether the firm will be able to pay regularly the interest and loan installments.

EFFCIENCY :


The turnover ratios are excellent guide to measure the efficiency of

managers. All such ratio related to sales present a good picture of the success on the business.

INTER FIRM COMPARION :

The absolute ratios of a firm are not of much use, unless they are compared with similar ratios of other firms belonging to the same industry. This is a inter firm compared to other firms comparison, which shows the strength and weakness of the firm as compared to other firms and will indicate corrective measures.

INDICATE TREND :

The ratio of the last 3 to 5 years will indicate the trend in the respective fields. A particular ratio of a company , for one year may compare favorably with industry average, but its trend shows a deteriorating position, it is not desirable only ratio analysis will provide this information.

USEFUL FOR BUDGETARY CONTROL :

Regular budgetary reports are prepared in a business where the system of budgetary control is in use. If various ratios are presented these reports, it will give a fairly good idea about various aspects of financial position.

USEFUL FOR DECISION MAKING :

Ratio guide the management in making some of the important decision, suppose, the liquidity ratios shows an unsatisfactory position, the management may decide to get additional liquid funds. Even for capital expenditure decision, the ratio of investment. The efficiency of each department a thus be deter minded. Thus, the ratio are the most useful I financial statement.

[ 3.3 ] CLASSIFICATION OF RATIO :

1) Profitability ratio :

These ratios indicate the profit generating capacity of Business. This category includes:

Gross Profit Ratio


Net Profit Ratio Operating ratio Return on Company Employee’s Ratio Return on Shareholder’s Funds Debt Service Coverage Ratio

2) Liquidity Ratios :

These ratios indicate whether short – term assets are enough to meet short - term obligation from short assets. These categories include :

Current Ratio Liquid Ratio Acid Test Ratio

3) Leverage Ratios :

These ratios indicate compensation of company’s capital and Its distribution into debt and equity. These categories include:

Proprietary Ratio Debt Equity Ratio Capital Gaining Ratio Fixed Capital to Fixed Assets Ratio

4) Activity Ratio :

These ratios indicate the efficiency of investment in the organization. These categories include :

Creditor’s Turnover Ratio Debtors Turnover Ratio Fixed Assets Turnover Ratio Total Assets Turnover Ratio


[ 3.2.1 ] Gross Profit Ratio :

Meaning : It is a ratio expressing relationship between Gross Profit earned to sales. It is a useful indication of the profitability of business.

Implementation : Gross profit is result of the relation between price, sales volume

and costs. A change in the gross margin can be brought about by changes in any of these factors.

The gross profit ratio can also be used in determining the extent of loss caused by theft, spoilage, damage and so on in the case of those firms which follow the policy of fixed gross profit margin in pricing their product.

The gross margin represents the limit beyond which fall in sales price are outside the tolerance limit.

Formula :

= Gross profit X 100 Sales

TABLE OF THREE YEARS RATIO :PARTICULAR 2006–07 2005-06 2004-05Gross profit 24.59 20.51 19.93

Calculation of three years : [ Rs. In million]PARTICULAR 2006 – 07 2005 – 06 2004 - 05Gross Profit 35880 24626 21744Sales 145922 120034 109108

INTERPRETATION :

This ratio indicates relation between G/P and Sales. For the year 2004-05 it was 19.93 and 2005-06 was 20.51 and increase to 24.59 in 2006-07.


[ 3.2.2 ] Net Profit Ratio :

Meaning :Net profit ratio is valuable for the purpose of ascertaining the over-all profitability of business and shows the efficiency of operating the business.

Implementation : The net profit ratio is indicative of management’s ability to

operate the business with sufficient success not only to recover from revenue of the period the cost of merchandise or services, the expenses of operating the business and the cost of the borrowed funds, but also to leave a margin of reasonable compensation to the owners for providing their capital at risk.

The ratio of net profit ratio to sales essentially expresses the cost price effectiveness of the operation.

A high net profit margin would ensure adequate return to the owners as well as enable a firm to withstand adverse economic conditions when selling price is declaiming, cost of production raising and a low net profit margin has the opposite implication.

Formula :

= Net Profit X 100 Sales

TABLE OF THREE YEARS RATIO :PARTICULAR 2006–07 2005-06 2004-05Net profit ratio 16.47 % 16.47 % 16.47 %

CALCULATON : [ Rs. In million]PARTICULAR 2006 - 07 2005 –06 2004 – 05Net Profit 15620 11891 8536Sales 145922 120034 109108

Interpretation : This ratio shows a better profitability of the firm as compared to the last year i.e. 2005 – 06. This suggests a satisfactory position. It is sound financial position to the company. Higher the ratio better for the company.


[ 3.2.3 ] Expenses Ratio :

Meaning :

Dividing expenses compute expenses ratio by sales. The term ‘expenses’ includes (1) COGS (2) administrative expenses (3) selling expenses and (4) financial expenses but excludes taxes, dividends and extraordinary losses due to theft of goods, good destroyed by fire and so on.

Implementation :

Some accountants calculate expenses ratio in respected of raw – material consumed, direct wages and factory expenses.

It is closely related to the profit margin, gross as well as net.

Formula :

= Expenses X 100 Sales

TABLE OF THREE YEARS :PARTICULAR 2006–07 2005-06 2004-05Expenses ratio 92.03 89.23 22.79

CALCULATION : [ Rs. In million]PARTICULAR 2006–07 2005– 06 2004-05

Expenses 100416 107110 129349Sales 109108 120034 145922Total 209524 227144 275271

INTERPRETATION : This ratio shows relationship between expanses to sales. Above table shows that for the year 2004 – 05 it was 88.64 % the increase in 2005 – 06 up to 89.23% that indicates there is increase in operating expenses for the year 2006 – 07 it is 92.03% and it is higher than previous tear which shows increase in operating expenses.

[ 3.2.4 ] OPERATING RATIO :


Meaning : Operating Ratio is computed by dividing expenses by sales. The term ‘operating ratio’ includes (1) COGS (2) administrative expenses (3) selling expenses and (4) financial expenses but excludes taxes, dividends and extraordinary losses due to theft of goods, good destroyed by fire and so on.

Implementation :

Some accountants calculate expenses ratio in respected of raw – material consumed, direct wages and factory expenses.

It is closely related to the profit margin, gross as well as net.

Formula:

= C O G S + Operating expenses X 100 Net sales

TABLE OF THREE YEARS :PARTICULAR 2006–07 2005-06 2004-05operating Ratio 87.33 86.90 83.89

Calculation : [ Rs. In million]PARTICULAR 2006-07 2005-06 2004-05

Operating Expenses 7928 8909 12370C O G S 87364 95408 110042Net sales 145922 120034 109108TOTAL 182556 224351 232454

INTERPRETATION: This ratio shows relationship between COGS + operating expanses to sales. Above table shows that for the year 2004 – 05 it was 87.33 % the increase in 2005 – 06 up to 86.90 % that indicates there is increase in operating expenses for the year 2006 – 07 it is 83.89 % and it is lower than previous year which shows increase in operating expenses.


[ 3.2.5 ] Return on investment / Capital employed :

Meaning :The profitability ratio can be computed by relating the profits of a firm to its investment.

Implementation : Return on investment indicates the profitability of business and

is very much in use among financial analysis. The ratio is an indicator of the measure of the success of a

business from the owners’ point of view. The ultimate interest of any business is the rate of return on invested capital. It may be measured by the ratio of income to equality capital.

It determines whether a certain goal has been achieved or whether an alternative use of capital is justified.

Formula := E B I T X 100 Capital employed

TABLE OF THREE YEARS :PARTICULAR 2006 – 07 2005– 06 2004- 05Return on investment / capital employed ratio

34.88 % 37.42 % 40.78 %

CALCULATION : [ Rs. In million]E B I T 2006 - 07 2005- 06 2004– 05Earning before interest and tax

25888 20558 18140

CAPITAL EMPLOYED 2006 - 07 2005- 06 2004– 05Capital 1445 1445 1445Reserve and surplus + long term loan

67094 53081 42343

INTERPRETATION:This ratio shows relationship between E B I T to CAPITAL EMPLOYED. Above table shows that for the year 2004 – 05 it was 22.19 % the increase in 2005 – 06 up to 26.54 % that indicates there is increase in E B I T for the year 2006 – 07 it is 24.60 %


and it is higher than previous year which shows decrease in capital employed. Higher the ratio, it is better for the company.

[ 3.2.6 ] Return on shareholder’s fund:

Meaning :It is carries the relationship of return to the sources of funds yet another step further.

Implication : It expresses the profitability of a firm in relation to the funds

supplied by the creditors and owners taken to gather, the return on shareholders’ equity measures exclusively the return on the

owners’ funds.

Formula := Net profit X 100 Share holders fund

TABLE OF THREE YEARS :PARTICULAR 2006- 07 2005-06 2004– 05

Return on shareholder’s fund ratio

24.30 % 23.70 % 21.90 %

CALCULATION : [ Rs. In million]Net Profit 2006 - 07 2005– 06 2004– 05

PAT 15620 11891 8536

Shareholders’ funds 2006 - 07 2005– 06 2004– 05

Capital 1445 1445 1445Reserve and surplusLong term funds

67094 53081 42343

INTERPRETATION:The ratio indicates relationship between Net profits to share holders fund therefore

higher the returns to shareholders. For the year 2004 05 it is 21.90 % that increase in the year 2005 – 06 up to 23.70.This ratio shows downward trend in the ratio in return on shareholders fund for this company.


[ 3.2.7 ] Return on Equity share capital :

Meaning :It is obtained by dividing net profit after tax deduction of performance dividing by his amount of ordinary share capital plus free reserve.

Implementation : This is probably the single most important ratio to judge whether

the firm has earned a satisfactory return for its equity – holders or not.

Its adequacy can be judge by : (1) comparing it with the past record of the same form, (2) comparisons with the overall industry average.

Formula := Net profit after tax -- Preference dividend X 100 Equity capital

TABLE OF THREE YEARS :PARTICULAR 2006 - 07 2005 –

06 2004 – 05

Ratio of Return on Equity share capital

22.79 % 21.81 % 19.49 %

CALCULATION : [ Rs. In million]Net profit after tax 2006- 07 2005– 06 2004– 05

EBIT(--)InterestEBT(--)PAT

2588830902279815620

2055830581750011891

181405091130495091

Shareholders’ funds 2006-07 2005-06 2004-05

Capital 1445 1445 1445

INTERPRETATION:The ratio indicates relationship between Net profits to share holders fund therefore higher the returns to shareholders. For the year 2004 – 05 it is 19.49 % that increase in the year 2005 – 06 up to 21.81 %.


This ratio shows downward trend in the ratio in return on shareholders fund for this company.

[ 3.2.8 ] Return on Equity share holders fund :

Meaning :It is obtained by dividing net profit after tax deduction of performance dividing by his amount of ordinary share capital plus free reserve.

Implementation : This is probably the single most important ratio to judge whether

the firm has earned a satisfactory return for its equity – holders or not.

Its adequacy can be judge by : (1) comparing it with the past record of the same form, (2) comparisons with the overall industry average.

Formula := Net profit after tax -- Preference dividend X 100 Equity share holders’ funds

TABLE OF THREE YEARS :PARTICULAR 2006–07 2005-06 2004– 05 Ratio of Return on Equity share capital

22.79 % 21.81 % 19.49 %

CALCULATION : [ Rs. In million] Net profit after tax 2006– 07 2005– 06 2004– 05

EBIT(--)InterestEBT(--)PAT

2588830902279815620

2055830581750011891

181405091130495091

Shareholders’ funds 2006- 07 2005– 06 2004 –05

Capital 1445 1445 1445Reserve and surplus 67094 53081 42343

INTERPRETATION:


For the year 2004 – 05 it is 19.49 % that increase in the year 2005 – 06 up to 21.81%. These ratios shows downward trend in the ratio in return on shareholders fund for this company.

[ 3.2.9 ] Earning per share :

Meaning :

EPS measures the profit available to the equity shareholders on a per share basis, that is, the amount that they can get on every share head.

Implementation :

Earning per share is a widely used ratio. EPS s a measure of profitability

Formula :

= profit after tax – preference dividend X 100 No. of equity shareholders fund

TABLE OF THREE YEARS :PARTICULAR 2006 – 07 2005– 06 2004 – 05 Ratio of Earning per share

54.06 41.06 29.55

CALCULATION : [ Rs. In million]PARTICULAR 2006 - 07 2005 – 06 2004 – 05

P A T 15620 11891 8536No. of shares 28891006

028891006

028891006

0

INTERPRETATION :

This ratio indicates the earning per share for shareholders of company. In the year 2004 – 05 ratio is 29.55 % and 2005 – 06 it is 41.16 % and its increase on 54.06 %.therefore it is good for company as well as shareholders.


[ 3.2.10 ] Dividend per share :

Meaning :

DPS is the dividend paid to shareholders on a per share basis. In the other words, DPS is the Net distributed profit belonging to the shareholders divided by the No. of ordinary shares outstanding.

Implementation :

The DPS would be a better indicator than EPS as the former shows what exactly is received by the owners.

Like the EPS, the DPS is also should not be taken at its face value as the increase DPS may not be a reliable measure of profitability as the equality base may have increase due to increase relation without any change in the number of

outstanding shares.

Formula :

= total dividend declared No. of equity shares

TABLE OF THREE YEARS :PARTICULAR 2006 – 07 2005– 06 2004 – 05 Ratio of dividend per share

4.50 3.50 2.00


Dividend declared 1300 1011 8536No. of shares 288910060 288910060 288910060

INTERPRETATION :


This ratio indicates the total dividend declared to no. of shares. For the year 2004 – 05 it is 2.00 % and 2005 – 06 is3.50 % and increase on 4.50 % in the year 2006 – 07.

[ 3.2.11 ] Price earning ratio :

Meaning :

It is closely related to the earning yield leanings price ratio. It is actually the reciprocal of the latter. Thus ratio is computed by dividing the market price of the shares by the EPS. Implementation :

The price earning ratio reflects the price currently being paid by the market for each Rupee of currently reported EPS. In other words, the PIE ratio measures investors’ expectations and the market appraisal of the earnings. Therefore, only normally sustainable earning associated with the assets are taken into account.

Formula :

= market value per share Earning per share

TABLE OF THREE YEARS :PARTICULAR 2006-07 2005-06 2004–05 Ratio of price earning ratio

17.58 21.95 29.55

CALCULATION : [ Rs. In million]PARTICULAR 2006-07 2005-06 2004-05

Market value 856 933 950

E P S 29.55 41.16 54.04

INTERPRETATION :This ratio indicates the earning per share for shareholders of company. In the year 2004 – 05 ratio is 17.58% and 2005 – 06 it is 21.95% and it’s increase on 29.55%. Therefore it is good for company as well as shareholders.


[ 3.2.12 ] Dividend yield ratio :

Meaning :Dividend yield ratio is closely related to the EPS and DPS. While the EPS and DPS are based on the book value per share, the yield is expressed in terms of the market value per share. The earnings yield may be defined as the ratio of earnings per share to the market value per ordinary share.

Implementation : The dividend yield ratio is calculated by dividing the cash

dividends per share by the market value per share.

Formula :

= Dividend per share Market value share

TABLE OF THREE YEARS :PARTICULAR 2006-07 2005-06 2004– 05 Ratio of dividend yield

0.04 -- --

CALCULATION : [ Rs. In million]PARTICULAR 2006- 07 2005– 06 2004– 05

Dividend per share 4.50 -- --Market value per share

950 -- --

Note: There is no information about dividend of 2004-05-06.

INTERPRETATION :This ratio indicates the earning per share for shareholders of company. In the year 2004 – 05 ratio is 29.55 % and 2005 – 06 it is 41.16 % and its increase on 54.06 %.therefore it is good for company as well as shareholders.


[ 3.2.13 ] interest coverage ratio :

Meaning :It is also known as ‘time interest – earned ratio’. This ratio measures the debt servicing capacity of a firm insofar as fixed interest on long term loan is concerned. It is determined by dividing the operating profit or earning before interest and taxes ( EBIT ) by the fixed interest changes on loans. Implementation :

This ratio uses the concept of net profits before taxes because tax is calculated after paying interest on long term loan.

This ratio as the name suggests, show how many times the interest changes are covered by EBIT out of which they will be paid.

Formula :

= EBITD Interest

TABLE OF THREE YEARS :PARTICULAR 2006 – 07 2005 –

06 2004 – 05

Interest coverage Ratio 68.85 100.70 50.39


EBDIT 25888 20558 18140Fix interest 376 204 360

INTERPRETATION :This ratio indicates the EBDIT to interest. In the year 2004 – 05 ratio is 50.39 and 2005 – 06 it is 100.70 and it’s decrease on 68.85.therefore it is good for company as well as shareholders.


[ 3.3.1 ] Overall turnover ratio :

Meaning :The amount invested in business is invested in all capital employed and sales are affected through them to earn profits so in order to find relation between net sales to capital employed.

Implementation : The usefulness of the Du Pont analysis lies in the fact that it

presents the overall picture of the performance of a firm as also enables the management to identify the factors which have a

bearing on profitability.

Formula := Net sales Capital employed

TABLE OF THREE YEARS :PARTICULAR 2006-07 2005-06 2004-05 Overall Ratio 2.08 2.37 2.75

CALCULATION : [ Rs. In million]PARTICULAR 2006-07 2005-06 2004–05

Net sales 185922 120034 109108Capital employed 69872 50527 39545

INTERPRETATION :This ratio indicates net sales to capital employed. In the year 2004 – 05 ratio is 2.75 and 2005 – 06 it is 2.37 and it’s decrease on 2.08 in the year 2006 – 07. Therefore it is bad for company.


[ 3.3.2 ] fixed assets turn over ratio :

Meaning :It is based on the relationship between the sales and assets of the firm. A reference to this was made while working out the overall profitability of a form as reflected in its earning power.

Implementation : To ascertain efficiency and profitability of the business. The

higher the turnover ratio, the more efficiency is the management and utilization of the assets while low turnover ratios are

indicative of underutilization of available resources.

Formula := sales Fixed assets

TABLE OF THREE YEARS :PARTICULAR 2006-07 2005-06 2004–05Fixed assets turnover Ratio

5.03 6.72 5.69


Net sales 145922 120034 109108

Fixed assets 28986 17872 19158

INTERPRETATION :

Fixed turn over ratio indicates the turnover of the company in one year. In the year 2004 – 05 ratio is 5.69 and 2005 – 06 it is 6.72 and its decrease on 5.08 in the year 2006 - 07. Therefore, it is bad for company.


[ 3.3.3 ] Debtor turn over ratio :

Meaning :It is allied and closely related to this is the average collection period. It is the test of the liquidity of the debtors of a firm.

Implementation : This figure should be measured, as in the case of average

inventory, on the basis of the monthly average. It suggests that number of times the amount of credit sale is collected during the year.

Formula :

= credit sales Avg. Debtors

TABLE OF THREE YEARS :PARTICULAR 2006-07 2005-06 2004– 05 Debtor turnover Ratio

20.94 19.19 16.90


Sales 145922 120034 109108Avg. Debtors 6967.5 6271.5 6444.5

INTERPRETATION :Debtor turnover ratio indicates credit sales to avg. debtors. In the year 2004 – 05 ratio is 16.90 and 2005 – 06 it is 19.19 and it’s increase on 20.94 in the year 2006 – 07. Therefore, it is good position for company. How efficiently the amount is collected from the customers from the credit sales. As compare to previous year the no. of days collection period increase which indicate inefficiency of collection department. Lower the collection period and higher debtor turnover ratio is advisable.


[ 3.3.4 ] Creditor ratio :

Meaning :It is the no. of days within which we make payment to our creditors for credit purchases it obtained from creditor ratio.

Implementation : The generally the longer credit period achieved means the

operation of the payment being financial interest feels by supper funds.

Formula := creditor + B / P X 365 Credit Purchases

TABLE OF THREE YEARS :PARTICULAR 2006-07 2005-

06 2004–05

Creditors Ratio 30.64 20.77 18.82

CALCULATION : [ Rs. In million]PARTICULAR 2006 -07 2005– 06 2004– 05

Creditors 9096 5551 4637Credit purchases 108362 97554 89632

INTERPRETATION :Creditor ratio indicates creditor to credit purchase. In the year 2004 – 05 ratio is 18.82 and 2005 – 06 it is 20.77 and its decrease on 18.88 in the year 2006 – 07. Therefore, it is good position for company.


[ 3.3.5 ] creditor turn over ratio :

Meaning :It is the no. of days within which we make payment to our creditors for credit purchases it obtained from creditor ratio.

Implementation : The generally the longer credit period achieved means the

operation of the payment being financial interest feels by supper

funds.

Formula := No. of days in a year Creditor’s ratio

TABLE OF THREE YEARS :PARTICULAR 2006-07 2005-06 2004-05 creditor turnover Ratio

11.91 17.57 19.33


Days 365 365 365Creditors ratio 30.64 20.77 18.88

INTERPRETATION :Creditor ratio indicates creditor to credit purchase. In the year 2004 – 05 ratio is 19.33 and 2005 – 06 it is 17.57 and its increase on 11.91 in the year 2006 – 07. Therefore, it is good position for company.


[ 3.3.6 ] stock turnover ratio :

Meaning :It is the no. of times the average stock is turned over during the year is known as stock turnover ratio. It measures the relationship between COGS and inventory level.

Implementation : This approach has the advantage of being free from bias as it

smoothens out the fluctuations in the inventory level at different period.

It is measures how quickly inventory is sold. it is a test of efficient inventory management.

To judge whether the ratio of a firm is satisfactory or not.

Formula := cost of good sold Average stock

TABLE OF THREE YEARS :PARTICULAR 2006 – 07 2005 –06 2004 – 05 Stock turnover Ratio 13.80 12.33 15.80


COGS 110042 45408 87364Avg. stock 7972 7737 5532

INTERPRETATION :Stock turnover ratio indicates cost of goods sold to average stock. In the year 2004 – 05 ratio is 15.80 times and 2005 – 06 it is 12.33 times and it’s increase on 13.80 times in the year 2006 – 07. Therefore, it is


good for company. How efficiently stock rate in the year Higher the ratio, better position of the company as well as efficiency.

[ 3.4.1 ] Current Ratio :

Meaning :The current ratio is the ratio of total current assets to total current liability. It is calculated by dividing current assets by current liability.

Implementation : The current ratio of a firm measures its short term solvency.

That is a measure of margin of safety to the creditors. The fact that a firm can rarely count on such an even flow requires that the size of the C.A. should be sufficiently larger than C.L. so that the firm would be assured of being able to pay its current

maturing debts as and when it becomes due.

Formula := current Assets Current liability

TABLE OF THREE YEARS :PARTICULAR 2006–07 2005-06 2004– 05 Current Ratio 1.54 : 1 1.52 : 1 1.84 : 1


Current assets 38459 37407 29720Current liability 25015 198771 16080

INTERPRETATION :Current ratio indicates current assets to current liability. In the year 2004 – 05 ratio is 1.84 : 1 and 2005 – 06 it is 1.89 : 1 and it’s decrease


on 1.54 : 1 in the year 2006 – 07. Therefore, it is good for company. Mainly 2 : 1 is good. It indicates, repaying condition of the company to the current liabilities. The standard current ratio must be 2:1.

[ 3.4.2 ] liquidity Ratio :

Meaning :It is obtained by dividing the liquid assets by liquid liabilities. It liquid ratio is designed to show the amount of cash available to meet immediate payments.

Implementation : The importance of adequate liquidity in the sense of the ability

of a firm to meet short term obligations when they become due for payment can hardly be overstressed.

In fact liquidity is a prerequisite for the very survival of a firm. It measures ability of a firm to meet its short term obligations and reflect the short term finance strength of a firm.

formula :

= liquid assets Liquid liability

TABLE OF THREE YEARS :PARTICULAR 2006 – 07 2005– 06 2004 – 05 Liquid ratio 1.27 : 1 1.52 : 1 1.53 : 1


Liquid assets 31327 28597 23054Liquid liability 24575 18825 15095


INTERPRETATION : Liquid ratio indicates liquid assets to liquid liability. In the year 2004 – 05 ratio is 1.53 : 1 and 2005 – 06 it is 1.52 : 1 and it’s decrease on 1.27 : 1 in the year 2006 – 07. Therefore, it is good for company. How effectively the liability paid off. The standard liquidation must be 1:1.

[ 3.4.3 ] Quick / acid test ratio :

Meaning :The measure of absolute liquidity may be obtain by comparing only cash and bank balance as well as readily marketable securities with liquid liabilities.

Implementation : This ratio is the most rigorous and conservative test of a firm’s

liquidity position. Further, it is suggested that it would be useful for the management.

formula :

= Quick assets Liquid liability

TABLE OF THREE YEARS :PARTICULAR 2006 – 07 2005– 06 2004 – 05 Quick / acid test ratio

0.79 1.17 1.13

CALCULATION : [ Rs. In million]PARTICULAR 2006–07 2005–06 2004-05

Quick assets 23853 22136 17059Liquid liability 24575 18825 15095

INTERPRETATION :Quick / acid test ratio is indicates quick assets and liquid liability. In the year 2004 – 05 ratio is 1.13 : 1 and 2005 – 06 it is 1.17 : 1 and it’s


decrease on 0.97 : 1 in the year 2006 – 07. Therefore, it is good for company.

[ 3.5.1 ] Proprietary ratio :

Meaning :The ratio shows the proportion of proprietors’ funds to the total assets employed in known in the proprietary ratio.

Implementation : Proprietary ratio helps to known how many proprietary funds to

total assets.

Formula := Proprietary fund Net asset

TABLE OF THREE YEARS :PARTICULAR 2006-07 2005-06 2004–05 Proprietary fund ratio 63.22 % 66.12 % 60.65 %


Proprietary fund 64198 50127 38845Total asset 101537 75793 64044

INTERPRETATION :This ratio indicates the proprietary funds to total assets. For the year 2004 – 05 it is 60.65 %and 2005– 06 is 66.12 % and decrease in 2006 – 07 it is 60.65 %. This is a bad for company.


[ 3.5.2 ] Debt equity ratio :

Meaning :The relationship between borrowed funds and owner’s capital is a popular measure of the long term financial solvency of a firm. This relationship is shown by the debt – equity ratio.

Implementation : This ratio reflects the relative claims of creditors and

shareholders against the assets of the firm. Alternatively this ratio indicates the relative proportions of debts and equity in financing the assets of a firm.

The D/E ratio is an important tool of financial analysis to appraise the financial structure of a firm. It has important implication from view point of the creditors, owners and the firm itself.

Formula := long term liabilities Shareholders fund

TABLE OF THREE YEARS :PARTICULAR 2006 – 07 2005– 06 2004 – 05 Debt – equity ratio 8.84 0.79 22.19

CALCULATION : [ Rs. In million]PARTICULAR 2006-07 2005–06 2004–05


Debt 5674 400 700Equity 64198 50127 38845

INTERPRETATION :This ratio indicates the debt to equity ratio. For the year 2004 – 05 it is 1.80 %and 2005– 06 is 0.79 % and decrease in 2006 – 07 it is 8.84%. This is a bad for company as compare to 2005-06 year is more debt ratio which indicate the more realize on debt fund rather owned fund. The good impact is interest burden will be more indirectly.

[ 3.5.3 ] capital gearing ratio :

Meaning :This ratio expresses the proportion of preference capital and ordinary capital the higher ratio, the greater propos ion of preference capital and debenture to ordinary capital.

Implementation : Capital gearing ratio is helps to preference share and dividend to

equity share and helps to know about company’ s capital and overall growth.

Formula := fixed investment barring capital Ordinary capital

TABLE OF THREE YEARS :PARTICULAR 2006 – 07 2005– 06 2004 – 05 Capital gearing ratio 4.36 0.50 2.13


Deb. + preference capital

6308 717 3076

Ordinary capital 1445 1445 1445

INTERPRETATION :


This ratio indicates the debenture and preference capital to ordinary share. For the year 2004 – 05 in4.13% and 2005 – 06 is 0.50%and increased in 2006 – 07 is 2.13. This is bad for the company.

ACCOUTING POLICIES

1)BASIS OF PREPARATION OF ACCOUNTS These accounts have been prepared in accordance with the historical. Cost convention, the applicable accounting Standards issued by the institute charted accounts of India and the relent provisions of the companies act, 1956.

2) FIXED ASSETS Fixed Assets (except freehold lamed which is carried at cost) are carried at cost of acquisition or construction or at manufacturing cost. [in case of own manufactured assets ] in the year of capitalization less accumulated depreciation.Assets required under finance lease are capitalized at the lower of their fair value and present value of minimum lease payments.

3) DEPRECIATION

Fixed assets excepts for lease hold land are depreciated on the straight line method on a prorate basis from the month in which each asset is put, to use, at the following rates :

1. Assets capitalized before 02/04/1987. Depreciation has been provided at the rates computed in accordance with sation 205 (2) (b) of the companies act, 1956, in terms of circular no.1186 dated 21/05/86 of the government of India.


2. Assets capitalized on or after 02/04/1987. Depreciation has been

provided at the rates. Prescribed in schedule x/v to the companies act 1956.except for certain fixed Assets. Where based on the managements estimates of the useful life of the assets , higher depreciation has been provide on the straight line method.

a) Lease- hold land is amortized over the period of lease.b) In case historical cost of an asset undergoes a change due to

an increase or decrease in related long term liability. On account of foreign exchange fluctuations, change in duties etc, the depreciation on the revised unamortized despicable amount is provided prospectively over the residues useful life of asset.

4) INVESTMENTS

Investments to be held for period exceeding one year, are classified as long term investments.

Long term investments are valued at cost, provision for domination in the value of such investment is made. Only if such a decline is, other then temporary on individual investment basis.

5) INVENTORIES

a) Inventories are valued of lower of cost determined on the weighted average basis and net realizable value.

b) Tools are written off over a period of three years except for tools valued at Rs.5000/- or less individually which are charged off to revenue in the year of purchase.

c) Machinery spares (other than those supplied along with main plant and machinery, which are capitalized and depreciated accordingly) are charged to revenue on consumption. Except those valued at Rs. 5000/- or less individually, which are charged off to revenue in the year of purchases.

6) INVESTMENTS

Current investments are valued at the lower of cost and fair value. Long term investments are valued at cost except. In the case of a permanent diminution in their value, in which case the necessary provisions made.


7) RESEARCH AND DEVELOPMENT

Revenue expenditure on research and development is charged off against the profit of the year in which it is incurred. Capital expenditure on research and development is shown as an addition to fixed assets depreciated accordingly.

8) RETIREMENT BENIFITS COSTS

The company has Defined contribution plans for post employment benefits’ namely Provident Fund and Superannuation Fund which are recognized by the income tax authorities. These funds are administered through trust and the company’s contributions thereto are charged to revenue every year.

The company also maintains insurance policy to fund post employment medical assistance scheme, which is Defined contribution plan administered by New India Insurance Company (NIIC). The company’s contribution to state plans namely Employee state insurance fund and Employee Pension Scheme 1995 are charged to revenue every year.

The company has Defined benefits plans namely leave Encashment / compensated absence. Gratuity and Retirement Allowance for employees, the liability for which is determined on the basis of an actuarial valuation at the end of the year. The Gratuity Fund is recognized by the income tax authorities and is administered through trusts. Termination benefits are recognized as an expense immediately.

Gains and losses arising out of actuarial evaluations are recognized immediately in the Profit and Loss account as income or expense.

9) DIFERRED TAXES

Tax expense of the period, comprising current tax, fringe benefits tax and deferred tax, is included in determining the net profit / (loss) for the year. Current tax is recognized based on assessable profit Compute in accordance with the income tax act and at the prevailing tax rate. Deferred tax is recognized for all timing differences. Deferred tax assets are carried forward to the extent it is reasonably/ virtually


certain that future taxable profit will be available against which such deferred tax assets can be realized. Deferred tax assets are reviewed at each balance sheet date and written down /written up to reflect the amount that is reasonably / virtually certain to be realized. Deferred tax assets and liabilities are measured at the tax rates that have been enacted or substantively enacted at the balance sheet date.

10) PROVISION AND CONTINGENCIES

The company creates a provision when there is a present obligation as a result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation. A disclosure of contingent liability is made when there is a possible obligation or a present obligation that will probably not require out flow of resources or where a reliable estimate of the obligation can not be made.


NOTES OF ACCOUNTS

1) C0NTINGENT LIABILITIES :

a) Claims against the Company disputed and not acknowledged as debts :

1) Sales tax demands of Rs. 50 million( previous year Rs. 50million ). Against this, the company has deposited a sum of

2) Rs. 2 million( previous year Rs. 2 million )under protest.

3) Excise duty demands / showcases – cause notices of Rs.2,592 million ( previous year Rs. 1,790 million ). Against this, the company has deposited a sum of Rs. 27 million ( previous year Rs. 29 million ) under protest.

4) Customs duty demands of Rs. 118 million ( previous year Rs. 118 million against this the company has deposited a sum of Rs. 22 million ( previous year Rs. 22 million ) under protest.

5) Income tax demands of Rs. 8,157 million (previous year Rs. 7,620 million) against this the company has deposited a sum of Rs. 4,869 million ( previous year Rs. 2,756 million ) under protest.

6) Service tax demands of Rs. 8,157 million (previous year Rs. 7,620 million).

a. Guarantee given to HDFC Limited for term loan of Rs.300million (previous year Rs. 300 million (previous year Rs. 300 million)givenbyHDFC Limited to employees co- Operative House Building SocietyLimited, Bonds, Against this, the contingent liability as at the year – end is Rs. Nil ( previous year Rs. 34 million ).

b. As co-lessee in agreements entered into between various vendors of the company, as lessee, and banks as lessors for leasing of dies and moulds of certain models aggregating Rs. 2,000 million ( previous year Rs. 15 million )

c. A Guarantee given to HDFC Bank against non-fund based facilities granted by the Bank to a group company Suzuki


Powertain India Limited of Rs. 2,000 million(previous year Rs.2,000 million).Against this the contingent liability as at the year end is as Rs. 26 million.

Outstanding commitments under letters of credits established by the company aggregate to Rs.1,050 million.

Cotimated value of contracts on capital account , excluding Capital advances, remaining to be executed and not provided for, amount to Rs. 8,076 million.

Consumption of Raw material and components includes a provision of Rs. 56 million and is net of Rs. Nil for earlier years, on account of estimated reversal of tax benefit on quantity differences on inputs.

The company was granted sales tax benefit in accordance with the provisions of rule 28C of Haryana General Sales Tax Rules, 1975 for the period from 1st August, 2001 to 31st July, 2015. The ceiling amount of concession to be availed of during entitlement period is Rs. 5,644 million. Till 31st March 2007, the company has availed of sales tax benefits amounting to Rs. 1,469 million(previous year Rs.1150 million ).

The company is primarily in the business of manufacture, purchase and sale of Motor Vehicles and spare parts (“ automobile ”). The other activities of the company comprise facilitation of Pre-owned Car sales, Fleet Management Car Financing. The income from these activities, which are incidental to the Company’s business is not material, in financial terms but contribute significantly ingenerating the demand for the products of the company. Accordingly segment information has not been disclosed.

FINANCIAL RESULTS :


Maruti’s performance during the year as compared with that during the previous year is summarized below :

Figures in Rs. Million

2006 - 07 2005 – 06 Gross Total Income 178,043 151,823Profit before Tax 22,798 17,500Provision for taxation( Incl. Prev. Year ) 7,178 5,609Profit after tax 15,620 11,891Balance brought forward 43,939 34,421MSAIL (Maruti Suzuki AutomobilesIndia Limited ) Loss : Adjusted On Amalgamation & TransitionAdjustment for employee benefits 88 0Profit available for appropriation 59,471 46,421 Appropriations :Debenture Redemption Reserve 17 31General Reserve 1,562 1,189Proposed Dividend 1,300 1,011Corporate Dividend tax 219 142Balance carried forward to balance 56,373 43,939sheet

DIVIDEND :

The Board recommends a dividend of 90% (i.e. Rs.4.50 Per equity share of Rs. 5 each ) for the year ended 31st March 2007 amounting to Rs. 1,300 million as against a dividend of 70% amounting to Rs.1,011 million , paid for the year ended 31st March 2006.

NETWORK :

The record sales performance was effected through Maruti‘s vast dealership network. The new car sales network grew from 375 outlets to 500 during the year. These outlets covered 312 cities across the country. In addition to this, there are 223. Maruti true value outlets spread across 148 cities , which are engaged in the sale , purchase and exchange of pre owned cars. Maruti true value is the largest organized pre-owned car sales network in India.

The service network had a total of 2445 service outlets, covering 1172 cities.


DIRECTORS : As per Articles of Association of the company and relevant provisions of the companies act, 1956,Mr. R.C.Bhargava ,Mrs. Pallavi Shroff and Mr. Shuji Oishi are liable to retire by rotation at the ensuing Annual General Meeting and, being eligible, offer themselves for reappointment, During the year, Mr. Tsuneo Kobayashi was elevated as Senior Joint Managing Director with effect from 13th November 2006. Pursuant to the promotion and transfer to Suzuki Motor Corporation, japan, Mr. Shinichi Takeuchi has resigned with effect from close of hours of 26th May 2007, from the post of Director and joint Managing Director. The Board records its appreciation for the invaluable contribution made by him during his tenure. Mr. Masayuki Osada was appointed as Director and whole-time Director designated as Director (Research & Development) w.e.f26th July 2007 to fill the casual vacancy caused by the resignation of Mr. Takeuchi. All the above appointments/ re-appointments are subject to the approval of the members in the ensuing Annual General Meeting. The brief resume/ details relating to the Directors who are to be appointed/re-appointed as stipulated under listing Agreement executed with the stock exchanges are furnished in the explanatory statement of the notice of the ensuing Annual General Meeting.

DIRECTORS’ RESPONSIBILITY STATEMENT : As required under section 217(2AA) of the companies Act, 1956, your Directors confirm having :

a) Followed in the preparation of the Annual Accounts, the applicable accounting standards with proper explanation relating to the material departures.

b) Selected such accounting policies and applied them consistently and made judgment and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your company at the end of the financial year and of the profit of your company for that period.

c) Taken proper and sufficient care for the maintenance with the provisions of the Companies Act, 1956, for safeguarding the assets of your company and for preventing and detecting fraud and other irregularities ; and


d) Prepared the Annual Accounts on a going concern basis.


AUDITORS’ REPORT

TO THE MEMBERS OF MARUTI UDYOG LIMITED

1.. We have audited the attached balance sheet of maruti udyog limited, as at 31st March 2007 and the related profit and loss account and cash flow statement for the year ended on that date annexed thereto, which we have signed under reference to this report. These financial statements are the responsibility of the company’s management. Our responsibility is to express an option on these financial statement statements based on our audit. 2.. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on test basic, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management presentation. We believe that our audit provides reasonable basic for our opinion.

3.. As required by the companies order, 2003, as amended by the companies order,200, issued by the central government of India in terms of sub – section of section 227 of the ‘The companies Act, 1956’ of India and on the basic of such checks of such checks of the books and according to the information and explanations given to us, we further report that:

1) a) The company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets. b) The fixed assets are physically verified by the management according to a phased programme designed to cover all the items , except furniture and fixtures, office application and certain other assets aggregating to Rupees 339 million , over a period of three years, which in our opinion, is reasonable having regard to the size of its assets have been physically verified by the material discrepancies between the book records and the physical inventory have been noticed.


c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assts has not been disposed off by the company during the year.

2) a) The inventory (excluding materials lying with vendors has been physically verified by the management during the year. Confirmations have been received for materials lying with vendors at the year end. In our opinion, the frequency of verification is reasonable.

b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relating to the nature of its business.

c) On the basis of our examination of the inventory records, In our opinion, the company is marinating proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material. 3) The company has not taken or granted any loans, secured or unsecured from/ to companies, firms or other parties covered in the register maintained under Section 301 of the act. 4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and nature of its business for the purchase of inventory, fixed assets and for the sale of goods and service. Further, on the basis of our examination of the books and records of the company, and according to the information and explanation given to us, we have neither come across nor have been informed of any continuing failure to correct major weakness in the aforesaid internal control procedure. 5) In our opinion and according to the information and explanation gives to us, there are no transactions made in pursuance of such contracts or arrangements and exceeding the value of Rupees five lakes in respect of any party during the year, which have been made at prices which are not reasonable having regard to the prevailing market prices at the relevant time. In respect of purchase of goods and materials including components from the holding company, the prices paid for these items are not comparables these are of special nature. 6) The company has not accepted any deposits from the public with in the meaning of section 58A and 58AA or any other relevant provisions of the act and the rules framed there under.


7) In our opinion, the company has an internal audit system commensurate with its size and nature of its business. 8) We have broadly reviewed the books of account maintained by the company in respect of products where , pursuant to the rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub section (i) of section 209 of the act and are of the opinion that prima facie, the prescribed account and records have been made and maintained . We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete. 9) According to the information and explanations given to us and the records of the company examined by us, in our opinion, the company is regular in depositing undisputed statutory dues in respect of provident fund, investor education and protection fund, employee’s state insurance, income tax, sales tax, service tax, customs duty, excise duty, less and other material statutory dues as applicable with the appropriate authorities.

10) The company has no accumulated losses as at March 31,2007 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

11) According to the records of the company examined by us and the information and explanations gives to us, the company has not defaulted in repayment of dues to any bank or debenture holders as at the balance sheet date. 12) The company has no granted any loans and advances on the basic of security by way of pledge of shares, departures and other securities. 13) The provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund /societies are not applicable to the company.

14) In our opinion, the company is not a dealer or trader in shares, securities, debentures and other investments.

15) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantee given by the company, for loans taken by others from banks or financial institutions during the year, are no prejudicial to the interest of the company.


16) In our opinion, and according to the information and explanations given to us, on an overall basic, the term loans have been applied for the purpose for which they were obtained.

17) On the basic of an overall examination of the balance sheet of the company, in our opinion and according to the information and explanations given to us , there are no funds raised on a short-term basic which have been used for long term investment.

18) The company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the act during the year. 19) The company has created security and charge in respect of debentures issued and outstanding to the year-end.

20) The company has not raised any money by public issue during the year.

21) During the course of our examination of the books and records of the company , carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the company, noticed or reported during the year, nor have we been informed of such case by the management.

Audit committee:

Mr. Amal Ganguli chairmanMr. Shinzo Nakanishi memberMrs. pallavi Shroff memberMr. D. S. Brar member


INTRODUCTION

A part from ratio analysis another useful way of analyzing financial statements to convert them into percentage when this method is pursued the income statement exhibits each expenses item or group of expenses as a percentage of net sales, and net sales are taken at 100%. Similarly each individual assets and liability classification is shown as percentage of total liabilities. Respectively statements prepared in this way are referred to as common size statements prepared for one firm over the years would highlight the relative changes in each group of expenses, assets and liabilities. This statements can be equally useful for absolute figures of the same industry are not comparable.

COMMAN SIZE PROFIT & LOSE ACCOUNT

PARTICULARS 2006 - 07 2005 - 06

Amount % Amount % Per cent ( Rs. in million )

( Rs. in million )

( % )

INCOME Net Sales 145,922 100 120,034 100 100 Income from Services

617 0.42 488 0.40 0.02

Other Income 5984 4.10 4292 3.57 0.53 Total 152,523 104.52 124,814 103.9 0.53

EXPENDITURE Raw materials 101,374 69.47 88,766 73.96 (4.49) Purchase of trade Goods.

6,159 4.22 4,644 3.69 0.53

Stores 1,097 0.75 824 0.69 0.06 Employee’s Remuneration and Benefits

2,884 1.98 2,287 1.90 0.08

Manufacturing ; Administrative & Other Expenses.

8,258 5.66 6,226 5.19 0.47

Selling and Distribution Expenses.

4,999 3.42 3560 2.97 0.45

Total 124,771 85.50 106,320 88.58 (3.08) Less: vehicles/dies 143 0.09 67 0.05 0.04 224


for own use Add: increase / Decrease in work Progress, finished, Goods and spares 2,007

1.37

1,997

1.67 (0.30)

Total 2,150 86.74 2,064 86.86 (0.07)

EARNING BEFORE ABOVE

17.74 17.12 0.62

Interest 367 0.26 204 0.16 0.1 Depreciation 2,714 2.11 2,854 2.37 (0.51) Differed revenue Expenditure chargedoff

- - - - -

Total 3,090 2.11 3,058 2.54 (0.43) Profit Before Tax 22,798 15.63 17,500 14.58 1.05 Less : Tax Expense 4.17 4.89 (0.72) Current Tax 6,089 5,873 Deferred Tax 897 0.61 321 0.26 0.35 Fringe Benefits Tax 67 0.04 57 0.04 - Previous years 125 0.08 - - 0.08 Total 7,178 6,251 Profit after Tax 15,620 1.17 11,891 9.91 0.79 Brought forward From previous year allount

43,851 30.11 34,421 28.68 1.43

Total 59,471 40.76 46,312 2.17 Less: Appropriation Debenture Redemption Reserve

17 0.01 31 0.02 (0.01)

General Reserve 562 1.07 1,189 0.99 0.08Proposed DividendTax

1,300 0.89 1,011 0.89 0.05

Corporate Dividend Tax 219 0.15 142 0.15 0.04 Total 3,098 38.63 2,373 36.60 2.03

COMMAN SIZE BALANCE SHEET


PARTICULARS 2006 - 07 2005 – 06 2004 - 05

Amount %

Amount%

Amount % ( Rs. in

million ) ( Rs. in million )

( Rs. in million )

SOURCES OFFUNDCapital 1445 1.89 1445 2.58 1445 3.01Reserve and Surplus 67094 87.68 53081 94.75 42343 88.28LOAN FUNDSSecured Loans 635 0.83 717 1.28 3076 6.42Unsecured Loans 5673 7.41DEFFERRED TAXDeferred Tax Liability 1675 2.19 7791 1.39 1100 2.29TOTAL 76,522 100 56,022 100 47,964 100APPLICATION OF FUNDSFIXED ASSETSNet Block 26,597 42.17 16,952 44.16 18,737 54.59Capital Work in Progress 2389 3.79 920 2.40 421 1.23INVESTMEENTS 34092 54.04 20,512 53.43 15.166 44.18CURRENT ASSETSLOANS AND ADVANCESInventories 7132 18.54 8812 23.50 6666 22.43

Sundry debtors 7474 19.43 6548 17.46 5995 20.17

Cash and bank 14228 37 14016 37.38 10294 34.64Other Current Assets 384 1.01 458 1.23 683 2.30 Loans and Advances 9241 24.02 7662 20.43 6082 20.46CURRENT LIABILITIES AND PROVISIONS Current liabilities 20110 80.39 15058 75.83 12188 75.80Provisions 4905 19.62 4800 24.17 3892 24.20Net Current Assets 13444 17.57 17638 31.48 13640 28.44TOTAL 76,522 56,022 100 47964 100

COMPARISION OF BALANCE SHEETCOMMAN SIZE BALANCE SHEET

PARTICULARS 2006 - 07 2005 – 06 2004 - 05


Amount ( Rs. in million )

% Amount ( Rs. in million )

% Amount ( Rs. in million )

% difference

SOURCES OFFUNDCapital 1445 1.89 1445 2.58 1445 3.01 2.57Reserve and Surplus 67094 87.68 53081 94.75 42343 88.28 13.07LOAN FUNDSSecured Loans 635 0.83 717 1.28 3076 6.42 0.44Unsecured Loans 5673 7.41 7.41DEFFERRED TAXDeferred Tax Liability 1675 2.19 7791 1.39 1100 2.29 0.07TOTAL 76,522 100 56,022 100 47,964 100 0.73APPLICATION OF FUNDSFIXED ASSETSNet Block 26,597 42.17 16,952 44.16 18,737 54.59 8.12Capital Work in Progress 2389 3.79 920 2.40 421 1.23 12.61INVESTMEENTS 34092 54.04 20,512 53.43 15.166 44.18 7.94CURRENT ASSETSLOANS AND ADVANCESInventories 7132 18.54 8812 23.50 6666 22.43 6.41

Sundry debtors 7474 19.43 6548 17.46 5995 20.17 1.77

Cash and bank 14228 37 14016 37.38 10294 34.64 6.41Other Current Assets 384 1.01 458 1.23 683 2.30 0.32 Loans and Advances 9241 24.02 7662 20.43 6082 20.46 6.41CURRENT LIABILITIES AND PROVISIONS

Current liabilities 20110 80.39 15058 75.83 12188 75.80 0.60Provisions 4905 19.62 4800 24.17 3892 24.20 2.01Net Current Assets 13444 17.57 17638 31.48 13640 28.44 31.91TOTAL 76,522 56,022 100 47964 100

CONCLUSION


When summarizing the financial results of “MARUTI UDYOG LIMITED”. I have observed that their working is quite reasonable financial. It is very good company. There are no any debts of long term liabilities of the company. To conclude, from of the overall analysis of financial management of the company, I can say that it is financial sound and well managed three consecutive year’s shows and applauding position. I was also able to well understand my financial concepts. It was a tough task to make this project but at last I able to complete the project report of analysis of annual report of the company “MARUTI UDYOG LIMITED”.


FINDINGS:

Annual Report of “MARUTI UDOG LIMITED” of 3 Years

1) 2004 – 052) 2005 – 063) 2006 – 07

Financial Management by khan & jain information about ratios and accounting policy.

B. S. SHAH

On the web site.


Maruti Suzuki

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