project on Automobile Industry (industry analysis)

INDUSTRY

An industry is the manufacturing of a good or service within a category. Although industry is a broad term for any kind of economic production, in economics and urban planning, planning, industry is a synonym for the secondary sector , which is a type of economic activity involved in the manufacturing of raw materials into goods and products. “Ind “Indus ustr try” y” means means any any syst system emat atic ic activ activit ity y carri carried ed on by co-ope co-opera rati tion on betw betwee een n an employer and his workmen for the production, supply or distribution of goods or services with a view to satisfy human wants or wishes (not being wants or wishes which are merely spiritual or religious in nature), whether or not any capital has been invested for the purpose of carrying on such activity; or such activity is carried on with a motive to make any gain or profit. CLASSIFICATION OF INDUSTRIES There are four key industrial economic sectors: sectors : the primary sector , the secondary sector , the tert tertiary iary sector sector, the quaterna quaternary ry sector sector, and the quinary quinary sector sector. The economy is also broadly separated into public sector and private and private sector , with industry generally categorized as private. Industries are also any business or manufacturing. Primary sector: These industries are involved in the extraction or production of raw materials such as mining, farming, fishing, forestry, coal mining, oil drilling, gold mining etc. Secondary sector: The secondary sector of the economy includes those economic sectors that create a finished, finished, usable product. These industries industries are involved involved in the processing processing of raw materials such as refining, refining, construction, and manufacturing. manufacturing. This This sector sector genera generall lly y takes the output of the primary sector and manufactures finished goods for export, or sale to domestic consumers. Tertiary sector: These are the service industries, e.g. Transport, dentists, doctors, and so on. The capita capitall requir required ed for a manufa manufactu cturin ring g busine business ss (second (secondary ary sector sector)) is usuall usually y prohibitively large.

relati tive vely ly new new type type of know knowle ledg dgee indu indust stry ry focu focusi sing ng on Quaterna Quaternary ry sector sector:: A rela technological research, research, design design and development development such such as comput computer er progra programmi mming, ng, and biochemistry. It focuses on the latest technology. Examples of ‛Quaternary Industries‛ are designing new computers/writing computer software, Researching new medicines and medical equipment. Quinary sector: The sector comprises comprises of health of health,, education education,, culture culture,, research research,, police police,, fire service,, and other government industries not intended to make a profit service profit.. The The quinar quinary y sector also includes domestic activities such as those performed by stay-at-home parents or homemakers homemakers.. These activities are not measured by monetary amounts but make a considerable contribution to the economy.

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INDUSTRY LIFECYCLE

The The stag stages es of evol evolut utio ion n thro throug ugh h which which an indu indust stry ry prog progre ress sses es as it moves moves from from conception to stabilization and stagnation represent an industry lifecycle. An industry has a beginn beginning ing,, with with technol technologic ogical al innovat innovation ion;; a period period of rapid rapid growth growth;; maturi maturity ty and consolidation; and finally decline and possibly death. The stages of industry lifecycle include fragmentation, shake-out, maturity and decline. Developmental Developmental Stage: The first stage of the industry life cycle is developmental or formative stage. This is the stage when the new industry develops the business. At this stage, the new industry normally arises when an entrepreneur works out how to bring the new product productss or servic services es into into the market market.. The growth growth prospe prospects cts are usuall usually y high. high. Compet Competit itio ion n is likel likely y to enhan enhance ce duri during ng the the devel develop opme ment nt of this this stag stagee as othe other r entrepreneurs become acquainted with the market potential. High risks can be seen in this phase phase given given that that there there is insecu insecurit rity y as to whethe whetherr or not consum consumers ers will will genera generally lly acknowledge the product, and which firms will continue to exist. Shake-out or growth stage: Shake-out is the second stage at which a new industry emerges. Consumer recognition extends the market as the leaders develop the product more. The risk in this this stag stagee redu reduce cess beca becaus usee of incr increas eased ed consume consumerr accepta acceptance nce and custom customer er loyalt loyalty y star starts ts to come come about about.. Compet Competit itor orss star startt to realize business opportunities in the emerging industry. Maturity: Maturity is the third stage in the industry lifecycle. This is by and large the most extended stage in the life cycle and can last for a good number of years. years. The competition competition in the industry is rather aggressive aggressive because there are many competitors and product substitutes. The growth rate slows down and becomes stable at a level that is sustainable over a long period of time, as a result of compet competiti ition on and shrink shrinking ing profit profit margin margins. s. Some Some compani companies es may shift some some of the production overseas in order to gain competitive advantage. Decline: Decline is the final stage of the industry lifecycle during which a war of slow destruction between businesses may develop and those with heavy bureaucracies may fail. In addition, the demand in the market may be fully satisfied or suppliers may be running out. Some companies may leave the industry if there is no demand for the products or services they provide, or they may develop new products or services that meet the demand in the market. In such cases, this will create a new industry.











The automo automobil bilee indust industry ry in India is the ninth ninth larges largestt in the world with with an annual 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. Following economic economic liberaliza liberalization tion in India in 1991, the Indian automotive industry has demonstrated sustained growth as a result of increased competitiveness and relaxed restr restrict iction ions. s. Severa Severall Indian Indian automo automobil bilee manufa manufactu cturer rerss such such as Tata Tata Motors Motors,, Maruti Suzuki and Mahindr Mahindraa and Mahind Mahindra ra,, expa expande nded d thei theirr domes domesti ticc and inte intern rnat atio ional nal operations. Since the first car rolled out on the streets of Mumbai (then Bombay) in 1898, the Automobile Industry of India has come a long way. During its early stages the auto indu indust stry ry was was over overlo look oked ed by the the then then Gove Govern rnme ment nt and and the the poli polici cies es were were also also not not favorable. The liberalization policy and various tax relief by the Govt. of India in recent years has made remarkable impacts on Indian Automobile Industry. Indian auto industry, which is currently growing at the pace of around 18 % per annum, has become a hot dest destin inat atio ion n for for glob global al auto auto play player erss like like Volvo Volvo,, General Motors and Ford ord. A well well develo developed ped transp transport ortati ation on syste system m plays plays a key role in the develo developme pment nt of an economy, and India is no exception to it. With the growth of transportation system the Automotive Industry of India is also growing at rapid speed, occupying an important place on the canvas of Indian economy. The face of the Indian automobile market has changed tremendously since the turn of the millennium and will change even further since Nano. Today Indian automotive industry is fully capable of producing various kinds of vehicles and can be divided into 03 broad categories: Cars, two-wheelers and heavy vehicles. Segment Know-how Among the two-wheeler segment, motorcycles have major share in the market. Hero Honda contributes 50% motorcycles to the market. In it Honda holds 46% share in scooter and TVS makes 82% of the mopeds in the country. 40% of the three-wheelers are used as goods transport purpose. Piaggio holds 40% of the market share. Among the passenger transport, Bajaj is the leader by making 68% of the three-wheelers. Cars dominate the passenger vehicle market by 79%. Maruti Suzuki has 52% share in passenger cars and is a complete monopoly in multi purpose vehicles. In utility vehicles Mahindra holds 42% share.











INDIAN AUTOMOBILE HISTORY During the 1920s, cars exhibited design refinements such as balloon tires, pressed steel wheels, and four-wheel brakes.

An embryo embryonic nic automo automotiv tivee indust industry ry emerge emerged d in India in the the 1940 1940s. s. Foll Followi owing ng the the independence, independence, in 1953, the Government of India and the private the private sector launched sector launched efforts to create create an automotive automotive component manufacturing manufacturing industry to supply supply to the automobile indust industry. ry. However, However, the growth growth was relati relativel vely y slow slow in the 1950s and 1960s 1960s due to nationalisation and the license raj which hampered the Indian private sector. After 1970, the automotive industry started to grow, but the growth was mainly driven by tractors, commercial vehicles and scooters. Cars were still a major luxury. Japanese manufacturers entered the Indian market ultimately leading to the establishment of Maruti of Maruti Udyog. Udyog. A number of foreign firms initiated joint ventures with Indian companies. In the 1980s, a number of Japanese manufacturers launched joint-ventures for building motorcycles and light commercial-vehicles. It was at this time that the Indian government chose Suzuki for its joint-venture to manufacture small cars. Following the economic liberalisation in 1991 and the gradual weakening of the license raj, a number of Indian and mult multii-nat natio iona nall car car comp compan anie iess laun launche ched d opera operati tions ons.. Sinc Sincee then then,, auto automo moti tive ve component component and automobile automobile manufacturing manufacturing growth has accelerated accelerated to meet domestic and export demands The automobile industry has changed the way people live and work. The earliest of modern cars was manufactured in the year 1895. Shortly the first appearance of the car followed in Indi India. a. As the the cent centur ury y turn turned ed,, thre threee cars cars were were impor importe ted d in Mumbai (India). The dawn of automobile actually goes back to 4000 years when the first wheel was used for transportation in India. In the beginning of 15th century Portuguese arrived in China and the interaction of the two cultures led to a variety of new technologies, including the creation of a wheel that turned under its own power. By 1600s small steam-powered engine models was developed. The actual horseless carriage was introduced in the year 1893. One of the highest-rated h ighest-rated early luxury automobiles was the 1909 Rolls-Royce Silver Ghost that featured a quiet 6cylinder cylinder engine, engine, leather leather interior, interior, folding folding windscreens windscreens and hood, hood, and an alumin aluminum um body It was usuall usually y driven driven by











The year 1957 brought powerful high-performance cars such as Mercedes-Benz 300SL. It was built on compact and stylized lines, and was capable of 230 kmh (144 mph). This was the Indian automo automobil bilee histor history, y, and today today modern modern cars cars are genera generally lly light, light, aerodynamically shaped, and compact.

GROWTH In India there are 100 people per vehicle, while this figure is 82 in China. It is expected that Indian automobile industry will achieve mass motorization status by 2014. The Indian automobile industry is often described as the sunrise Industry.

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. The introduction of tailor made made financ financee scheme schemes, s, easy easy repaym repayment ent scheme schemess has also helped helped the growth growth of the automobile automobile sector. sector. India, India, in auto sector, is turning turning to be a sourcing base for the global global auto majors. The passenger car and the motorcycle segment are set to grow by 8-9 per cent cent in comi coming ng coupl couplee of year years. s. The The indu indust stry ry is stri strivi ving ng to main mainta tain in the the grow growth th momentum picked up in 2002-03.

        

India has become one of the international players in the automobile market In the year 2006-07, the Indian Automobile Industry produced 2.06 million four wheelers and 9 million two and three wheelers The four wheelers include passenger cars, ca rs, multi-utility vehicles, sports utility vehicles, light, medium and heavy commercial vehicles, etc The three wheelers include mopeds, motor-cycles, scooters, and three wheelers India ranks 2nd in the global two-wheeler market India is the 4th biggest commercial vehicle market in the world India ranks 11th in the international passenger car market India ranks 5th pertaining to the number of bus and truck sold in the world It is expected that the Automobile Industry in India would be the 7th largest automobile market within the year 2016











markets. It has been continuously restructuring itself and absorbing newer technologies in order to align itself to the global developments and realize its potentialities. Among the car companies that are investing in India are US automakers General Motors and Ford, Germany's BMW and DaimlerChrysler AG, France's Renault, Japan's Suzuki, Toyota and Honda, and South Korea's Hyundai. Automo Automobil bilee indust industry ry in India India also also receiv received ed a boost boost from from string stringent ent governm government ent auto auto emission regulations over the past few years. This ensured that vehicles produced in India conformed to the standards of the developed world. With the growing automotive market, customers are always looking for newer designs. Automobile designing has, therefore, become as important as fuel efficiency or the safety and ergonomics of a vehicle. The setting up of indigenous auto designing capabilities through a national automobile design institute is, therefore, essential for the growth of Indian auto Industry There is also a boom in auto ancillary companies. India is an attractive outsourcing destination for global auto companies because of its strong engineering skills and low costs. Sourcing parts from India is 10-20% cheaper for US auto makers and about 50% cheaper cheaper for their their Europe European an counter counterpar parts. ts. The auto auto compon component ent sector sector has also also posted posted significant growth of 20 per cent in 2003-04, to achieve a sales turnover of Rs.30, 640 crore. There is a potential for higher growth due to outsourcing activities by global automobiles giants. Today, this sector has emerged as another sunrise sector.

CONTRIBUTION

In India, automotive is one of the largest industries showing impressive growth over the years and has been significantly making increasing contribution to overall industrial development in the country. It plays a pivotal role in country's rapid economic and industrial development. It caters to the requirement of equipment for basic industries like steel, steel, non-fe non-ferro rrous us metals metals,, ferti fertiliz lizers ers,, refine refinerie ries, s, petroc petrochem hemica icals, ls, shippi shipping, ng, texti textiles les,, plast plastics ics,, glass, glass, rubber rubber,, capital capital equipme equipments nts,, logist logistics ics,, paper, paper, cement cement,, sugar, sugar, etc. etc. It facilitates the improvement in various infrastructure facilities like power, rail and road transport. On the canvas of the Indian economy, auto industry occupies a prominent place. The automotive industry has a strong multiplier effect and is capable of being the driver of economic growth. A sound transportation system plays a pivotal role in the country's rapid rapid economi economicc and indust industri rial al develop developmen ment. t. The well-d well-deve evelop loped ed Indian Indian automo automoti tive ve industry ably fulfils this catalytic role by producing a wide variety of vehicles: passenger cars, light, medium and heavy commercial vehicles, multi-utility vehicles such as jeeps,













workfo workforce rce.. The aboliti abolition on of licens licensee raj in 1991 opened the doors doors for internati international onal automobile manufacturers. A number of leading global automotive companies entered into joint ventures with domestic manufacturers of India and thus started the large-scale production of automobiles in India. The automobile sector is one of the core industries of the Indian Indian economy, economy, whose whose prospe prospect ct is reflec reflectiv tivee of the econom economic ic resili resilience ence of the country.

The automotive industry comprising of the automobile and the auto component sectors has made rapid strides since delicensing and opening up of the sector to FDI in 1991. The Auto Component industry industry is today considered considered as the sunrise industry industry with huge growth prospects. This industry is also expected to drive the growth of the engineering sector in view of its strong downstream and upstream linkages with many other segments of the engin enginee eeri ring ng sect sector or like like raw raw mate materi rial als, s, capi capita tall goods goods,, inte interm rmedi ediat atee prod product uctss etc. etc. Government Government has also liberalized liberalized the norms for import of technology technology and that appears to have benefite benefited d the automob automobile ile sector. sector. The industry industry had an invest investmen mentt of about Rs. 50,000 crore in 2002-03 which has gone upto Rs. 80,000 crore by the year 2007. The contributio contribution n of the automotive automotive industry industry to GDP has risen from 2.77% in 1992-93 to 5% in 2006-07. The industry is also making a contribution of 17% to the kitty of indirect taxes of the Government. The Indian automotive industry has already attained a turnover of Rs. 1, 65,000 crore (34 billion USD) and has provided direct and indirect employment to 1.31 crore people in the country country.. Endowe Endowed d with with severa severall advant advantage agess like like low cost cost and high high skill skill manpowe manpower; r; globally globally competitiv competitivee auto-ancill auto-ancillary ary industry; established established testing testing and R & D centers; centers; produc productio tion n of steel steel at lowest lowest cost; cost; etc., etc., the indust industry ry provid providee immens immensee invest investmen mentt opportunities. This has instilled confidence in auto manufacturers to face international competition as well as improve quality standards of vehicles with safety norms in the wake of rapidly increasing traffic.











Maruti Suzuki India Limited (MSIL, formerly Maruti Udyog Limited), a subsidiary of Suzuki Motor Corporation of Japan, is India's largest passenger car company, accounting for over 50 per cent of the domestic car market. More than half the numbers of cars sold in India wear a Maruti Suzuki badge. The company offers full range of cars- from entry level Maruti 800 & Alto to stylish hatchback Ritz, A star, Swift, Wagon R, Estillo and sedans sedans DZire, DZire, SX4 and Sports Sports Utili Utility ty vehicl vehiclee Grand Grand Vitara Vitara.. Since Since incept inception ion,, it has produced produced and sold over 7.5 million million vehicles in India and exported over 500,000 units to Europe and other countries. The turnover for the fiscal 2008-09 stood at Rs. 203,583 Million & Profit after Tax at Rs. 12,187 Million. The company was born as a government company, with Suzuki as a minor partner, to make make a people' people'ss car for middl middlee class class India. India. Over the years, years, the produc productt range range has widened, ownership has changed hands and the customer has evolved. What remains unchanged, then and now, is its mission to motorize India. The parent company, Suzuki Motor Corporation, has been a global leader in mini and compact cars for three decades. Suzuki's technical superiority lies in its ability to pack power and performance into a compact, lightweight engine that is clean and fuel efficient. Right from inception, Maruti brought to India, a very simple yet powerful Japanese philosophy 'smaller, fewer, lighter, shorter and neater' The company takes great pride in sharing sharing that customers customers have rated Maruti Suzuki first once again in Customer Satisfaction Survey conducted by independent body, J.D.Power Asia Pacific. It is 10th time in a row.











Balance Sheet Bala Balanc nce e Shee Sheett of Maru Maruti ti Suzu Suzuki ki Indi India a

------------------------------ in Rs. Rs. Cr. Cr. -----------------------------Mar '07

Mar '08

Mar '09

Sources Of Funds

12 mths

12 mths

12 mths

Total Share Capital

144.50

144.50

144.50

Equity Share Capital

144.50

144.50

144.50

Share Application Money

0.00

0.00

0.00

Preference Share Capital

0.00

0.00

0.00

6,709.40

8,270.90

9,200.40

0.00

0.00

0.00

6,853.90

8,415.40

9,344.90

63.50

0.10

0.10

Unsecured Loans

567.30

900.10

698.80

Total Debt

630.80

900.20

698.90

7,484.70

9,315.60

10,043.80

Mar '07

Mar '08

Mar '09

12 mths

12 mths

12 mths

Gross Block

6,146.80

7,285.30

8,720.60

Less: Accum. Depreciation

3,487.10

3,988.80

4,649.80

Net Block

2,659.70

3,296.50

4,070.80

238.90

736.30

861.30

3,409.20

5,180.70

3,173.30

Inventories

713.20

1,038.00

902.30

Sundry Debtors

747.40

655.50

918.90

Cash and Bank Balance

114.80

324.00

239.00

Total Current Assets

1,575.40

2,017.50

2,060.20

Loans and Advances

1,072.60

1,173.00

1,809.80

Fixed Deposits

1,308.00

0.00

1,700.00

Total CA, Loans & Advances

3,956.00

3,190.50

5,570.00

0.00

0.00

0.00

2,288.60

2,718.90

3,250.90

490.50

36 3 69.50

380.70

Reserves Revaluation Reserves Networth Secured Loans

Total Liabilities Application Of Funds

Capital Work in Progress Investments

Deferred Credit Current Liabilities Provisions











Profit & Loss account of Maruti Suzuki India Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalized Total Expenses

Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualized) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)

------------------- in Rs. Cr. ------------------Mar '07

Mar '08

Mar '09

17,358.40 2,552.00 14,806.40 338.10 -200.70 14,943.80

21,200.40 3,133.60 18,066.80 494.00 336.30 18,897.10

23,381.50 2,652.10 20,729.40 491.70 -356.60 20,864.50

10,863.00 97.40 288.40 392.40 483.26 239.44 -14.30 12,349.60 Mar '07 12 mths 2,256.10 2,594.20 37.60 2,556.60 271.40 0.00 2,285.20 33.40 2,318.60 705.30 1,562.00 1,486.60 0.00 130.00 21.90

13 1 3,958.30 147.30 356.20 523.30 521.48 287.62 -19.80 15,774.40 Mar '08 12 mths 2,628.70 3,122.70 59.60 3,063.10 568.20 0.00 2,494.90 76.60 2,571.50 763.30 1,730.80 1,816.10 0.00 144.50 24.80

15 1 5,983.20 193.60 471.10 716.10 751.06 303.44 -22.30 18,396.20 Mar '09 12 mths 1,976.60 2,468.30 51.00 2,417.30 706.50 0.00 1,710.80 37.90 1,748.70 457.10 1,218.70 2,413.00 0.00 101.10 17.20

2,889.10 54.07 90.00 237.23

2,889.10 59.91 100.00 291.28

2,889.10 42.18 70.00 323.45











Tata Motors Limited is India's largest automobile company, with consolidated revenues of Rs.70, 938.85 crores (USD 14 billion) in 2008-09. It is the leader in commercial vehicles in each segment, and among the top three in passenger vehicles with winning products in the compact, midsize car and utility vehicle segments. The company is the worl world' d'ss four fourth th larg larges estt truc truck k manu manufa fact ctur urer er,, and and the the worl world' d'ss seco second nd larg larges estt bus bus manufacturer. The company's 23,000 employees are guided by the vision to be "best in the manner in which we operate best in the products we deliver and best in our value system and ethics." Established in 1945, Tata Motors' presence indeed cuts across the length and breadth of Indi India. a. The The comp compan any' y'ss manu manufa fact ctur urin ing g base base in Indi Indiaa is spre spread ad acros acrosss Jams Jamshe hedpu dpur r (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand) and Dharwad (Karnataka). Tata Motors, the first company from India's engineering sector to be listed in the New York York Stock Stock Exch Exchan ange ge (Sep (Septe temb mber er 2004) 2004),, has has also also emer emerge ged d as an inte intern rnat atio ional nal automobile automobile company. Through subsidiari subsidiaries es and associate associate companies, Tata Motors Motors has operations in the UK, South Korea, Thailand and Spain. Among them is Jaguar Land Rover, a business comprising the two iconic British brands that was acquired in 2008. It was was Tata Tata Moto Motors rs,, whic which h devel develope oped d the the firs firstt indi indige geno nous usly ly devel develop oped ed Ligh Lightt Commercial Vehicle, India’s first Sports Utility Vehicle and, in 1998, the Tata Indica, India's first fully indigenous passenger car. Within two years of launch, Tata Indica became India’s largest selling car in its segment. In 2005, Tata Motors created a new













FINANCIAL STATEMENTS Balance Sheet Bal Balanc ance Sheet heet of Tata ata Motors tors

------------------------------ in Rs. Rs. Cr. Cr. -----------------------------Mar '07

Mar '08

Mar '09

12 mths

12 mths

12 mths

Total Share Capital

385.41

385.54

514.05

Equity Share Capital

385.41

385.54

514.05

Share Application Money

0.00

0.00

0.00

Preference Share Capital

0.00

0.00

0.00

6,458.39

7,428.45

11,855.15

25.95

25.51

25.07

Networth

6,869.75

7,839.50

12,394.27

Secured Loans

2,022.04

2,461.99

5,251.65

Unsecured Loans

1,987.10

3,818.53

7,913.91

Total Debt

4,009.14

6,280.52

13,165.56

10,878.89

14,120.02

25,559.83

Mar '07

Mar '08

Mar '09

12 mths

12 mths

12 mths

Sources Of Funds

Reserves Revaluation Reserves

Total Liabilities

Application Of Funds











Profit and loss account (income statement)

Profit & Loss account account ------------------------------------- in Rs. Cr. ----------------------------------

Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure

Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalized Total Expenses

Mar '07

Mar '08

Mar '09

31,089.69 4,425.44 26,664.25 1,114.38 349.68 28,128.31

33,123.54 4,355.63 28,767.91 734.17 -40.48 29,461.60

28,538.20 2,877.53 25,660.67 921.29 -238.04 26,343.92

19,879.56 327.41 1,367.83 872.95 1,505.23 1,051.49 -577.05 24,427.42 Mar '07 12 mths

20,891.33 325.19 1,544.57 904.95 2,197.49 964.78 -1,131.40 25,696.91 Mar '08 12 mths

18,801.37 304.94 1,551.39 866.65 1,652.31 1,438.89 -916.02 23,699.53 Mar '09 12 mths











LIQUIDITY RATIOS:

It measures the ability of the firm to meet its short-term obligations that is capacity of the firm to pay its current liabilities as and when they fall fall due. Thus these ratios reflect the short-term financial solvency of a firm. 1. Curr Curren entt rati ratio o

Current ratio is the relationship between current assets and current liabilities. It is a measure of general liquidity i.e. analysis of short-term financial position. A current ratio of 2:1 is the standard ratio of liquidity for a firm. The higher the current ratio the greater is the margin of safety. The larger the amount of current assets in relation to current liabilities, the more is the firm’s ability to meet its current obligations. Current Ratio = Current Asset Current Liabilities











2. Quic uick Ratio

Quick ratio is the relationship between quick assets and current liabilities. It measures the firm’s capacity to pay off current obligations immediately and is a more rigorous test of liquidity. A high quick ratio indicates that the firm is liquid and has the ability to meet its current obligations in time and on the other hand a low quick ratio represents that the firm’s liquidity position is not good. A standard of 1:1 is considered satisfactory. Quick Ratio = Quick Assets Current liabilities (Quick assets = current assets – inventory)

Maruti Suzuki Total Current Assets Inventories

Mar Mar '07 Mar '08 '09 1575. 2060. 4 2017.5 2 1,038.0 713.2 0 902.3

TATA Motors Total Current Assets Inventories

Mar '07

Mar '08

3818.91 4302.7 2,500.9 5 2,421.83

Mar '09

4423.18 2,229.81











PROFITABILITY RATIOS

The primary objective of a business is to earn profits. Profitability ratios are a test of efficiency and a measurement of control. 1. Gr Gros osss Pro Profi fitt Rat Ratio io

This ratio indicates the extent to which selling prices of goods per unit may decline without resulting in losses on operations of a firm. It measures profitability of the firm through the relationship between gross profit and sales. It reflects the efficiency with which the firm produces its products. The gross profit ratio should be adequate to cover the operating expenses of the firm. Higher the ratio better is the profitability. Gross profit margin or ratio = Gross profit X 100 Net sales Maruti suzuki Gross Profit

Mar Mar Mar '07 '08 '09 2588.8 3130.8 2 4 2433.4

TATA Motors Gross Profit

Mar '07

3473.89

Mar '08

3511.15

Mar '09

2627.24













2. Net Net Pro Profi fitt Rat Ratio io

It meas measur ures es the the rela relati tion onsh ship ip betw betwee een n net net prof profit it and and sale saless of a firm firm.. It indica indicate tess management’s efficiency in manufacturing, administrating, and selling the products. It also indicates the firm’s capacity to face adverse economic conditions such as price competition, low demand etc. Higher the ratio better is the profitability. Net profit margin or ratio = Earning after tax X 100 Net Sales











Interpretation: The ratio has fallen down considerably in case of both the firms which show that the operating efficiency of the firm is not satisfactory.

4. Networt Networth h Ratio Ratio or Return Return on inves investmen tmentt Ratio(RO Ratio(ROI): I):

ROI is the relationship between net profits and proprietors funds. It is used to measure the overall efficiency of a firm. It indicates the extent to which the earnings of a firm can be maximized. As the ratio reveals how well the resources of a firm are being used, higher the ratio, better are the results.











Interpretation: A very low percentage in the year 2009 as compared to 2007 indicates that there is a decline in the profitability position of the both the firms.

LEVERAGE or CAPITAL STRUCTURE RATIOS

Financing firm’s assets is a very crucial problem in every business and as general rule there should be a proper mix of debt and equity capital in financing the firm’s assets. Leverage Leverage ratios ratios are calculated calculated to test the long term financial financial position of a firm. firm. These ratios are based on the relationship between b etween borrowed funds and owner’s capital.











2. Fixe Fixed d Assets Assets to to Netw Networt orth h Ratio: Ratio:

The ratio of fixed assets to Networth indicates the extent to which shareholder’s funds are sunk into the fixed assets.











3. Prop Propri riet etar ary y Rat Ratio io::

This ratio establishes establishes the relationship relationship between between shareholder shareholder’s ’s funds to total assets assets and is used to determine the long-term solvency of a firm.























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Modern-age design tools should be used by automobile manufacturers to develop better products in a shorter timeframe, as well as further reduce overall costs. The Indian auto component industry which is the supply chain for the automobile vehicle manufactures in India needs to be supported especially the Small and Medium Enterprises, (SME).

project on Automobile Industry (industry analysis)

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