“MARUTI SUZUKI INDIA LIMITED”

a project report submitted by

GOKUL.K
REG. NO: 2035F0169
2020-2022

MASTER OF BUSINESS ADMINISTRATION

DEPARTMENT OF MANAGEMENT STUDIES

Submitted to,
B. R. Manoj Kumar
Assistant Professor
Nehru College of Management
On 07/06/2021
 TABLE OF CONTENTS

SL NO: TITLE PAGE

NO:

1 INTRODUCTION 1
PROFILE OF THE COMPANY

CREDIT ANALYSIS

OBJECTIVE OF THE COMPANY

2 RESEARCH ANAYSIS 16
CASH FLOW

RATIOS

CHARTS

FINDINGS AND CONCLUSION

3 35
REFERENCE
4 38
INTRODUCTION
1
 Maruti Suzuki India Limited, formerly known
as Maruti Udyog Limited, is a subsidiary of the
Japanese automotive manufacturer Suzuki. It was founded and
owned by the Government of India between 1981 until 2003. It
was sold to Suzuki Motor Corporation by Government of
India in 2003.[2][6] As of July 2018, it had a market share of 53
percent in the Indian passenger car market

Maruti Suzuki India Limited (Formally known as

Maruti Udyog Ltd) was established in 1981, February 24th. It
was organized as a legal corporation beneath the provision of
the Indian Companies ACT, 1956 to converge the rising
demand of personal transportation by the lack of an efficient
public transport system. It is the largest car manufacturing
company in India accruing over 50% domestic car market.
Suzuki Motor Corporation is the largest manufacture of mini
passenger vehicles in Japan. According to Automotive
Intelligence, Suzuki is eleventh largest vehicle manufacturing
company in the world and fourth in Japan in terms of
worldwide sales.

The company offered different range of cars from

passenger cars to sports cars. From 1982, Maruti Udyog was a
subsidiary of Suzuki Motor Corporation of Japan. They
2
licensed and joint venture agreement had been made between
two companies on October, 2 1982.

The company has nine subsidiary companies,

namely Maruti Insurance Business Agency Ltd, Maruti
Insurance Distribution Services Lad, Maruti Insurance Agency
Solutions Ltd, Maruti Insurance Agency Network Ltd, Maruti
Insurance Agency Services Ltd, Maruti Insurance Agency
Logistics Ltd, True Value Solutions Lad, Maruti Insurance
Broker Ltd and JJ Impex (Delhi) Pvt Ltd. Maruti Suzuki India
Ltd was incorporated on February 24, 1981 with the name
Maruti Udyog Ltd. The company was formed as a government
company, with Suzuki as a minor partner, to make a people's
car for middle class India. Over the years, the company's
product range has widened, ownership has changed hands and
the customer has evolved. Mission With no mission statement
mentioned as such, still brands mission since its inception has
been "To motorize the country".
Maruti has inaugurated its second plant in 1995. In
1997, Maruti started Maruti Service Master as model workshop
to take care of its sales in India. In 2002, Suzuki Motor
Corporation increased the share in Maruti to 54.2%. By 2002
they established 10 finance companies in which 8 of them were

3
finance companies and two were joint ventures. They started a
new business strategy for its purchase, sales and trade of old
cards is Maruti True Value. With the first worlds strategic
model with the help of Suzuki Motor Corporation they
launched ‘the SWIFT’ in 2005

Strengths in the SWOT analysis of Maruti Suzuki India

Limited
• Maruti Udyog limited (MUL) is in a leadership position in
the market with a market share of 48.74
• Major strength of MUL is having largest network
of dealers and after sales service canters in the country.
• Good promotional strategy is adopted by MUL to transfer
its thoughts to the people about its products.
• Maruti Suzuki recorded highest number of domestic sales
with 9,66,447 units from 7,65,533 units in the previous
fiscal. It recently attained the 10million domestic sales
mark.
• Strong Brand Value and Loyal Customer Base are big
strengths for MUL

4
 • There are around 15 vehicles in Maruti Product portfolio.
Has good product lines with good fuel efficiency like
Maruti Swift, Diesel, Alto etc
• Alto still beats the small car segment with highest number
of sales
• MUL is the first automobile company to start second hand
vehicle sales through its True-value entity.
• MUL has good market share and hence it’s after sales
service is a major revenue contributor.

Weaknesses in the SWOT analysis of Maruti Suzuki India

Limited
• Low interior quality inside the cars when compared to
quality players like Hyundai and other new foreign
players like Volkswagen, Nissan etc.
• Government intervention due to having share in MUL.
• Younger generations started getting a
great affinity towards new foreign brands
• The management and the company’s labour unions are not
in good terms. The recent strikes of the employees have
slowed down production and in turn affecting sales.

5
 • Maruti hasn’t proved itself in SUV segment like other
players.

Opportunities in the SWOT analysis of Maruti Suzuki

India Limited
• MUL has launched its LPG version of Wagon R and it was
a good move simultaneously
• MUL can start R&D on electric cars for a much better
substitute of the fuel.
• Maruti’s cervo 600 has a huge potential in tapping the
middle-class segment and act as a strong threat to Nano
• New DZire from Maruti will capture the market share and
expected to create the same magic as Maruti Esteem
(currently not available)
• Export capacity of the company is giving new hopes in
American and UK markets
• Economic growth of the country is constantly increasing
and the government is working hard to increase the gdp to
double digit.

6
Threats in the SWOT analysis of Maruti Suzuki India
Limited
• MUL recently faced a decline in market share from its
50.09% to 48.09 % in the previous year(2011)
• Major players like Maruti Suzuki, Hyundai, Tata has lost
its market share due to many small players like
Volkswagen- polo. Ford has shown a considerable
increase in market share due to its Figo.
• Tata Motors recent launches like Nano 2012, Indigo e-cs
are imposing major threats to its respective competitor’s
segment
• China may give a good competition as they are
also planning to enter into Indian car segment
• Launch of Hyundai’s H800 may result in the decline of
Alto sales

7
The PESTLE analysis of Maruti Suzuki India Limited

Political
1. Rise in protectionism measures for business opportunities
2. Make in India initiative

Social
1. Enhanced customer requirements and perceived social value
2. Rise in car-pooling & shared mobility

Legal
1. Greater attention and more initiatives to reduce
environmental impact due to automobiles
2. More legal compliance measures to increase passenger
safety

Economical
1. Positive development in global economy a healthy sign for
export sales
2. Economic growth of domestic market

8
Technological
1. Increase in embedded technologies driving safety and
performance and implementation of green technologies

Environmental
1. Growing criticism towards environmental pollution created
by vehicles

9
Credit analysis
Credit analysis is the method by which one
calculates the creditworthiness of a business or organization. In
other words, It is the evaluation of the ability of a company to
honor its financial obligations. The audited financial statements
of a large company might be analyzed when it issues or has
issued bonds. Or, a bank may analyze the financial statements
of a small business before making or renewing a commercial
loan. The term refers to either case, whether the business is
large or small.

The objective of credit analysis is to look at both

the borrower and the lending facility being proposed and to
assign a risk rating. The risk rating is derived by estimating the
probability of default by the borrower at a given confidence
level over the life of the facility, and by estimating the amount
of loss that the lender would suffer in the event of default.

Credit analysis involves a wide variety of

financial analysis techniques, including ratio and trend analysis
as well as the creation of projections and a detailed analysis of
cash flows. Credit analysis also includes an examination
of collateral and other sources of repayment as well as credit
10
history and management ability. Analysts attempt to predict the
probability that a borrower will default on its debts, and also
the severity of losses in the event of default. Credit spreads—
the difference in interest rates between theoretically "risk-free"
investments such as U.S. treasuries or LIBOR and investments
that carry some risk of default—reflect credit analysis by
financial market participants.

Before approving a commercial loan, a bank will

look at all of these factors with the primary emphasis being the
cash flow of the borrower. A typical measurement of
repayment ability is the debt service coverage ratio. A credit
analyst at a bank will measure the cash generated by a business
(before interest expense and excluding depreciation and any
other non-cash or extraordinary expenses). The debt service
coverage ratio divides this cash flow amount by the debt service
(both principal and interest payments on all loans) that will be
required to be met. Commercial bankers like to see debt service
coverage of at least 120 percent. In other words, the debt
service coverage ratio should be 1.2 or higher to show that an
extra cushion exists and that the business can afford its debt
requirements

11
➢ Cash flows

Cash flows are the net amount of cash and cash-equivalents

being transferred into and out of a business. Cash received are
inflows, and money spent are outflows.

At a fundamental level, a company’s ability to create value for

shareholders is determined by its ability to generate positive
cash flows, or more specifically, maximize long-term free cash
flow (FCF). Free cash flow is the cash that a company
generates from its normal business operations after subtracting
any money spent on capital expenditures.

KEY TAKEAWAYS

• Cash flows refer to the movements of money into and out

of a business, typically categorized as cash flows from
operations, investing, and financing.
• Operating cash flow includes all cash generated by a
company's main business activities.
• Investing cash flow includes all purchases of capital assets
and investments in other business ventures.

12
 • Financing cash flow includes all proceeds gained from
issuing debt and equity as well as payments made by the
company.
• Free cash flow, a measure commonly used by analysts to
assess a company's profitability, represents the cash a
company generates after costs.

➢ Ratio
Ratio analysis is a quantitative method of gaining insight
into a company's liquidity, operational efficiency, and
profitability by studying its financial statements such as
the balance sheet and income statement. Ratio analysis is
a cornerstone of fundamental equity analysis.

KEY TAKEAWAYS

• Ratio analysis compares line-item data from a company's

financial statements to reveal insights regarding
profitability, liquidity, operational efficiency, and
solvency.
• Ratio analysis can mark how a company is performing
over time, while comparing a company to another within
the same industry or sector.
13
 • While ratios offer useful insight into a company, they
should be paired with other metrics, to obtain a broader
picture of a company's financial health.

Types:
• Per Share Ratios
• Margin Ratios
• Return Ratios
• Liquidity Ratios
• Leverage Ratios
• Turnover Ratios

14
 Objective of the Study
➢ To understand the credit worthiness of Maruti Suzuki India Limited
➢ To analysis the cash flow from various activities of Maruti Suzuki
India Limited
➢ To analysis the Earning Per Share over the years of Maruti Suzuki
India Limited
➢ To analysis the Dividend distribution over the years of Maruti
Suzuki India Limited
➢ To analysis the Margin ratio over the years of Maruti Suzuki India
Limited
➢ To analysis the Retum ratio over thhe years of Maruti Suzuki India
Limited
➢ To analysis the Liquidity ratio over the years of Maruti Suzuki India
Limited
➢ To analysis the Leverage ratio over the years of Maruti Suzuki India
Limited
➢ To analysis the Turmover ratio over the years of Maruti Suzuki India
Limited

15
RESEARCH ANALYSIS

16
To analysis the Cash Flow from various activities of Maruti
Suzuki India Limited

Activities 2018 2019 2020

Operating Activities 11,787 6,600 3,495

Investing Activities -8,301 -3,539 -556
Financing Activities -3,436 -2,947 -3,104
Others 0 0 0
Net Cash Flow 50 113 -165

Operating Activities

Operating Activities

12,000

10,000

8,000

6,000

4,000

2,000

0
2018 2019 2020

Interpretation
The graph clearly depicts that the company had negative cash flow from operating
activities during the year 2018, 2019 . So, this indicates that the company is not
generating enough revenue to cover its expenses as well as its not able to keeps
expenses under the set standers

17
Investing Activities

Investing Activities

0
-1,000 2018 2019 2020

-2,000
-3,000
-4,000
-5,000
-6,000
-7,000
-8,000
-9,000

Interpretation
The graph clearly depicts that the company had negative cash flow from investing
activities during the year 2018, 2019 which means the amount spend on purchase
of physical assets and security was way more than the amount received on the
sale of investments.

18
Financing Activities

Financing Activities

-2,700
2018 2019 2020
-2,800
-2,900
-3,000
-3,100
-3,200
-3,300
-3,400
-3,500

Interpretation
The graph clearly depicts that the company is having negative cash flow from
financing activity .It may be due to the dividend payment and the debt repayment
might be more than the amount raised through issuing equity and debts.

19
Net Cash Flow

Net Cash Flow

150

100

50

0
2018 2019 2020
-50

-100

-150

-200

Interpretation
From the graph its clearly depicted that the company had the negative cash flow
in the year 2020. In the year 2018 and 2019 the company had managed to have
a positive cash flow.

20
To analysis the Ratios over the years of Maruti
Suzuki India Limited

1.Per Share Ratios

Per Share Ratios 2018 2019 2020

Basic EPS (Rs.) 260.88 253.26 187.95

Basic EPS (Rs.)

Basic EPS (Rs.)

300

250

200

150

100

50

0
2018 2019 2020

Interpretation
From the graph it's clear that the Basic Earnings per share of the company is
decreased in the year 2020 compared to the EPS in the year 2018 and 2019. It
may be the impact of covid in business.

21
 2.Margin Ratios

Margin Ratios 2018 2019 2020

Gross Profit Margin 17.67 15.76 14.07

(%)
Operating Margin (%) 14.22 12.25 9.4
Net Profit Margin (%) 9.66 8.7 7.34

Gross Profit Margin (%)

Gross Profit Margin (%)

18
16
14
12
10
8
6
4
2
0
2018 2019 2020

Interpretation
The company Gross profit margin(% ) is declined in the year 2020 . Because of :
High cost of production with lower selling price in the year 2020.In the year 2018
and 2019 much better Gross profit margin (%).

22
Operating Margin (%)

Operating Margin (%)

16
14
12
10
8
6
4
2
0
2018 2019 2020

Interpretation
The graph showing that there is some troubles Ind the business of the Company
that lead to a decrease in operating margin (%) in the year 2020.Highest operating
margin(%) is in the year 2018 .

23
Net Profit Margin (%)

Net Profit Margin (%)

10
9
8
7
6
5
4
3
2
1
0
2018 2019 2020

Interpretation
Ineffective coast structure and weak pricing strategies effected the company in
the year 2020 compared to 2018 & 2019. From the graph clearly depict that
company net profit margin (%) declined in the year 2020.

24
3. Return Ratios

Return Ratios 2018 2019 2020

Return on 18.51 16.24 11.48
Networth / Equity
(%)
ROCE (%) 25.33 21.16 13.6
Return On Assets 13.07 11.95 8.92
(%)

25
Return on Networth / Equity (%)

Return on Networth / Equity (%)

20
18
16
14
12
10
8
6
4
2
0
2018 2019 2020

Interpretation
From the above data we can conclude that the equity (%) difference between the
year 2018 and 2020 is 7.03 .So the graph declined from the year 2018 and 2019
to 2020.

26
ROCE (%)

ROCE (%)

30

25

20

15

10

0
2018 2019 2020

Interpretation
From the graph it is clearly depicted that the ROCE (%) of the company has
decreased steadily over the years . The decline in ROCE from the year 2018 to
2020 means that it is using its resources inefficiently even if it's profit margin is
high.

27
Return On Assets (%)

Return On Assets (%)

14

12

10

0
2018 2019 2020

Interpretation
From the graph we get a clear data about falling ROA (%) steadily.A falling ROA
indicate the company might have over invested in assets that have failed to
produce revenue growth.

28
4. Liquidity Ratios
Liquidity Ratios 2018 2019 2020

Current Ratio (X) 0.51 0.87 0.75

Quick Ratio (X) 0.31 0.64 0.46

Current Ratio (X)

Current Ratio (X)

0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2018 2019 2020

Interpretation
The graph clearly depicts that the company had increased current ratio during the
year 2019 than the year 2020 . But there is an positive improvement in the year
2020 than the current ratio of the year 2018.

29
Quick Ratio (X)

Quick Ratio (X)

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0
2018 2019 2020

Interpretation
The above graph gives an idea about the quick ratio in the years 2018,2019 and
2020. The company taken too much debt or sales are decreased in the year 2018
that's why the quick ratio is very low in the year 2018. But in the year 2019 a
quick increase of quick ratio happened and in the year 2020 a slight decline of
quick ratio occurred.

30
5. Leverage Ratios
Leverage Ratios 2018 2019 2020

Debt to Equity 0 0 0
(x)
Interest 32.82 138.92 53.04
Coverage Ratios
(%)

Debt to Equity (x)

Debt to Equity (x)

1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2018 2019 2020

Interpretation
From the graph the debt to equity is zero in the year 2018,2019 & 2020. This debt
to equity is equal to zero means the company hasn't relied on borrowing to finance
operations.

31
Interest Coverage Ratios (%)

Interest Coverage Ratios (%)

140

120

100

80

60

40

20

0
2018 2019 2020

Interpretation
Higher the Company's debt burden in the year 2018 . Company's Earnings to
interest payments High in the year 2019 and it was again decreased in the year
2020. So the interest coverage ratios is high in the year 2019.

32
6. Turnover Ratios
Turnover Ratios 2018 2019 2020

Asset Turnover 132.46 134.54 118.91

Ratio (%)

Inventory 25.25 25.9 23.54

Turnover Ratio
(X)

Asset Turnover Ratio (%)

Asset Turnover Ratio (%)

135

130

125

120

115

110
2018 2019 2020

Interpretation
From the graph its clearly depicted that the company had increased Asset
Turnover Ratio in the year 2018- 2019. The declined Asset Turnover Ratio can
be traced back towards the impact of covid in business in the year 2020

33
Inventory Turnover Ratio (X)

Inventory Turnover Ratio (X)

26
25.5
25
24.5
24
23.5
23
22.5
22
2018 2019 2020

Interpretation
During the year 2019 the sale was increased ,it indicate that the inventory turnover
ratio is high in the graph . The covid pandamic situation effected the company's
sale in the year 2020, it shows the decline in the Inventory turnover ratio (X) in
the year 2020.

34
Findings and Conclusion
35
 Findings
➢ It is evident that the graph of operating activities clearly depicts that the company had
negative cash flow from operating activities during the year 2018, 2019.
➢ It is found that investing activities clearly depicts that the company had negative cash flow
from investing activities during the year 2018, 2019 which means the amount spend on
purchase of physical assets and security was way more than the amount received on the
sale of investments
➢ It is found that the financing activities clearly depicts that the company is having negative
cash flow from financing activity.
➢ It is found that the net cash flow is clearly depicted that the company had the negative cash
flow in the year 2020.
➢ It is evident that the Basic earnings per share of the company is reduced over the year due
to covid.
➢ It is clear that the Gross profit margin of the company is declined in 2020.
➢ It is evident that the operating margin of the company reduced in 2020 due to some troubles.
➢ It is found that the Ineffective coast structure and weak pricing strategies effected the
company in the year 2020 compared to 2018 & 2019.
➢ It is found that the equity (%) declined from 2018 and 2019 to 2020.
➢ It is evident that the ROCE of the company decreased steadily over the years.
➢ It is clear that ROA of the company is falling.
➢ It is evident that there is a positive improvement in 2020 than the current ratio in 2018.
➢ It is evident that the quick ratio of the company fluctuates over the years.
➢ It is found that the debt to equity remains zero over the years.
➢ It is found that the interest coverage ratio is changing over the years.
➢ It is clear that the asset turnover ratio of the company reduced in 2020.
➢ It is evident that due to covid the inventory turnover ratio declined in 2020.

36
Conclusion
This project has been very useful to me because I learned credit worthiness of
Maruti Suzuki India Limited. This has improved my knowledge on cash flow
statement, credit analysis and ratio analysis which is very useful in business and
commerce every day. The work I did in this project has helped me to understand
the techniques, application and usefulness of financial statements to understand
the performance of Maruti Suzuki or any other companies without much
difficulties. A company’s health and stability, providing an understanding of how
the company conducts its business. So, this study undertaken has brought in the
following conclusions. According to this project I came to know Maruti Suzuki
have been gained profit as well as it has some losses are there during the period
of the study from the year 2018-2020.Operating Activities, Investing Activities,
Net Cash Flow, Earnings Per Share ratio, Margin Ratios, Return Ratios, Liquidity
Ratios, Leverage Ratios and Turnover Ratios are the main areas focused in this
project. From this project I came to know that from the analysis of credit
statements it is clear that Maruti Suzuki India Limited have been incurring loss
during the period of study.

The covid pandemics conditions effected the company inversely. So, the
company should focus always on getting of profits in the coming years by taking
care internal as well as external factors.

37
 Reference
➢ https://en.wikipedia.org/wiki/Maruti_Suzuki
➢ https://www.swotandpestle.com/maruti-suzuki/
➢ https://en.wikipedia.org/wiki/Credit_analysis#:~:text=Credit%20analysis
%20is%20the%20method,issues%20or%20has%20issued%20bonds.
➢ https://www.moneycontrol.com/india/stockpricequote/auto-
carsjeeps/marutisuzukiindia/MS24

38