Serial No.

Particulars Page
No.

1 Introduction
2
Company Profile

3 Literature Review

4 Research Methodology

▪ Problem Statement

▪ Need of the Study

▪ Objectives of Study

▪ Hypotheses of Study
▪ Limitations of Study

5 Data Analysis & Interpretation

6 Findings & Suggestions

7 Conclusion

8 References

9 Annexure
 INTRODUCTION

The working capital (WC) measures the operating liquidity accessible to a

company, organization, or other body, including governmental agencies.
Working capital is a component of operational capital and fixed assets like plant
and equipment. Current assets are equal to gross working capital. Existing
assets less Current Liabilities equals Working Capital. An entity has a
functional capital deficiency, also known as an operating capital deficit and
negative working capital if current assets are fewer than current liabilities.
Suzuki Motor Corporation of Japan's affiliate, Maruti Suzuki India Limited
(MSIL, originally Maruti Udyog Limited), was founded in India. India's top
producer of passenger vehicles is Maruti Suzuki. Maruti Suzuki, affectionately
known as the "people's car maker," has transformed how Indians commute and
travel over the past three decades. The company has two manufacturing sites in
India's south at Gurgaon and Manesar. Together, the two plants have the
capacity to produce more than 1.5 million automobiles per year. One vehicle
every 12 seconds, then. head and shoulders above the competition, which
includes all significant international automakers. By 2013, the company wants
to increase its production capacity to 1.75 million (17,50,000).

Index Terms - Net Working capital, Liquidity, Profitability, Current asset, and
Current Liabilities Formula: Working Capital = Current Asset – Current
Liabilities
 WORKING CAPITAL MANAGEMENT

Working capital management is significant in Financial Management due to

the fact that it plays a pivotal role in keeping the wheels of a business
enterprise running. Working capital management is concerned with short-
term financial decisions.

Shortage of funds for working capital has caused many businesses to fail and
in many cases, has retarded their growth. Lack of efficient and effective
utilization of working capital leads to earn low rate of return on capital
employed or even compels to sustain losses.

The need for skilled working capital management has thus become greater in
recent years. A firm invests a part of its permanent capital in fixed assets and
keeps a part of it for working capital i.e., for meeting the day to day
requirements. We will hardly find a firm which does not require any amount
of working capital for its normal operations.

The requirement of working capital varies from firm to firm depending upon
the nature of business, production policy, market conditions, seasonality of
operations, conditions of supply etc. Working capital to a company is like
the blood to human body. It is the most vital ingredient of a business.
Working capital management is concerned with the problems arise in
attempting to manage the current assets, the current liabilities and the inter
relationship that exist between them. The term current assets refers to those
assets which in ordinary course of business can be, or, will be, turned in to cash
within one year without undergoing a diminution in value and without
disrupting the operation of the firm. The major current assets are cash,
marketable securities, account receivable and inventory. Current liabilities ware
those liabilities which intended at their inception to be paid in ordinary course
of business, within a year, out of the current assets or earnings of the concern.
The basic current liabilities are account payable, bill payable, bank over-draft,
and outstanding expenses. The goal of working capital management is to
manage the firm’s current assets and current liabilities in such way that the
satisfactory level of working capital is mentioned. The current should be large
enough to cover its current liabilities in order to ensure a reasonable margin of
the safety.
 NEED OF WORKING CAPITAL MANAGEMENT

The need for working capital gross or current assets cannot be over emphasized.

As already observed, the objective of financial decision making is to maximize

the to shareholders wealth. Achieve this, it is necessary to generate sufficient

profits can be earned will naturally depend upon the magnitude of the sales

among other things but sales cannot convert into cash. There is a need for

working capital in the form of current assets to deal with the problem arising out

of lack of immediate realization of cash against goods sold. Therefore sufficient

working capital is necessary to sustain sales activity. Technically this is refers to

operating or cash cycle. If the company has certain amount of cash, it will be

required for purchasing the raw material may be available on credit basis. Then

the company has to spend some amount for labor and factory overhead to

convert the raw material in work in progress, and ultimately finished goods.

These finished goods convert in to sales on credit basis in the form of sundry

debtors. Sundry debtors are converting into cash after expiry of credit period.

Thus some amount of cash is blocked in raw materials, WIP, finished goods,

and sundry debtors and day to day cash requirements. However some part of

current assets may be financed by the current liabilities also. The amount

required to be invested in this current assets is always higher than the funds

available from current liabilities. This is the precise reason why the needs for

working capital arise

 DETERMINANTS OF WORKING CAPITAL

Working capital requirements of a concern depends on a number of factors,

each of which should be considered carefully for determining the proper amount

of working capital. It may be however be added that these factors affect

differently to the different units and these keeps varying from time to time. In

general, the determinants of working capital which re common to all

organization’s can be summarized as under:

1. Nature of Business

Working capital requirement of a firm are basically influenced by nature of

business. Trading and financial firms require a large sum of money to be

invested in working capital to carry large stocks of a variety of goods to satisfy

varied and continuous demands of their customers. Manufacturing and

construction firms have to invest substantially in working capital. In contrast,

Public utilities may have limited need for working capital because they may

have only cash sales and supply services, not product. So such concern have to

make adequate investment in current assets depending upon the total assets

structure and other variables.

2. Size and growth of business

In very small company the working capital requirement is quit high due to high

overhead, higher buying and selling cost etc. as such medium size business

positively has edge over the small companies. But if the business start growing
after certain limit, the working capital requirements may adversely affect by the

increasing size.

3. Business/ Trade cycle

If the company is the operating in the time of boom, the working capital

requirement may be more as the company may like to buy more raw material,

may increase the production and sales to take the benefit of favorable market,

due to increase in the sales, there may more and more amount of funds blocked

in stock and debtors etc. similarly in the case of depressions also, working

capital may be high as the sales terms of value and quantity may be reducing,

there may be unnecessary piling up of stack without getting sold, the receivable

may not be recovered in time etc.

4. Length of production cycle

In some business like machine tools industry, the time gap between the

acquisition of raw material till the end of final production of finished products

itself is quit high. As such amount may be blocked either in raw material or

work in progress or finished goods or even in debtors. Naturally there need of

working capital is high.

5. Fluctuations of supply and seasonal variations

Some companies need to keep large amount of working capital due to their

irregular sales and intermittent supply. Similarly companies using bulky

materials also maintain large reserves’ of raw material inventories. This

increases the need of working capital. Some companies manufacture and sell

goods only during certain seasons. Working capital requirements of such

industries will be higher during certain season of such industries period.

6. Production policies

Production policies of the organization effect working capital requirements very

highly. Seasonal industries, which produces only in specific season requires

more working capital. Some industries which produces round the year but sale

mainly done in some special seasons are also need to keep more working

capital.

7. Operating efficiency

If the business is carried on more efficiently, it can operate in profits which may

reduce the strain on working capital; it may ensure proper utilization of existing

resources by eliminating the waste and improved coordination etc.

8. Terms of purchase and sales

Some time due to competition or custom, it may be necessary for the company

to extend more and more credit to customers, as result which more and more

amount is locked up in debtors or bills receivables which increase the working

capital requirement. On the other hand, in the case of purchase, if the credit is

offered by suppliers of goods and services, a part of working capital

requirement may be financed by them, but it is necessary to purchase on cash

basis, the working capital requirement will be higher.

9. Profitability

The profitability of the business may be vary in each and every individual case,
which is in turn its depend on numerous factors, but high profitability will

positively reduce the strain on working capital requirement of the company,

because the profits to the extend that they earned in cash may be used to meet

the working capital requirement of the company.

10. Current asset policies

The quantum of working capital of a company is significantly determined by its

current assets policies. A company with conservative assets policy may operate

with relatively high level of working capital than its sales volume. A company

pursuing an aggressive amount assets policy operates with a relatively lower

level of working capital.

11. Other factors

Effective co ordination between production and distribution can reduce the need

for working capital. Transportation and communication means. If developed

helps to reduce the working capital requirement.

 MEANING OF WORKING CAPITAL MANAGEMENT

Decisions relating to working capital and short term financing are referred to as

working capital management. These involve managing the relationship between

a firm's short-term assets and its short-term liabilities.

The goal of working capital management is to ensure that the firm is able to

continue its operations and that it has sufficient cash flow to satisfy both

maturing short-term debt and upcoming operational expenses.

Efficient management of working capital is one of the pre-conditions for the

success of an enterprise. Efficient management of working capital means

management of various components of working capital in such a way that an

adequate amount of working capital is maintained for smooth running of a firm

and for fulfillment of twin objectives of liquidity and profitability. While

inadequate amount of working capital impairs the firm’s liquidity. Holding of

excess working capital results in the reduction of profitability. But the proper

estimation of working capital actually required, is a difficult task for the

management because the amount of working capital varies across firms over the

periods depending upon the nature of business, production cycle, credit policy,

availability of raw material, etc.

 TYPES OF WORKING CAPITAL

WORKING CAPITAL

BASIS OF BASIS OF
CONCEPT TIME

Gross Net Permanent Temporary

Working Working / Fixed WC / Variable
Capital Capital WC
 OPERATING CYCLE OF WORKING CAPITAL

The need of working capital arrived because of time gap between production of

goods and their actual realization after sale. This time gap is called Operating

Cycle or Working Capital Cycle . The operating cycle of a company consist of

time period between procurement of inventory and he collection of cash from

receivables. The operating cycle is the length of time between the company's

outlay on raw materials, wages and other expanses and inflow of cash from

sales of goods. Operating cycle is an important concept in management of cash

and management of cash working capital. The operating cycle reveals the time

that elapses between outlays of cash and inflow of cash. Quicker the operating

cycle less amount of investment in working capital is needed

and it improves profitability. The duration of the operating cycle depends on

nature of industries and efficiency in working capital management.

In manufacturing concern ,the working capital cycle/operating cycle starts

with the purchase of raw material and ends with the realization of cash from the

sale of finished products. This cycle involves purchase of raw material and

stores, its conversion through into stocks of finished goods through work-in-

progress with progressive increment of labor and service costs, conversion of

finished stock intosales, debtors and receivables and ultimately realization of

cash and this cycle continues again from cash to purchase

 DEBTORS
(RECEIVABLES)

CASH FINISHED GOODS

RAW MATERIALS WORK-IN-PROCESS

(WORKING CAPITAL CYCLE/OPERATING CYCLE)

The speed with which the working capital completes one cycle determines the

requirements of working capital-longer the period of the cycle larger is the

requirement of working capital

 COMPANY PROFILE

Maruti Suzuki India limited, a subsidiary of SMC, Japan, is the leader in

passenger cars and multipurpose vehicle (MPVs) in India, accounting for almost

55% of the total industry sales.

The company formerly known as Maruti Udyog limited was incorporated as a

joint venture (JV) between government of India and SMC, Japan on 24th

February,

1981.The first car was rolled out from its Gurgaon facility on 14 Dec

1983.Since

then; it has sustained its leadership position in the Indian car market.

Maruti Suzuki has a strong balance sheet with Reserves and Surplus of Rs.92,

004 million & debt equity ratio of 0.07 as on 31st March, 2010.

DOMESTIC SALES AND SERVICE NETWORK

TOTAL SERVICE NETWORK----------------

----------2767 TOTAL SALES NETWORK

------------------------------------------------681

REGIONAL OFFICES--------------------16

AREA OFFICES----------------------09

ZONAL OFFICES------------------04
The company has the largest sales and service network amongst car
manufacture in India .It had 681 sales outlets in 454 cities as on 31 st March,
2009. The car park of the company is in excess of seven million vehicles and to
service this car park ,the company has 2,767 service workshops in 1,314
cities .The service network of Maruti Suzuki includes Dealer workshop, Maruti
Authorized services stations (MASs),Maruti service masters (MSM)and Maruti
service Zones (MSZ).
Besides selling and servicing vehicles, the company provides its customers with
“one stop-shop” experience such as automobile Finance, Automobile insurance,
Maruti Genuine Parts and Accessories, Extended warranty and Maruti Certified
pre-owned car outlets in 181 cities as on 31st March, 2009.
EXPORTS
Maruti Suzuki exported the first lot of 500 car to Hungary in September,
1987.Presently, we are exporting to over 100 markets in Europe, Asia, Latin
America, Africa and Oceania.In2008-09, the company launched a new model
A-Star that meets stringent European safety and emission regulation. The
company has exported over 500,000 cars so far.
PORT FACILITIES FOR EXPORT
In 2009-10, in association with Mundra Port SEZ Limited, the company had set
up the company had set up the state-of -the art facilities at Mundra Port ,Gujarat
for Export terminal offers a “Roll On, Roll Off”(RORO) berth ,which speeds up
the loading process and minimizes the chance of damage to cars. The company
also has a Pre-Delivery Inspection (PDI) Centre at Mundra.
In a first of its kind initiative, the company, in partnership with Indian Railways,
has developed double Decker rail wagons for transporting export cars Mundra.
MARUTI AND CRM:- Maruti created a land-mark in CRM by launching a
website for the customers in the year 1998.
 SWOT ANALYSIS OF MARUTI SUZUKI
STRENGHS
 Bigger name in the market
 Trust of People
 Maruti Udyog Ltd. is the market leader for more than two decade.
 Has a great dealership chain in the market.
 Better after sales service
 Low maintenance cost of vehicle
WEAKNESSES
 Exports are not that good.
 Lesser diesel models in the market compare to others
 Global image is not that big
OPPORTUNITIES
 Great opportunities to go global with success of Swift and SX4All over
 Introduction of more diesel models. The diesel car segment is growing.
 Opportunity to grow bigger by entering into bigger car markets
 Already a market leader so great opportunity to be the king of market in
every stage of industry
THREATS

 Foreign companies entering market; so a bigger threat from MNCs.

 To the market share, as many big names are coming in the industry
 There is hardly any diesel models
 Rs. 1 lakh – Rs. 1.5 lakh car
 COMPANY PRODUCT

The company offers a portfolio of 13 brands, ranging from the people’s car Maruti
800 to the stylish hatch – back, Swift, SX4 sedan and luxury sport utility vehicle
(SUV), Grand Vitara. More than half the cars sold in India wear a Maruti
Suzuki badge. As per the classification by the society of Indian Automobile
manufacturers (SIAM), Maruti Suzuki models are categorized under the
following heads:
A1 Segment (up to 3400 mm) : Maruti 800
A2 Segment (3400 mm to 4000 mm): Alto, Estilo, WagonR, A-star, Ritz, Swift A3
Segment (4000mm to 4500 mm): Dzire & SX4
Multy utility Vehicle (MUA) Segment: Gypsy & Grand Vitara Multi
Purpose vehicle (MPV) Segment: Omni & Versa

(1) Maruti 800 -change your life: - Maruti 800 has gone beyond just being a

car ; It has transformed the lives of countless people, by

bringing the joy of motoring to million across the length and breadth of the
country.

(2) Alto-Let’s go:- Alto is a great combination of economy, practicality &

styling, It

exemplifies the benchmark in build ,quality & reliability in a

compact car. These a attributes make it the largest selling car in Indian
automobile market .This is testified by the 24 hr endurance record set by
covering 3,082 kms in 24 hrs at an average speed of 128 kmph.

(2) Dzire-The heart car: - A car that has everything you ever desired;

striking looks, l luxurious interiors & enough power to

capture your heart just slide in the DZire & take it for a spin, it’s sure to steal
many a heart, beginning with yours.

(3) SX4- Men are back:- Revolutionary European design ,world class “drive

by wire” technology, most spacious in its class,

steering mounted audio controls, maximum ground clearance in its class ,high
on safety with dual airbags, Anti-lock Brake system (ABS) & Electronic rack
force Distribution (EBD) feature.

(4) GRAND VITARA*-2.4-Reloaded:- Distinctively styled, the third

generation Grand Vitara takes three decades of Suzuki

SUV heritage to the next level. The Vitara model first hit the road in Japan in
1988 as a 3-door part –time four wheel drive (4WD). In its second avatar, the
Vitara came armed with a stylish design, superior engineering and a new name,
the Grand Vitara. Launched in India on 1st July, 2009
(5) VERSA –The joy of travelling together:- Experience the joy of

travelling together. Equipped with twin –ACs, large

sliding doors and flexible seating, the Versa encourages family and friend to
enjoy long drives and getaways together. In spite of being so spacious, its
design allows for easy maneuverability in the city.

(7) SWIFT –You are the fuel: A new kind of computer car ,one that’s based on

a fresh approach to design and development, Swift

delivers the kind of driver and passenger experience that places it in a class of
its own and has true worldwide appeal.

(8) OMNI –Ab Kamyabi se hai sirf Omni bhar ka faasla

Omni is truly India’s original MPA .Today it as available in five variants-5

seater, 8 seater, Cargo, Ambulance & liquefied

petroleum Gas (LPG).It meets diverse needs across different user segments &
can double up both as a people carrier and a goods carrier .it is easy on the
pocket, yet tough on the job.
(9) WAGONR-For the smarter race:- Drive with complete peace of mind .The

world class safety features of the WagonR keeps you

safe and secure, always. Wearing new vibrant colors, the new WagonR is full of
freshness and energy to keep you charged up and always ready to go.

(10) GYPSY KING –There is a Gypsy in everyone:- With superb

maneuverability, maneuverability, smooth handling

and raw energy packed in to a sleek yet rugged frame, the Gypsy King is the
real adventure MUV ,whether ploughing through the dirk tracks, climbing
formidable terrain or making way through the city traffic .Maruti Suzuki is
proud to support the operations of our country’s defense services with the tailor
made Gypsy King .Gypsy has proved its mettle during defense operation in the
Himalayas and Thar desert.

(11) ESTILO*-Take a fresh view of life:- The all new ESTILO is a new

landmark in terms of design and technology, with its all

new aerodynamic design , Estilo sets the benchmark and makes each drive a
fresh new experience .Complementing its stylish looks are new ,classy and
elegant interiors that redefine comfort .What’s more ,the all new Estilo with its
advance K-series engine gives you incredible power each time you turn on the
ignition.*Launched in August,2009

(11) A-STAR- Stop @ Nothing:- Designed to perfection ,driven only to

succeed ,A-Star has taken over the world. Made in India to meet European

standards, the car symbolizes the beginning of a

revolution with its unique aerodynamic stylish ,Powered by the latest state –of-
art ,light weight K-series petrol engine, it has the best in class pick-up and
segment beating mileage of 19.59 kmpl. It is expected to many European and
Non-European countries under the brand name of Suzuki alto and Suzuki
Celerio respectively. As tested by Automotive Research Association of India
(ARAI),Pune ,India’s premier automotive research agency.

(13) RITZ*-live the moment:- The Ritz combines modern European design, the

sportiness of the swift, the latest in engine technology

and Suzuki’s globally acclaimed expertise in compact cars, Ritz is an
exceptional blend of modern design & practicality .The interior of the car are
smartly styled providing a very comfortable space to all the people in the
cabin .The K12M petrol engine and 1.3 liter DDiS diesel engine powering the
Ritz are supremely refined & silent with best in class fuel efficiency.*launched
on 15th May,2009.
LITERATURE
REVIEW
 Author: Jain, V., & Pandey, A.
 Year: 2015
 Journal: International Journal of Scientific Research
 Summary: This paper compares the working capital management practices
of Maruti Suzuki within the Indian automobile industry, analyzing their
respective strategies, efficiency, and financial performance.
 "Determinants of Working Capital Management: A Study of Maruti Suzuki
India Ltd.”

 Author: Das, S., & Mishra, A.

 Year: 2015
 Journal: Journal of Financial Management and Analysis
 Summary: This study assesses Maruti Suzuki's financial performance from
the perspective of working capital management, analyzing key indicators
such as liquidity, profitability, and efficiency.
 "Working Capital Management in Indian Automobile Industry: A Study of
Maruti Suzuki India Limited"

 Author: Sharma, A., & Kharb, A.

 Year: 2016
 Journal: International Journal of Engineering and Management Research
 Summary: The study investigates the determinants influencing the working
capital management of Maruti Suzuki India Ltd., exploring factors such as
cash conversion cycle, inventory turnover, and accounts receivable turnover.
 "Working Capital Management of Maruti Suzuki India Limited"

 Author: Gopinathan, A.
 Year: 2017
 Journal: International Journal of Management Studies
 Summary: This paper provides an overview of Maruti Suzuki's working
capital management practices, assessing its efficiency and impact on
the company's financial performance and liquidity position.
 "A Study on Working Capital Management of Maruti Suzuki India Limited"
 Author: Gupta, P., & Kumar, A.
 Year: 2018
 Journal: International Journal of Research in Finance and Marketing
 Summary: The study examines the working capital management strategies
employed by Maruti Suzuki India Ltd., analyzing factors affecting its
working capital requirements and evaluating their effectiveness.
 "Efficiency of Working Capital Management: A Case Study of Maruti
Suzuki India Ltd."

 Author: Verma, R., & Yadav, S.

 Year: 2019
 Journal: International Journal of Finance & Banking Studies
 Summary: This case study evaluates the efficiency of Maruti Suzuki's
working capital management practices, assessing its ability to optimize
liquidity while minimizing costs and risks.
 "Impact of Working Capital Management on Profitability: A Study of
Maruti Suzuki India Ltd."

 Author: Singh, N., & Singh, R.

 Year: 2020
 Journal: Journal of Commerce & Accounting Research
 Summary: The research investigates the relationship between working
capital management and profitability in the context of Maruti Suzuki India
Ltd., analyzing how variations in working capital affect the company's
financial performance.
 "Working Capital Management Practices in the Indian Automobile
Industry: A Case Study of Maruti Suzuki India Limited"
 Author: Mishra, S., & Sharma, R.
 Year: 2021
 Journal: International Journal of Business Management and Commerce
 Summary: This case study examines the working capital management
practices of Maruti Suzuki India Ltd. within the broader context of the
Indian automobile industry, identifying key trends, challenges, and
strategies.
 "An Empirical Analysis of Working Capital Management
Efficiency: Evidence from Maruti Suzuki India Limited"

 Author: Chauhan, S., & Gupta, M.

 Year: 2022
 Journal: Journal of Accounting and Finance Management
 Summary: The study empirically analyzes the efficiency of Maruti Suzuki's
working capital management, employing quantitative techniques to
measure its effectiveness in optimizing liquidity and maximizing
profitability.
 "Financial Performance Evaluation through Working Capital Management:
A Study of Maruti Suzuki India Ltd."
 RESEARCH

METHODOLOGY
RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the research problem. It

may be understood as a science of studying now research is done systematically.

In that various steps, those are generally adopted by a researcher in studying his

problem along with the logic behind them. It is important for research to know

not only the research method but also know methodology. ”The procedures by

which researcher go about their work of describing, explaining and predicting

phenomenon are called methodology.”

Methods comprise the procedures used for generating, collecting and evaluating

data. All this means that it is necessary for the researcher to design his

methodology for his problem as the same may differ from problem to problem.

Data collection is important step in any project and success of any project will

be largely depend upon now much accurate you will be able to collect and how

much time, money and effort will be required to collect that necessary data, this

is also important steps. Data collection plays an important role in research work.

Without proper data available for analysis you cannot do the research work

accurately.
RESEARCH DESIGN

Research design refers to the overall strategy utilized to carry out research that

defines a logical plan to tackle established research questions through the

collection, interpretation, analysis, and discussion of data.

Collection of Data:

⚫ Sources of Data: -

To fulfil the information, need of study. The data is collected from secondary

sources.

⚫ Secondary Data:-

Secondary data is the data that have been already collected by and readily

available from other sources. Such data are cheaper and more quickly

obtainable

than the primary data and also may be available when primary data cannot be

obtained at all.
PROBLEM STATEMENT:

 Working capital is the portion of a company's resources that are essential

to its operation.

 It may be challenging to achieve the goals of the business enterprise

without adequate capital management

 The problem that arises from trying to manage current assets, current

liabilities and the relationships between them is addressed by effective

financial management

Funds available for period of one year or less is called short term finance. In
India short term finance is used as working capital finance. Two most
significant short term sources of finance for working capital are trade credit and
bank borrowing. Trade credit ratio of current assets is about 40%, it is indicated
by Reserve Bank of India data that trade credit has grown faster than the growth
in sales. Bank borrowing is the next source of working capital finance. The
relative importance of this varies from time to time depending on the prevailing
environment. In India the primary source of working capital financing are trade
credit and short term bank credit. After determine the level of working capital, a
firm has to consider how it will finance. Following are sources of working
capital finance.

Sources of working Capital Finance

1) Trade credit
2) Bank Finance
3) Letter of credit
 1) Trade credit
Trade credit refers to the credit that a customer gets from suppliers of goods in the
normal course of business. The buying firms do not have to pay cash
immediately for the purchase made. This deferral of payments is a short term
financing called trade credit. It is major source of financing for firm.
Particularly small firms are heavily depend on trade credit as a source of finance
since they find it difficult to raised funds from banks or other sources in the
capital market. Trade credit is mostly an informal arrangement, and it granted
on an open account basis. A supplier sends goods to the buyers accept, and thus,
in effect, agrees to pay the amount due as per sales terms in the invoice. Trade
credit may take the form of bills payable. Credit terms refer to the condition
under which the supplier sells on credit to the buyer, and the buyer required
repaying the credit. Trade credit is the spontaneous source of the financing. As
the volume of the firm’s purchase increase trade credit also expand. It appears
to be cost free since it does not involve explicit interest charges, but in practice,
it involves implicit cost. The cost of credit may be transferred to the buyer via
the increased price of goods supplied by him.

2) Bank finance for working capital

Banks are main institutional source of working capital finance in India. After trade
credit, bank credit is the most important source of financing working capital in
India. A bank considers a firms sales and production plane and desirable levels
of current assets in determining its working capital requirements. The amount
approved by bank for the firm’s working capital is called credit limit. Credit
limit is the maximum funds which a firm can obtain from the banking system. In
practice banks do not lend 100% credit limit; they deduct margin money.
Forms of bank finance:-
 Term Loan
 Overdraft
 Cash credit
 Purchase or discounting of bills

 Term Loan
In this case, the entire amount of assistance is disbursed at one time only, either
in cash or the company’s account. The loan may be paid repaid in installments
will charged on outstanding balance.

 Overdraft
In this case, the company is allowed to withdraw in excess of the balance
standing in its Bank account. However, a fixed limit is stipulated by the Bank
beyond which the company will not able to overdraw the account. Legally,
overdraft is a demand assistance given by the bank i.e. bank can ask repayment
at any point of time.

 Cash credit
In practice, the operations in cash credit facility are similar to those of those of
overdraft facility except the fact that the company need not have a formal
current account. Here also a fixed limit is stipulated beyond which the company
is not able to withdraw the amount.

 Bills purchased / discounted

This form of assistance is comparatively of recent origin. This facility enables
the company to get the immediate payment against the credit bills / invoice
raised by the company. The banks hold the bills as a security till the payment is
made by the customer. The entire amount of bill is not paid to the company. The
company gets only the present worth of amount of bill from of discount charges.
On maturity, bank collects the full amount of bill from the customer.

3) Letter of credit
In this case the exporter and the importer are unknown to each other. Under
these circumstances, exporter is worried about getting the payment from the
importer and importer is worried as to whether he will get goods or not. In this
case, the importer applies to his bank in his country to open a letter of credit in
favor of the exporter whereby the importers bank undertakes to pay the exporter
or accept the bills or draft drawn by the exporter on the exporter fulfilling the
terms and conditions specified in the letter of credit. Banks have been certain
norms in granting working capital finance to companies. These norms have
been greatly influenced by the recommendation of various committees
appointed by the Reserve Bank of India from time to time. The norms of
working capital finance followed by bank since mid-70 were mainly based on
the recommendations of the Tendon committee. The Chore committee made
further recommendations to strengthen the procedure and norms for working
capital finance by banks.
 NEED OF STUDY

• The primary focus of the study is the working capital management of

MARUTI SUZUKI LIMITED OF INDIA

• The primary purpose of working capital management is also to enable the

company to maintain sufficient cash flow to meet its short term operating
costs and short term debt obligations
 OBJECTIVES OF STUDY

Study of the working capital management is important because unless the working
capital is managed effectively, monitored efficiently planed properly and
reviewed periodically at regular intervals to remove bottlenecks if any the
company cannot earn profits and increase its turnover. With this primary
objective of the study, the following further objectives are framed for a depth
analysis.

• To study the working capital management of Maruti Suzuki India

Limited

• To study the optimum level of current assets and current liabilities of the
Company

• To study the ways and means of working capital finance of the Maruti
Suzuki India Limited

• To estimate the working capital requirement of Maruti Suzuki India Ltd

• To study the operating and cash cycle of the Maruti Suzuki India
Limited
 HYPOTHESIS

H0: There is no significant relationship between Maruti Suzuki's working capital

management and its financial performance.
H1:There is a significant relationship between Maruti Suzuki's working capital management
and its financial performance.
 LIMITATIONS OF THE STUDY

The analysis is restricted to 5 years for the period of 2018 - 2022.

Limited data provided by the company "Maruti Suzuki."

Limited area as it was difficult to collect the data regarding the competitors and
their financial information.
DATA ANALYSIS &
INTERPRETATION
 DATA ANALYSIS & INTERPRETATION

Table 1: For the years 2017 to 2018:

DATA ANALYSIS-
Schedule of changes in Working Capital for the year financial year 2017 - 2018 (In Crores)

As on 31st March As on 31st March

Particulars 2017 2018 Increase Decrease
Current Assets: Current Investments 2178.80 1217.30 961.50
Inventories 3262.20 3160.80 101.40
Trade Receivables 1199.20 1461.80 262.60
Cash And Cash Equivalents 13.80 71.10 57.30
Short Term Loans and Advances 2.50 3.00 0.50
Other Current Assets 2119.70 2007.40 112.30
Total Current Assets 8776.20 7921.40
Current Liabilities: Short-Term 483.60 110.80 372.80
Borrowings
Trade Payables 8367.30 10497.00 2129.70
Other Current Liabilities 3926.50 4274.30 347.80
Short Term Provisions 449.00 560.00 111.00
Total Current Liabilities 13226.40 15442.10
Net Working capital -4450.20 -7520.70 693.20 3763.70
Net increasing working capital -3070.50 3070.50
Total -7520.70 -7520.70 3763.70 3763.70

INTERPRETATION -
Overall, the data suggests for the period of 2017 to 2018 that the company's
working capital position deteriorated during the year, with a decrease in current
assets and an increase in current liabilities. However, the net increasing working
capital indicates that the company was able to generate additional working
capital during the year, which is a positive sign. The company may need to
closely monitor and manage its working capital position to ensure smooth
operations and profitability in the future.
 Table 2: For the year 2018 to 2019:
DATA ANALYSIS-
Schedule of changes in Working Capital for the year Financial year 2018 - 2019 (In Crores)

As on 31st March As on 31st March

Particulars 2018 2019 Increase Decrease
Current Assets: Current Investments 1217.30 5045.50 3828.20
Inventories 3160.80 3325.70 164.90
Trade Receivables 1461.80 2310.40 848.60
Cash And Cash Equivalents 71.10 178.90 107.80
Short-Term Loans And Advances 3.00 16.00 13.00
Other Current Assets 2007.40 1485.10 522.30
Total Current Assets 7921.40 12361.60
Current Liabilities: Short Term 110.80 149.60 38.80
Borrowings
Trade Payables 10497.00 9633.00 864.00
Other Current Liabilities 4274.30 3743.30 531.00
Short Term Provisions 560.00 624.40 64.40
Total Current Liabilities 15442.10 14150.30
Net Working capital -7520.70 -1788.70 6357.50 625.50
Net increasing working capital -5732.00 5732.00
Total -7520.70 -7520.70 6357.50 6357.50

INTERPRETATION -
Overall, the data suggest for the period of 2018 to 2019 that the company's
working capital position significantly improved during the year, with a
considerable increase in current assets and a decrease in current liabilities. The
net increasing working capital indicates that the company was able to generate a
substantial amount of additional working capital during the year, which is a
positive sign. The company may have efficiently managed its working capital
position, which may have helped improve its operations and profitability
 Table 3: For the year 2019 to 2020:
DATA ANALYSIS-
Schedule of changes in Working Capital for the year Financial year 2019 - 2020 (In Crores)

As on 31st March As on 31st

Particulars 2019 March Increase Decrease
2020
Current Assets: Current Investments 5045.50 1218.80 3826.70
Inventories 3325.70 3214.90 110.80
Trade Receivables 2310.40 1974.90 335.50
Cash And Cash Equivalents 178.90 21.10 157.80
Short-Term Loans And Advances 16.00 16.90 0.90
Other Current Assets 1485.10 1980.80 495.70
Total Current Assets 12361.60 8427.40
Current Liabilities: Short-Term 149.60 106.30 43.30
Borrowings
Trade Payables 9633.00 7494.10 2138.90
Other Current Liabilities 3743.30 3014.80 728.50
Short Term Provisions 624.40 679.60 55.20
Total Current Liabilities 14150.30 11294.80
Net Working capital -1788.70 -2867.40 3407.30 4486.00
Net increasing working capital -1078.70 1078.70
Total -2867.40 -2867.40 4486.00 4486.00

INTERPRETATION –
Overall, the data suggests for the period of 2019 to 2020 that the company's
working capital position deteriorated during the year, with a significant
decrease in current assets and a decrease in current liabilities. However, the net
increasing working capital indicates that the company was able to generate
additional working capital during the year, which is a positive sign. The
company may need to focus on efficiently managing its working capital
position to ensure smooth operations and profitability in the future.
 Table 4: For the year 2020 to 2021

Schedule of changes in Working Capital for the year financial year 2020 - 2021 (In Crores)

As on 31st March As on 31st March

Particulars 2020 2021 Increase Decrease
Current Assets: Current Investments 1218.80 8415.70 7196.90
Inventories 3214.90 3050.00 164.90
Trade Receivables 1974.90 1276.60 698.30
Cash And Cash Equivalents 21.10 3036.40 3015.30
Short-Term Loans And Advances 16.90 23.00 6.10
Other Current Assets 1980.80 2725.00 744.20
Total Current Assets 8427.40 18526.70
Current Liabilities: Short Term 106.30 488.80 382.50
Borrowings
Trade Payables 7494.10 10161.70 2667.60
Other Current Liabilities 3014.80 4714.60 1699.80
Short Term Provisions 679.60 741.60 62.00
Total Current Liabilities 11294.80 16106.70
Net Working capital -2867.40 2420.00 10962.50 5675.10
Net increasing working capital -5287.40 5287.40
Total -2867.40 -2867.40 10962.50 10962.50

INTERPRETATION –
Overall, the data suggests for the year 2020 to 2021 that the company's working
capital position significantly improved during the year, with a considerable
increase in current assets and an increase in current liabilities. The net
increasing working capital indicates that the company was able to generate a
substantial amount of additional working capital during the year, which is a
positive sign. The company may have efficiently managed its working capital
position, which may have helped improve its operations and profitability.
 Table 5: For the years 2021 to 2022:
Schedule of changes in Working Capital for the year Financial year 2021 - 2022 (In Crores)
Particulars As on 31st March As on 31st March Increase Decrease
2021 2022
Current Assets
Current Assets: Current Investments 8415.70 4100.10 4315.60
Inventories 3050.00 3533.10 483.10
Trade Receivables 1276.60 2030.10 753.50
Cash And Cash Equivalents 3036.40 3036.20 0.20
Short Term Loans And Advances 23.00 30.50 7.50
Other Current SAssets 2725.00 4051.20 1326.20
Total Current Assets 18526.70 16781.20
Current Liabilities
Current Liabilities: Short Term 488.80 381.90 106.90
Borrowings
Trade Payables 10161.70 9761.00 400.70
Other Current Liabilities 4714.60 6009.50 1294.90
Short Term Provisions 741.60 861.30 119.70
Total Current Liabilities 16106.70 17013.70
Net Working capital 2420.00 -232.50 3077.90 5730.40
Net increasing working capital -2652.50 2652.50
Total 2420.00 2420.00 5730.40 5730.40

INTERPRETATION
Overall, the data suggests for the year 2021 to 2022 that the company's working
capital position deteriorated during the year, with a significant decrease in current
assets and an increase in current liabilities. The net increasing working capital
indicates that the company was able to generate additional working capital during
the year, but the overall trend suggests a decline in the company's working capital
position. The company may need to focus on efficiently managing its working
capital position to ensure smooth operations and profitability in the future.
 Table 5: For the years 2022 to 2023:

Schedule of changes in Working Capital for the year Financial year 2021 - 2022 (In Crores)
Particulars As on 31st March As on 31st March Increase Decrease
2021 2022
Current Assets
Current Assets: Current Investments
Inventories
Trade Receivables
Cash And Cash Equivalents
Short Term Loans And Advances
Other Current Assets
Total Current Assets
Current Liabilities
Current Liabilities: Short Term
Borrowings
Trade Payables
Other Current Liabilities
Short Term Provisions
Total Current Liabilities
Net Working capital
Net increasing working capital
Total
 Schedule of changes in Working Capital for the year Financial year 2021 - 2022 (In Crores)
Particulars As on 31st March As on 31st March Increase Decrease
2021 2022
Current Assets
Current Assets: Current
Investments
Inventories
Trade Receivables
Cash And Cash Equivalents
Short Term Loans And Advances
Other Current SAssets
Total Current Assets
Current Liabilities
Current Liabilities: Short Term
Borrowings
Trade Payables
Other Current Liabilities
Short Term Provisions
Total Current Liabilities
Net Working capital
Net increasing working capital
Total
 FINDINGS & SUGGESTIONS

FINDINGS

 Table 1 shows changes in a company's working capital from March 31, 2017,
to March 31, 2018. Current assets decreased, mainly due to lower current
investments, while current liabilities increased, mainly due to higher trade
payables. The net working capital decreased, but net increasing working capital
was positive.

 The table 2 shows the changes in working capital. Current assets increased by
Rs. 4,440.20 crores, led by current investments. Current liabilities decreased by
Rs. 1,291.80 crores due to a decrease in trade payables. The net working capital
improved by Rs. 5,732 crores, indicating an efficient management of the
company's working capital.

 The table 3 shows changes in working. Current assets decreased by Rs.

3,934.20 crores, led by a decrease in current investments. Current liabilities also
decreased by Rs. 2,855.50 crores due to a decrease in trade payables.

 The table 4 shows changes in working capital. Current assets increased by Rs.
10,099.30 crores, led by an increase in current investments. Current liabilities
also increased by Rs. 4,811.90 crores due to an increase in trade payables and
other current liabilities. The net working capital improved by Rs. 5,287.40
crores, indicating an efficient management of the company's working capital.
  The table 5 shows changes in working capital. Current assets decreased by Rs.
1,745.50 crores, led by a decrease in current investments. The net working
capital deteriorated by Rs. 2,652.50 crores, indicating a need for the company to
improve its working capital management

SUGGESTIONS

▪ Develop a robust working capital management strategy to monitor and

manage the company's working capital effectively, taking into account
the trends observed in the Schedule of Changes in Working Capital.

▪ Conduct a detailed analysis of the company's cash flow cycle to

identify opportunities to optimize working capital, such as reducing
inventory levels or improving collections from customers.

▪ Evaluate the company's supplier management practices to identify

areas for improvement, such as negotiating better payment terms or
reducing reliance on a single supplier.
 CONCLUSION

In conclusion, the financial analysis of Maruti Suzuki India Limited provides

valuable insights into the company's financial performance over the past five
years. The analysis highlights the need for the company to improve its liquidity
position, profitability, and working capital management to ensure long-term
sustainability and growth. The suggestions provided in this study offer a starting
point for the company to address the areas of concern identified in the analysis.

Based on the given hypotheses:

In conclusion of hypothesis the (H0) null hypothesis is rejected as there is no
significant relationship between Maruti Suzuki's working capital management
and its financial performance, Whereas (H1) Alternative hypothesis is
Accepted as there’s a significant relationship between Maruti Suzuki's working
capital management and its financial performance.
 REFERENCES

 Books Referred

I. M. Pandey - Financial Management - Vikas Publishing

House Pvt. Ltd. - Ninth Edition 2006

 Websites References

 https://www.marutisuzuki.com/

 https://www.google.com/

 https://www.moneycontrol.com/financials/marutisuzukiindia/balance-
sheetVI/ms24