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SUMMER TRAINING REPORT ON MARUTI SUZUKI

ANALYSIS OF AUTOMOBILE MANUFACTURERS OF INDIA AND CHINA

Submitted in partial fulfillment of the requirements of Submitted to:

BY

Executive summary: It has been a very good learning experience for me. I got this golden opportunity to pursue my summer internship with MARUTI which is pride of India. Maruti has taken Indian automobile industry to a new height and thus helped India to gain name and fame all over the globe. Since its inception in 1981 there has been no looking back for the company. It is known as the peoples car company in India. Today almost 60% cars which run on Indian roads are manufactured by MARUTI. It has helped Indian economy to grow a lot by expanding its cars to all over the world. After the liberalization when MARUTI joined hands with SUZUKI motors it was just like two powers coming together to become a super power. MARUTI SUZUKI is today Indias largest car manufacturer covering almost a share of 54% in the automobile market. I would like to extend my vote of thanks to Mr. Satya Pal Singh has been there althrough my internship with me. I learnt many things to start of with the first is IRFS which is International Financial Reporting Standards which every multi national corporation has to implement from April 1st, 2010. Apart from this I also learnt the methodology to read and interpret the financial statements of companies what important entries are to be compared and what have to be left out. In my report, I have compared MARUTI and HYUNDAI which today are the biggest automobile manufacturers of India with FORD motors operating in China. I have compared them in terms of profitability, GDP, Fixed assets, profit after tax, total income and liquidity. During my course of internship I have learnt many things about finances and money control in any organization. Like treasury management, wealth management etc. Starting with investment into Fixed Assets MARUTI uses many Capital Budgeting Techniques like N.P.V and Payback period. Maruti is presently using many techniques and methods to centre its cost in this period of pricerise. Maruti at its excellence centre is using many techniques like value engineering and value analysis to reduce its cost. Localization of parts is
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around 80-90% in the new as well as existing cars which has helped Maruti to reduce its cost and increase profitability. Maruti at its excellence centre is doing effective R & D to all its existing as well as new models to reduce the costs. It has also trained its suppliers to provide them with better quality goods so as to reduce wastage and increase profits. Maruti has also build up a good and efficient dealer network all across INDIA to provide cars and efficient after sales services to its customers. Maruti today stands as a no. 1 car manufacturer in INDIA which provides cars not only in INDIA but also exports a large number all across the globe which has directly and indirectly helped Indian Economy to strengthen its position in World Economy. My findings were that MARUTI is the leader in the Indian market whereas Hyundai is biggest competitor of Maruti and is doing well. In all the basis of comparison Maruti is highest except one or two clauses here and there. Marutis growth rate is around 22% whereas Hyundai is just doing at the rate of 9%. Ford motors (China) despite of having high sales are incurring losses may be due to high taxes and high cost of raw material in China. We can clearly state there is no comparison with Maruti in India if any other company wants to overlap Maruti has to really tie their belts. Maruti is also launching some special schemes for the benefit of Indian citizens like associating itself with public awareness programmes like polio and AIDS and also opened some driver training schools.

ACKNOWLEDGEMENT: A formal statement of acknowledgement hardly need the ends of justice in manner of expression if my deeply felt sincere and allegiant gratitude to all those who encouraged me and helped me during my internship. I stand indebted to Mr. S.K. Bhatia (HRD manager) for allowing me the opportunity to pursue the summer internship with Maruti. The help, assistance and guidance that I received during the course of this project from Mr. Satyapal Singh (Sr. manager, Finance) corporate accounting and reporting department and Mr. Rajesh Gupta ( Department Manager) corporate accounting and reporting would be earnestly cherished in times to come. Throughout my internship, I tried to put in practice the theories and cases taught during the classroom studies. Hence, I would extend thanks to Faculty members who taught me during my PGP programme so far. Lastly, I would thank each and everyone who has directly or indirectly helped me to complete my project and apologize for any names omitted.

Overview of the INDIAN Automobile Industry 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 industry was overlooked by the then Government and the policies were also not favorable. The liberalization policy and various tax reliefs 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 destination for global auto players like Volvo, General Motors Ford. A well developed transportation system plays a key role in the development 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. Over the last few decades. the car market in India have been in a burgeoning stage with all types of cars flooding the market in order to meet the demands of Indian customers who are increasingly exposed to state-ofthe-world automobiles and want the best when it comes to purchasing a car. It is expected that by 2030, the Indian car market will be the 3rd largest car market across the globe. Small cars seem to be ruling the roost in the Indian automobile market with over 7.5 lakh small cars being sold in India in 2006-07. The main encouraging factors for the success story of the car market in India are the increase in the opportunity for new investments, the rise in the GDP rate, the growing per capita income, massive population, and high ownership capacity. The liberalization policies followed by the Indian government had been inviting foreign investors and manufacturers to participate in the car market in India. The recent trend within the new generation to get work in the software based sector has led to the rise in the income level and change in the lifestyle which has further led to the increase in the demand for different varieties of cars among them. Moreover, there are many financing companies providing easy car loans at reasonable interest rates and affordable installments. The car Market in India is crowded with all varieties of car models like the small cars, mid-size cars, luxury cars, super luxury cars, and sports utility
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vehicles. Initially the most popular car model dominating the Car Market in India was the Ambassador, which however today gave way to numerous new models like Maruti, Fiat, Hyundai, BMW, and many others. Moreover, there are many other models of cars in the pipeline, to be launched in the car market in India. Some of the leading brands dominating the car market in India at present are Hindustan Motors, Reva Electric Car Co., Fiat India Private Ltd., Daimler Chrysler India Private Ltd, Ford India Ltd., Honda Siel Cars India Ltd., General Motors India, Hyundai Motors India Ltd., Skoda Auto India Private Ltd., and Toyota Kirloskar Motor Ltd. Since the demand for foreign cars are increasing with time, big brands like Mercedes Benz, Aston Martin, Ferrari, and Rolls-Royce have long since made a foray into the Indian car market. Today Indian automotive industry is fully capable of producing various kinds of vehicles and can be divided into 03 broad categories : Cars, twowheelers and heavy vehicles. 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. A well developed transport network indicates a well developed economy. For rapid development a well-developed and well-knit transportation system is essential. As India's transport network is developing at a fast pace, Indian Automobile Industry is growing too. Also, the Automobile industry has strong backward and forward linkages and hence provides employment to a large section of the population. Thus the role of Automobile Industry cannot be overlooked in Indian Economy. All kinds of vehicles are produced by the Automobile Industry. India Automobile Industry includes the manufacture of trucks, buses, passenger cars, defense vehicles, twowheelers, etc. The industry can be broadly divided into theCar manufacturing , two-wheeler manufacturing and heavy vehicle manufacturing units. The Indian automobile industry crossed a landmark with total vehicle production of 10 million units. Car sales was 8,82,094 units against 8,20,179 units in 2004-05.
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The two-wheeler market grew by 13.6 per cent with 70,56,317 units against 62,09,765 units in 2004-05. Commercial vehicles segment grew at 10.1 per cent with 3,50,683 units against 3,18,430 units in 2004-05. Facts & Figures India, in auto sector, is turning to be a sourcing base for the global auto majors. The passenger car and the motorcycle segment is set to grow by 8-9 per cent in coming couple of years, says the ICRA report. The industry is likely to maintain the growth momentum picked up in 2002-03. The ICRA's analysis points on the auto sector that the passenger car market in the country was inching towards cars with higher displacements. The sports-utility-vehicle (SUV) that was getting crowded everyday, would witness intense competition as many SUVs had been competitively priced, the report said. Honda, Suzuki, General Motors and Hyundai, the global automakers had already launched their premium SUVs in the market to broaden their portfolio and create product excitement in the segment estimated at about 10,000 units annually.

W orld Vehicle Production Trends (in '000s)

70000

60000

50000

40000

30000

20000

10000

0 1997 1998 1999 2000 Year North Am erica South Am erica European Union Other Europe Japan Asia-other than Japan 2001 2002 2003 2004

The reason behind the immense growth of the India Car Industry can be attributed to the availability of car loans, affordable rates of interest, smooth repayment facilities and the deductions offered to the customers by the retailers. The constant changes in the existing car models with regard to design, innovation, technology, and colors, have led to a fiercely competitive market. Now that technology and innovation are not alien concepts for Indian car makers, Indian cars are becoming increasingly sleek, stylish, and luxurious. Major players in the Indian Car Industry: Fierce competition among the major car players can be witnessed in the Indian Car industry. The India car industry is being dominated by the following major players:

Car Manufacturers In India


Hindustan Motors Maruti Udyog Reva Electric Car Co Fiat India Private Ltd Ford India Ltd General Motors India Honda Siel Cars India Ltd Hyundai Motors India Ltd Toyota Kirloskar Motor Ltd Skoda Auto India Private Ltd AUDI AG BMW CHEVROLET NISSAN MOTOR CO. LTD PORSCHE ROLLS-ROYCE MOTOR TATA MOTORS

The latest developments in the car market in India: In Nashik, a car manufacture plant has been established as a result of a joint venture of Renault and Mahindra & Mahindra to manufacture a comparatively cheap cars (at US$ 9,700), mainly targeting the Indian middle classes, the youth, and the affluent classes in rural India. Tata Motors has plans to launch a luxury car with an engine of 33 horsepower. The recent reduction in the excise duty of the small cars from 24% to 16% will definitely prove to be a boon for the India car industry.

Technical advancements in the Indian Car Industry: The latest technical advancements in the car market in India include the following features

Power Steering Radial Tires Anti-lock Breaking Systems Tip-tronic Transmission

The varied car markets in India: The market for small cars now occupies a substantial share of 70% out of the annual production of 1 million cars in India. Maruti Udyog, with its
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legendary Maruti -800 is the leader in the small car market. A number of manufacturing plants are coming up for advancements in the field of small cars. The recent launches in the small car market in India are:

Getz Prime by Hyundai Motor Co. Tata Magic by Tata Motors Tata Magic Palio Stile byFiat India Pvt. Ltd

Mid-sized cars are normally cars ranging from Rs. 3-8 lakh and generally meant to be 4 seaters. The mid-sized car section has recently moved beyond the 1 lakh target. The recent launches in the mid-size car market in India are:

1.4 SXI Duratorq by Ford Motor Co. Indigo XL by Tata Motors

Luxury cars and premium cars are quite expensive and they are purchased for their design, innovation, and technology. They are usually priced over Rs. 20 lakh and have many takers in India. The recent launches in the premium car market in India and the luxury car market in India are:

Sonata Embera H-Matic by Hyundai Motor Co. Nissan Teana by Nissan Motor Co. Ltd

Sports Utility Vehicles (SUVs) have also become very popular in India as they are considered advantageous due to their ability to accommodate more passengers. They are ideal for trips with the whole family. The Sport Utility Vehicle market in India is the most booming market in India presently and SUVs have become the fastest selling cars of India. The Indian Automobile Market is expected to grow at a CAGR of 9.5 percent amounting to Rs. 13,008 million by 2010. The Commercial Vehicle Segment has been contributing to the automobile market to a great extent. Many foreign companies have been investing in the Indian Automobile Market in various ways such as technology transfers, joint ventures, strategic alliances, exports, and financial collaborations. The auto market in India can boast of attractive finance schemes, increasing purchasing power, and launch of the latest products. Total sales of major car manufacturers in India registered a figure of 0.674 million units at the end of March, 2007. The number of car exports in India
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was 39,295 units. General Motors, Maruti, and Honda accounted for 60 percent of the market sales at the end of April, 2007. There has been an increase in the purchase of motorcycles and cars both, in the rural as well as urban areas. Some vital statistics regarding the automobile market in India has been mentioned below:

Two wheelers - 2nd largest in the world Commercial Vehicle - 4th largest in the world Passenger car- 11th largest in the world

As such, the Indian automobile market comprises of a wide variety of vehicles such as light, medium, and heavy commercial vehicles, cars, scooters, mopeds, motor cycles, 3 wheelers, and multi-utility vehicles such as jeeps and trax. The modern automobile market in India has been considering key issues in the process of growth: Customer care, and not just 'service' Domestic as well as multinational investments Searing through cut-throat competition Road safety Anti-pollution norms Coordination with the government to enable advancement Used vehicle trade

The future of Indian Automobile market is bright as it looks forward to manufacturing and implementing new innovations such as electric cars as provided by Reva, alternate fuels like CNG and LPG, and probably customized Internet automobile orders. Key Challenges facing the industry Increasingly Stringent Emission & Safety Regulations Technological capability Cost Increase in input prices
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Ferrous & Non-Ferrous Metals Crude oil & derivatives Natural rubber Rising Customer Expectations Product features Quality & reliability Integration with Global Markets Lowering product life cycles Reducing time-to-market for new products Threat of new competition Different Segments of the industry Passenger Car Sales- Domestic & Exports

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Maruti Tata Hyundai Toyota Honda others

45% 17% 22% 4% 4% 8%

Tata Motors, Maruti Udyog Limited, Hyundai, Honda, Fiat, Ford, Toyota, Mahindra & Mahindra, etc are the leaders in Indian passenger car segment delivering compact and luxurious cars. Some of the domestic as well as the global players are in the process of delivering more compact cars in Indian markets. During financial year 2005-06, sales of passenger cars in Indian market showed a growth of 7.55% with an increase of 5.93% in exports by Indian passenger car manufacturers.

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India is the fourth-largest car market in Asia. During financial year 200506, Indian passenger car segment grew at 19% with the sale of 1.3 million passenger vehicles. Passenger cars come in great variety, starting from 2-seater electric car REVA to 5-seater compact cars like Zen, Santro, Indica, etc. They come in all ranges- economical and luxurious. Tata Motors, Maruti Udyog Limited, Mahindra & Mahindra, etc are the leading Indian manufacturers in passenger cars segment, whereas many foreign players such as Hyundai, Honda, Fiat, Ford, Toyota, etc are also serving the segment. Production of passenger cars in Indian automobile industry witnessed an overall growth of more than 8%. The major players are in the process of expanding their capacity. Some companies are also in the process of launching new compact cars in Indian market. During financial year 2005-06, passenger vehicle sales showed a growth of 7.55% over the preceding year. Passenger vehicle exports increased by 5.93% in the same period.

Category Passenger Car Multi Utility Vehicles Commercial Vehicles Two Wheelers Three Wheelers Percentage Growth

1998-99 25468 2654 10108 100002 21138 -16.6

2004-05 (Apr-Dec) 121478 3892 19931 256765 51535 32.8

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Passenger Vehicle Production & Market Sub-Segments (Nos.)

1,400,000

1,200,000

67,371 181,778

1,000,000

60,673 146,325

800,000 51,441 600,000 0 127,519 63,751 105,667 960,505 400,000 513,415 200,000 500,301 557,410 782,562 114,479

0 2000-01 2001-02 2002-03 Year 2003-04 2004-05

Passenger Cars

Utility Vehicles

Multi-Purpose Vehicles

Foreign auto makers, including Ford Motor Co. , General Motors Corp., Honda Motor Co. Ltd., Toyota Motor Corp., DaimlerChrysler AG and Hyundai Motor Co. Ltd., are looking to increase their presence in India and use it as an export hub. Exports of auto components, whose manufacturing costs are 30-40 per cent lower than in the West, have grown at 25% a year between 2000 to 2005. Key Market Drivers Increasing disposable incomes Rising aspirational levels Low interest rates. Wide variety and easy availability of Financing options. High sensitivity to Fuel prices Lack of urban & rural public transportation infrastructure Service Sector
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Flourishing

Facts & Figures The Indian automotive export industry presently is finding a good recognition globally. The auto industry along with the component industry is contributing to the export effort of the country. In 2002-03, the export of the automobile industry had registered a growth rate of 65.35%. In 2003-04, it was 55.98%. The following table briefs about the 2003-04 and 2004-05 (upto April-Dec. 2004) automobile export in numbers.

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Snapshot of Maruti Suzuki:

Maruti was born as a government company, with Suzuki as a minor partner, to make a people's car for middle class India. Over the years, their product range has widened, ownership has changed hands and the customer has evolved. What remains unchanged, then and now, is their mission to motorise India. Marutis 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. The same characteristics make their cars extremely relevant to Indian customers and Indian conditions. Product quality, safety and cost consciousness are embedded into their manufacturing process, which it has inherited from their parent company. Right from inception, Maruti brought to India, a very simple yet powerful Japanese philosophy 'smaller, fewer lighter, shorter and neater' From the Japanese work culture Maruti imbibed simple practices like an open office, a common uniform and common canteen for everyone from the Managing Director to the workman, daily morning exercise, and quality circle teams. From the Japanese work culture Maruti imbibed simple practices like an open office, a common uniform and common canteen for everyone from the CEO to the workman, daily morning exercise, and quality circle teams.

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Overview: Incorporated February 1981 Joint Venture Agreement Equity Structure Sales (No of Cars) Financial year 2007-08 October 1982 54.2% Suzuki, Japan, balance with Other Financial Institution and Public 764, 842 including 53,024 exports. INR 178603 $ 4.512 Billion * INR 17308 Million 7090 of Financial year 2007-08 Gurgaon: 3 Manesar: 1 Head Office Regional offices: 16 vehicle vehicle in New assembly assembly Delhi, plants plant India Million , Yen 449 Billion ,

Sales (Net of Excise) Financial year 2007-08

Profit After Tax Financial year 2007-08 Employee Strength Facilities

Suzuki Powertrain India Limited (SPIL), Joint Venture between Suzuki Motor Corporation 70% Equity the rest is with Maruti Suzuki India Limited. Global hub for Diesel engines and transmissions for Suzuki worldwide. 15 Joint Venture companies, including Suzuki Powertrain India Limited for component supply.

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Diesel Powertrain Plant Joint Venture Subsidiary Companies Product Portfolio

True Value: for sale and purchase of preowned cars Maruti Insurance: for insurance of Maruti vehicles (four companies) Maruti Finance: for financing Maruti vehicles 11 models with around 100 variants including:

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Proposed Investments till 2010

Maruti 800 Omni

Alto WagonR

Swift Zen

Gypsy DZire

INR 9000 Crores i.e. INR 90 Billion, Yen 257 Billion ( 1Yen = 0.35 Rs), $ 2.25 Billion (1 $ = Rs 40) *

Versa

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Maruti believes their core values drive Maruti in every endeavour

More than half the number of cars sold in India wear a Maruti Suzuki badge. Maruti is a subsidiary of Suzuki Motor Corporation Japan. As India's largest passenger car company, it accounts for over 50 per cent of the domestic car market. Maruti have a sales network of 600 outlets in 393 towns and cities, and provide maintenance support to customers at 2628 workshops in over 1200 towns and cities (as on March 31,2008).Since inception, it has produced and sold over 7.5 million vehicles, including almost 500,000 units in Europe and other export markets. Maruti has been rated first in customer satisfaction for eight years in a row in J D Power's Surveys, and are India's Most Respected Automobile Company (As per survey conducted by Businessworld, a reputed Indian Magazine) Also, in an independent survey conducted by Forbes.Com where they rated top 200 reputed companies on various parameters such as reputation within
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the customer and employee fraternity, it stood 91st. In the automobile section it finsihed 7th. Reaching out to Customers:

Their customers have rated them first in J D Power's Customer Satisfaction Survey for eight consecutive years. When Maruti achieved it first time in 2000, people were skeptical. They could not fathom how could a market leader like Maruti manage to keep happy such a vast and diverse group of customers. The answer perhaps lies in their approach towards customer satisfaction.

Being first in a Customer Satisfaction rating was not just simply about winning an award. Rather, it became their weapon to fight and win in this competitive market place. From the very beginning, the growth of Maruti has influenced the growth of the country as a whole. Maruti's growth has been synonymous with the Indian auto industry. The inception of Maruti in 1981 saw the growth of many automotive ancillary manufacturers. The company set up a network of component vendors, dealers and service stations and facilitated around 60 technical collaborations for Indian vendors from Japanese, European and even American partners to upgrade technology and quality levels. Along with this came the task of instituting quality processes and systems across this network. Today, the suppliers to Maruti are huge corporations themselves and are today in the global business arena.

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Working with Suppliers:

Participation has been the key to their success. Through a participative and collaborative approach called Value Analysis & Value Engineering, it has been successful in bringing cost reduction across all their models. The localization levels are as high as 85 per cent.

Their supplier partners have been major contributors to their turnaround. Less than 20 per cent of a car is manufactured in-house. The rest is accounted for by their 215 suppliers and hundreds of second and third tier of vendors who, in turn, supply to them.

The underlying basis of their relationship has been that rather than focus on "price reduction" of the component, they have to work together to bring down the "cost" of the component.

One of the ways to reduce their cost has been to replicate the Maruti Production System on the shop floor of supplier companies. These techniques have been transplanted through the Maruti Centre for Excellence. The suppliers, too, have been able to reduce wastage and make their operations lean and efficient.

Rather than appropriate the entire gains, they have a system whereby suppliers keep a part of the productivity and cost gains and pass on the rest in the form of a price reduction.

The other route to cost reduction has been Value Analysis & Value Engineering, another collaborative effort between their suppliers and Maruti.

Thanks to their efforts to improve efficiencies and reduce cost, both in-house and at their suppliers, they have been able to reduce car prices for customers over the past 5-6 years

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Marutis Gurgaon facility

Their facility in Guragoan houses three fully integrated plants. While the three plants have a total installed capacity of 350,000 cars per year, several productivity improvements or shop floor Kaizens over the years have enabled the company to manufacture nearly 650,000 cars per year at the Gurgaon facilities. The entire facility is equipped with more than 150 robots, out of which 71 have been developed in-house. More than 50 per cent of their shop floor employees have been trained in Japan. Marutis Manesar facility

Their Manesar facility has been made to suit Suzuki Motor Corporation (SMC) and Maruti Suzuki India Limited's (MSIL) global ambitions. Rated high among Suzuki's best plants worldwide the plant was inaugurated in February 2007. The plant has several in-built systems and mechanisms to ensure that cars being manufactured here are of good quality. There is a high degree of automation and robotic control in the press shop, weld shop and paint shop to carry on manufacturing work with acute precision and high quality. In particular, areas where manual operations are hazardous or unsafe have been equipped with robots. The plant is designed to be flexible: diverse car models can be made here conveniently owing to automatic tool changers, centralized weld control system and numerical control machines that ensure high quality. The open lay-out and ergonomic design make work convenient and improve productivity. The plant at Manesar is the company's fourth car assembly plant and has started with an initial capacity of 100,000 cars per year. This will be scaled up to 300,000 cars per year. A total investment of Rs 2,500 crore will be made in this car plant by 2010

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Marutis Diesel engine plant

Suzuki Powertrain India Limited the diesel engine plant at Manesar is Suzuki & Maruti's first and perhaps the only plant designed to produce world class diesel engine and transmissions for cars. The plant is under a joint venture company, called Suzuki Powertrain India Limited (SPIL) in which SMC holds 70 per cent equity with the rest held by MSIL. This facility has an initial capacity to manufacture 100,000 diesel engines a year. This will be scaled up to 300,000 engines per year by 2010. The diesel engines manufactured at this plant will also be exported to SMC companies across the world. This facility, too, has a high level of automation. Final inspection of components is done through automatic measuring and marking machines, which leads to a uniform and error free production.

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Maruti Exports

Maruti Suzuki exports entry level models across the globe to over 100 countries and the focus has been to identify new opportunity markets. Latin America and Africa constitute new emerging markets where Maruti exports have increased at least by 60% in the last year. New technology: The company is working towards localization, development and testing of products - both new and existing. This would help in indegenisation of various vehicle aggregates at lower costs. The launch of Zen Estilo, launched with a localization of 94.2% is a case in point.

Capabilities strengthened in component and vehicle evaluation, benchmarking and design optimization will further improve and upgrade existing models for comfort, style and value for money.

Alternative fuels like CNG, LPG, which could help make environmentally friendly vehicles are being worked upon. Global Sourcing and advanced sourcing get advanced technologies into India at lower costs
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Marutis Facilities.

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Board of Directors: Maruti Suzuki Limited is a Board-managed company. Currently the directors on the Board are: Mr. R. C. Bhargava, Chairman Mr. Shinzo Nakanishi, Managing Director & Chief Executive Officer Mr. Keiichi Asai, Director (R&D). Mr. Hirofumi Nagao, Joint Managing Director Mr. Tsuneo Ohashi, Director (Production) Mr. Shuji Oishi, Director (Marketing & Sales) Mr. Osamu Suzuki, Director Mr. D. S. Brar, Director Mr. Amal Ganguli, Director Ms. Pallavi Shroff, Director Mr. Manvinder Singh Banga, Director

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Analysis Of Marutis Financial Statements Capital of Maruti: Financial Years 2005 2006 2007 Analysis: So by looking at this we can conclude that the companys Capital has remained same over the years. Which shows the company is working well & its earning enough profit to manage its operations & feel no need to borrow money or raise fresh capital. By doing this the company can also save on the costs involved in raising fresh capital. Likewise cost of debt, cost of Equity and other likely costs can be saved. Thus the money saved can be added to reserves and surplus and can be allocated to some better project.

Amount 1445 1445 1445

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Reserves & Surplus: Financial Years 2005 2006 2007 Amount 43788 54526 68539

Analysis: We can state that the reserves of the company are growing at a rate of around 25%. The rate of growth is very good the basic reason for the growth in the amount of reserves is that the sales are growing at a good speed for the company. With this we can also conclude that the company is making more & more profits. Thus the treasury and wealth management of the company has a role to play now as it has a good amount of wealth with itself and has to now evaluate different projects and choose those which are beneficial for the company.

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Fixed Assets: Financia l Years 2005 2006 2007 Amoun t 50531 49546 61468

Analysis: We can see that the fixed assets decreased in the year 2005-06 the reason may be that some old models like Zen was stopped & new models were launched so the company might have to sell off the old plant & machinery & purchased new one in the following year so the fixed assets have increased. The fixed assets of Maruti mainly includes the assembly lines and paint shops so if there is any increase in the amount of fixed assets it must be due to addition to either of the two. Maruti uses different Capital Budgeting Techniques like NPV and Payback Period to evaluate different projects before investing in Fixed Assets.

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Current Assets: Financial Years 2005 2006 2007 Amount 29720 37409 38459

Analysis: The current assets of the company are growing which shows that the company is investing more in inventories and other current assets. So that it can meet the growing demands of the industry. The company is prepared for any short-term increase in demand which arises in near future by keeping high inventory level. The company follows Just In Time inventory system and along with this it also follows Economic Order Quantity model for inventory management. Maruti also uses KANBAN system in its assembly lines.

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Current Liabilities: Financial Years 2005 2006 2007 Amount 12188 20110 15058

Analysis: The current liabilities of the company increased in 2005-06 but there was a significant decrease in 2006-07. This is because Maruti has built a participative and collaborative approach called Value analysis and Value Engineering with their partners and suppliers it has been successful in bringing down levels of Current liabilities as there is fixed period of time after which it makes payment to its creditors. The localization levels are as high as 85 per cent. Their supplier partners have been major contributors to their turnaround. Less than 20 per cent of a car is manufactured in-house. The rest is accounted for by their 215 suppliers and hundreds of second and third tier of vendors who, in turn, supply to them.

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Gross Sales: Financial Years 2005 2006 2007 Amount 132914 147043 171442

Analysis Gross sales of the company have grown by 13% in 2005-06 and have grown by 24% in 2006-07 which shows a drastic growth. Due to growth in sales the company has grown all over. This growth is due to launch of new models in 2005 and opening up of new plant at manesar. Now customers have a lot more variety to opt from as their own trusted brand Maruti is providing them with more luxurious cars at an economical price.The diesel engine plant at manesar has also helped Maruti to increase its sales. The sales of the company are the highest by any automobile company operating in India. Some other factors which have helped Maruti increase its sales are high aspiration levels, Increasing disposable income, easy availability of financing options

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EBITDA: Financial Years 2005 2006 2007 Amount 18140 25888 20558

Analysis The earnings of the company have grown by 4% in the year 2005-06 due to the launch of SWIFT which was a huge hit amongst the consumers. But have dipped down in 2006-07 due to the rises in prices of almost all the factors of inputs but company has not raised the the prices of cars accordingly. Still the earnings stand at 20,558 million Rs which is not bad. The reason behind decrease in earnings can be that the consumers today are switching over to high class and luxury cars. Another reason could be that maruti is investing more in its subsidiary schemes like True Value, Maruti Insurance , Maruti Finance etc.

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Net cash from Operating Activities: Financial Years 2005 2006 2007 Amount 10747 12226 20280

Analysis Cash, the most liquid asset, is of vital importance to the daily operations of any business firm. Net cash from operating activities has grown 20% in 2005-06 and 65% in 2006-07 which shows immense growth. Cash from operating activities is the sole component which helps in running of the company. To achieve a growth of 65% in it is a very difficult task which MARUTI has achieved. MARUTI is using Adjusted Net Income Method to estimate its future cash flows. As the company is growing it may need higher amount of cash balance with itself so with a high amount of cash available it can increase its optimal level of cash balance with ease.

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Profit margin ratio = Profit after tax /sales For Maruti Financial Years = P.A.T/ SALES =P.M.R 2005 = 34421/132914 = 25.89% 2006 = 43939/147043 = 29.88% 2007 = 59471/171442 = 34.68% A high gross profit margin relative to its competitors means that the firm is able to produce at a relatively lower cost. Analysis Maruti Suzuki has undertaken several measures like use of energy efficient lamps, use of solar energy for heating water in security barracks, use of natural lighting, etc. These initiatives and other efforts have reduced electricity consumption per car by 2.5%, water by 4% and gas by 2.2% for the Maruti. This has reduced production cost. Target costing and value engineering/value analysis during the time of designing and production have reduced production cost. Localization of parts has led to reduced inventory levels. This leads to reduced transportation and storage cost. E.g. Zen Estilo is having localization of 94.2%. Maruti Centre for Excellence imparts training to supplier and helps them upgrade productivity and operational efficiencies leading to lower material cost.

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Asset Turnover Ratio = Sales/Average total assets For Maruti Financial years = Sales/Avg. total Assets = A.T.R 2005 = 132914/50531 = 2.63 times 2006 = 147043/49546 = 2.96 times 2007 = 171442/61468 = 2.78 times The Inventory Turnover ratio tells us how many times a company has gone through, or turned over, its inventory during a specified time period, usually a year. It gives us an indication of how fast a company can sell its products. Higher the ratio, greater, greater the efficiency of inventory management

Analysis Asset turnover ratio for Maruti is over 2.5 times which shows that the company is utilizing its assets very efficiently and effectively. It is very important for any organization to grow that it utilizes its assets well. The reason behind this ratio being high for Maruti is that the sales are very high and with use of JIT inventory system for Maruti a lot of time is saved on the assembly line and products are manufactured quickly. Maruti on an average produces a car every 32 seconds this has also helped Maruti increase it assets turn over ratio.

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Comparison of Maruti,Hyundai &Ford Motors (China) In terms of Fixed Assets Fixed Assets(in Million) Hyundai 31339 31840 38906 Financial Years 2005 2006 2007

Analysis Fixed assets of Hyundai is almost same in the year 2005 and 2006. But the growth in 2007 is around 20% which is good. This shows that the company is growing which can be a threat to MARUTI as HYUNDAI is the biggest competitor of MARUTI in the INDIAN CAR MARKET.

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Maruti Fixed Assets(in Millions) 50,531 49,546 61,468

Financial

Year 2005 2006 2007

Analysis Fixed assets of MARUTI have slightly dipped in 2006 but have grown by around 22% in 2007 which is more growth than HYUNDAI. The reason may be launch of new models for which the company has to set up new resources. This shows that both MARUTI and HYUNDAI have grown in the year 2006 so it was a good year for the automobile manufacturers but growth in MARUTI is higher than growth in HYUNDAI. Although Maruti is very careful in investing into fixed assets as before investing it evaluates different projects using Capital Budgeting Techniques. Setting up of new plant at Manesar has also played a part in rising Fixed Assets for the company.

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Ford Motors (China) Fixed Assets(in Million) 61945 60658 62500

Year 2005 2006 2007

Analysis Fixed assets of FORD motors is almost same in all the years. It can be concluded that the growth in FORD motors china is very slow. The reason behind this could be that the Automobile Industry is not growing at a pace at which the INDIAN automobile industry is growing.

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COMPARISION (year 2005) Fixed Assets(in Million) 50,531 31,339 61,945

Automobile Co. Maruti Hyundai Ford China

Analysis In the year 2005 we can see that the Fixed Assets of MARUTI are almost 1.75 times of HYUNDAI. The reason is that MARUTI is offering more variety in terms of its product to its customers for which it requires more bigger plant space and more assembly lines to manufacture its cars. So in order to cater to diverse needs of customers it has to maintain a high level of Fixed Assets. As fixed assets are the lifeline of any manufacturing organization it is very important for Maruti to maintain a good level of fixed assets.

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COMPARISION (year 2006) Fixed Assets(in Million) 49,546 31,840 60,658 Automobile (Co.) Maruti Hyundai Ford China

Analysis In this year we can see that Fixed Assets of all the three firms have dipped a little. The reason is that Maruti has disposed of some of its machinery used at assembly lines and weld shops in order to make the process faster and better to implement Six sigma and JIT systems it has thought to use robots at assembly Lines.

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COMPARISION (year 2007) Fixed Assets(in Million) 61,468 38,906 62,500

Automobile (Co.) Maruti Hyundai Ford China

Analysis In the year 2007 we can see that the INDIAN market has grown. Due to this there is rise in the level of Fixed Assets. The growth in both INDIAN companies is good but growth in FORD motors operating in China is stable. In this year also MARUTI is almost 1.75 times bigger than HYUNDAI. The increase in the levels of fixed assets in this year is the setting up of new plant at Manesar where Maruti has to invest a lot in setting up of new paint shops, weld shops and assembly lines to manufacture world class cars.

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Analysis Based On Total Income Of All The 3 Firms Maruti Total Income(in Million) 113538 124814 152523 Years 2005 2006 2007

Analysis Marutis total income is quite good. In the year 2006 it has grown at around 9% which is the same rate at which the industry is growing in INDIA & in the year 2007 the growth is around 24% which is very good. It is a very good sign for the company that it is growing at a faster rate than the industry. It stands at almost double of Hyundais Total Income which is MARUTIs largest competitor. So we can conclude that at the present time it has a very little threat to Maruti. Maruti today is the largest car seller in the Indian Market today its share is 54% which means more than half of the cars that run in India today are manufactured by Maruti.

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Hyundai Total Income(in Million) 58,830 63648 69601

Years 2005 2006 2007

Analysis Hyundais Total Income is growing at a pace which industry is growing i.e 9%. But if Hyundai wants to grow more it has to put in more efforts in order to please its customers with its product range so that the company earns more profit. It has to pull up his socks think to increase customers by providing some more services which Maruti is providing and build trust and loyalty which Maruti has built over the years.

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Ford Motors (China) Total Income(in Million) 176835 160065 172455

Years 2005 2006 2007

Analysis Fords Total Income stands at a very high position as compared to both the Indian companies. But we can see a huge decline in the year 2006 and a slight increase in 2007. This shows that the conditions prevailing in China are not as favourable as conditions prevailing in the Indian Car Market.

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COMPARISION (year 2005) Total Income(in Million) 113538 58830 176835

Automobile Co. Maruti Hyundai Ford China

Analysis In the year 2005 Marutis Income stand at almost double that of Hyundais income but it is lower than Fords Income .So in the Indian Market there is still a minimum level of threat to Marurti as its major competitor today stands at half of its position. Maruti has a share of 54% in the Indian Car Market which shows that Maruti is the leader of the market so enjoying the position which Maruti has built it has a vey high income.

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COMPARISION (year 2006) Total Income(in Million) 124814 63648 160065

Automobile Co. Maruti Hyundai Ford China

Analysis In the year 2006 also Marutis income is double that of Hyundai . But the income of Ford has declined from previous year. So we can say that Hyundai has to put in some serious efforts to give a tough competition to Maruti & Maruti is enjoying the brand image & loyalty which it has build over the years in the Indian car Market. Maruti has built a very strong and efficient dealer network all across India it has a sales network of 600 outlets in 393 towns and cities, and provide maintenance support to customers at 2628 workshops in over 1200 towns and cities which in turn has helped Maruti increase its income.

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COMPARISION (year 2007) Total Income(in Million) 152523 69601 172455

Automobile Co. Maruti Hyundai Ford China

Analysis In the year 2007 we can see that Maruti has grown by 24 %but Hyundai has grown only by 8-89%. The growth at which the industry is growing in India. We can conclude that the Hyundai is growing with the sector but Maruti is growing more than the sector is growing in India. Also Maruti has exported almost 500,000 units in Europe and other export markets which has also played a very important part in increasing income of Maruti.

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Analysis Based On Profit After Tax Of All The 3 Firms Maruti Profit After Tax((in Million) Year 34421 2005 43939 2006 59471 2007

Analysis The profit after tax is 17 times higher than of Hyundai and also the growth in profit after tax is also more than the growth of Hyundai. This shows that Maruti is the leader in the Indian Car Market because it is earning more profit than any other automobile manufacturer operating in India. So the brand and trust Maruti has build among Indian still strong and favoring Maruti. Maruti has also used many techniques at its excellence centre like Value based Engineering and Value Analysis which has helped Maruti reduce its Cost and increase profits.

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Hyundai Profit After Tax(in Million) Year 2445 2005 12592 2006 16004 2007

Analysis Hyundai has shown a tremendous growth in the year 2006 and the growth in the year 2007 is also good. This shows that being not a very old company the Hyundai motor corporation is doing good in the Indian market. The profit after tax is not as high as Maruti but is satisfactory. May be the growing economy of India has helped Hyundai to grow at a good pace.

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Ford Motors (China) Profit After Tax((in Million) 1909 -12419 -2452

Years 2005 2006 2007

Analysis Though the sales of Ford are higher than that of both the Indian organizations the profits are very lo. The reason behind this could be that the the expenses incurred and taxes paid are very higher. We can conclude that the conditions prevailing in China do not favor the organizations operating there.

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COMPARISION (year 2005) Profit After Tax((in Million) 34421 2445 1909

Automobile Co. Maruti Hyundai Ford China

Analysis In the year 2005 Profit after tax for Maruti is the highest. It is 17 times more than that of Hyundai. This shows that the profitability of Hyundai is less though is income is half that of Maruti its profit after tax is very less as compared to Maruti. Maruti is earning huge profit as compared to Ford also whereas income of Ford was much higher. Fords profit is even lesser than Hyundai.Maruti has taken special schemes at its excellence centre to train its suppliers to provide them with better quality goods to reduce wastage it has helped Maruti increase its profits.
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COMPARISION (year 2006) Profit After Tax((in Million) 43939 12592 -12419

Automobile Co. Maruti Hyundai Ford China

Analysis In the year 2006 the rate of growth of Hyundai is more than the rate of growth of Maruti. This shows that Hyundai has started doing well in the Indian Market but still it has to do a lot to reach to Marutis position whereas the profit of Ford has become negative. The reason behind this could be high expenses and taxes. Maruti is using methods like Value Analysis and value Engineering which has also helped Maruti to reduce its cost and increase profits.

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Automobile co. Maruti Hyundai Ford China

Analysis In the year 2007 all 3 companies have shown growth in their profits but the growth in Maruti is maximum out of the 3. Maruti is still enjoying its position at the top. Maruti is using localization and intensive R & D for its existing as well as new products which has also helped Maruti reduce cost and increase profits.

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Analysis Based On Cash Balance at the end of the year Of All The 3 Firms Maruti Cash Million) 10294 14016 14228 Balance(in Years 2005 2006 2007

Analysis Maruti is holding a good amount of cash with itself in order to meet future uncertainties. This shows that the company is ready to meet future challenges and is very strong in terms of liquidity. As cash is the lifeline of any business it is very important for Maruti to hold a good amount of cash as all the funding into new projects is done through reserves. This high cash balance of Maruti Suzuki proves that the company is in a quite strong position to meet its current obligations with large amount of cash balances.

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Ford Motors (China) Cash Balance(in Million) 5585 505 6387

Years 2005 2006 2007

Analysis Ford is also keeping low amount of cash with itself as their profit is also low. They are also not strong in terms of liquidity.

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COMPARISION (year 2005) Cash Balance(in Million) 10294 12098 5585

Automobile Co. Maruti Hyundai Ford China

Analysis In the year 2005 the cash balance of Hyundai is the highest out of the 3 companies which is a cause of worry for Maruti. The reason behind this could be that it is a new company and capital may be high. The reason is that maruti has engaged itself with many other schemes like True Value and other schemes and today it is spending a lot of money on Advertising through all the media sources. Some examples are Maruti Suzuki traffic update, top 20 songs of the week etc.

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COMPARISION (year 2006) Cash Balance(in Million) 14016 -6678 505

Automobile Co. Maruti Hyundai Ford China

Analysis In this year cash balance of Maruti is the highest whereas cash balance of Hyundai have gone negative. So there must have been some problem in Hyundai as from top it has come to the bottom. Maruti Suzuki has the highest cash balance among its competitors for the year2006, as most of its funding is done through cash reserves it is justified in maintaining high cash balance.

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COMPARISION (year 2007) Cash Balance(in Million) 14228 6636 6387

Automobile Co. Maruti Hyundai Ford China

Analysis In this year also the cash balance of Maruti is highest whereas Hyundai has done well to recover itself from negative cash balance and cash balance of Hyundai is also good. This high cash balance of Maruti Suzuki proves that the company is in a quite strong position to meet its current obligations with large amount of cash and bank balances.

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Analysis Based On Profitability Of All The 3 Firms Ratio Analysis: Ratios are well-known and most widely used tools of financial analysis. A ratio gives mathematical relationship between one variable and another. The ratios are used by different people for various purposes. Ratio Analysis compares significant numbers from financial statements. Rather than focusing on specific volumes, ratios are indicators of the broad state of the business. Though computation of ratios involves only a simple arithmetic operation, its interpretation is a difficult exercise. The analysis of a ratio can disclose relationship as well as basis of comparison that reveal conditions and trends that cannot be detected by going through the individual components of the ratio. The usefulness of ratios ultimately depends on their intelligent and skillful interpretation. The ratio analysis is one of the most important tools for financial analysis. It is used as a device to analyze and interpret the financial health of the enterprise. It is with the help of ratio that the financial statement can be analyzed more clearly and decisions made from such analysis. PROFITABILITY RATIOS: These ratios measure the efficiency of the firm`s activities and its ability to generate profits. These ratios show or measure the profitability of the firm in both short term and long term. Besides management of the company, creditors and owners are also interested in the profitability of the firm. Creditors want to get interest and repayment of principal regularly whereas owners want to get required rate of return on their investments. Hence these ratios are often used. Profit margin ratio = Profit after tax /sales The gross profit margin reflects the efficiency with which a company produces each unit of product. This ratio indicates the average spread between the cost of goods sold and the sales revenue. A high gross profit margin relative to its competitors means that the firm is able to produce at a relatively lower cost.

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For Maruti Financial Year = P.A.T/ Sales = P.M.R 2005 = 34421/132914 = 25.89% 2006 = 43939/147043 = 29.88% 2007 = 59471/171442 = 34.68%

For Hyundai 2005 = 12322/58830 = 20.94 % 2006 =12568/63648 = 19.74% 2007 = 13347/69601 = 19.17%

For Ford Motors (china) 2005 = 1909/176835 = 0.01% 2006 = (12419)/160065 = -0.07% 2007 = (2452)/172455 = -0.01 %

Analysis The Profit Margin Ratio of Maruti has increased over the years and it is the highest among the 3 companies. The reason behind this is that Maruti has taken many cost control measures like localization of parts and followed methods like value engineering and value analysis. It has also trained its employees to work efficiently and effectively so as to reduce wastage and damage. It has also implemented Six Sigma Standards all these measures have helped Maruti to earn more profits. Maruti at its excellence centre has also trained its suppliers to provide them with better quality parts and also used intensive R & D techniques which has helped Maruti a lot to reduce costs and increase profits.
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The profitability of Maruti is higher which shows it has been able to control its cost and increase profits.

Asset Turnover Ratio = Sales/Average total assets The firms ability to generate sales from a given amount of assets is called assets turnover ratio. It highlights the amount of assets that the firm used to generate its total sales. A firm should manage its assets efficiently to maximize sales. The higher the assets turnover ratio the better it is for the company. Idle or improperly used assets increase the firm`s need for costly financing and the expenses for maintenance and upkeep. By achieving a high asset turnover, a firm reduces cost and increases the eventual profit to its owners. Total assets equals to fixed assets plus current assets whereas gross sales is the total sales before deducting excise duty.

For Maruti Financial Year = Sales/ Avg Total Assets = Assets Turn Over ratio 2005 = 132914/50531 = 2.63 times 2006 = 147043/49546 = 2.96 times 2007 = 171442/61468 = 2.78 times For Hyundai 2005 = 58830/38892 = 1.50 times 2006 = 63648/43191 = 1.47 times 2007 = 69601/43725 = 1.57 times

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For Ford Motors (china) 2005 = 176835/61945 = 2.85 times 2006 = 160065/60658 =2.63 times 2007 = 172455/62500 = 2.75 times Analysis The asset turn Over Ratio of Maruti has been good it has been constant in all the three years which shows that Maruti is following a proper system to control assets. They increase the amount of assets when they feel the sales may rise and there would be quick demand and vice versa. Hyundai is not able to utilize its assets as efficiently as Maruti and ford is working well with its assets. Maruti is working well with its assets some methods which it uses for investment in fixed assets are Payback Period and NPV. It manages its Inventories in compliance with Just In Time Inventory Systems. Current Ratio = Current Assets/Current Liabilities Current ratio is a measure of short-term solvency. The current ratio shows us how well a company is able to pay off its short-term debt using its most liquid assets. A ratio of 1 would indicate that the company has exactly enough cash (or assets that is relatively easy to turn into cash) to pay off its debt. If the ratio is higher than 1, the company can successfully pay off its debt while at the same time still has cash left over to continue operating. Naturally, if the ratio is under 1, then investors should be weary of the fact that the company cannot pay off its short-term debt if necessary. If a company has a ratio of 2.5, one can say the company can pay off its liabilities more than two times over. The current ratio of a company should not be high also. for example, if a company has a ratio of 4, it may mean that the company is not effectively using its money; there is too much cash sitting around doing nothing.

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For Maruti Financial Year = Current Assets/ Current Liabilities = Current Ratio 2005= 29720/ 12188 = 2.48 2006= 37409/20110 = 1.86 2007 = 38459/15058 = 2.55

For Hyundai 2005= 25014/30041 = 0.83 2006 = 25580/30953 =0.82 2007 = 28189/37003 = 0.76 For Ford Motors(China) 2005 = 153188/84937 = 1.80 2006 = 152843/101272 = 1.50 2007 = 162667/95570 = 1.70

Analysis The Current Ratio of Maruti is very good it shows that the company is very liquid and is very ready to meet any future any uncertainty arising in near future and is paying off well to its creditors. Ratio of Ford is also good but for Hyundai it is matter of concern as the ratio is very low for Hyundai and is below 1 which is not considered a good position. Current ratio is much better than its competitors. Current ratio below 1.5 indicates that the company is not maintaining any safety margin for the payment of its current liabilities. Ideally, current ratio of 2:1 is considered good but since Maruti Suzuki has a very good inventory turnover ratio and only a small portion of debtors considered doubtful, current ratio of Maruti is good enough for short term creditors and investors.

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Comparison and growth of automobile sector with GDP

Economics experts and various studies conducted across the globe envisage India and China to rule the world in the 21st century. For over a century the United States has been the largest economy in the world but major developments have taken place in the world economy since then, leading to the shift of focus from the US and the rich countries of Europe to the two Asian giants- India and China.

The rich countries of Europe have seen the greatest decline in global GDP share by 4.9 percentage points, followed by the US and Japan with a decline of about 1 percentage point each. Within Asia, the rising share of China and India has more than made up the declining global share of Japan since 1990. During the seventies and the eighties, ASEAN countries and during the eighties South Korea, along with China and India, contributed to the rising share of Asia in world GDP. According to some experts, the share of the US in world GDP is expected to fall (from 21 per cent to 18 per cent) and that of India GDP to rise (from 6 per cent to 11 per cent in 2025), and hence the latter will emerge as the third pole in the global economy after the US and China. Indian Economy experienced a GDP growth of 9.0 percent during 2005-06 to 9.4 percent during 2006-07. By 2025 the India's economy is projected to be about 60 per cent the size of the US economy. The transformation into a tri-polar economy will be complete by 2035, with the Indian economy only a little smaller than the US economy but larger than that of Western Europe. By 2035, India is likely to be a larger growth driver than the six largest countries in the EU, though its impact will be a little over half that of the US. India, which is now the fourth largest economy in terms of purchasing power parity, will overtake Japan and become third major economic power within 10 years.

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India - a growing economy

A growth rate of above 8% was achieved by the Indian economy during the year 2003-04 and in the advanced estimates for 2004-05, Indian economy has been predicted to grow at a level of 6.9 %. Growth in the Indian economy has steadily increased since 1979, averaging 5.7% per year in the 23-year growth record. In fact, the Indian economy has posted an excellent average GDP growth of 6.8% since 1994 ( the period when India's external crisis was brought under control). However, in comparison to many East Asian economies, having growth rates above 7%, the Indian growth experience lags behind. The tenth five year plan aims at achieving a growth rate of 8% for the coming 2-3 years. Though, the growth rate for 2004-05 is less than that of 2003-04, it is still among the high growth rates seen in India since independence. Many factors are behind this robust performance of the Indian economy in 2004-05. High growth rates in Industry & service sector and a benign world economic environment provided a backdrop conducive to the Indian economy. Another positive feature was that the growth was accompanied by continued maintenance of relative stability of prices. However, agriculture fell sharply from its 2003-04 level of 9 % to 1.1% in the current year primarily because of a bad monsoon. Thus, there is a paramount need to move Indian agriculture beyond its centuries old dependency on monsoon. This can be achieved by bringing more area under irrigation and by better water management.
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Because of the weakening of the US dollar for the last two years, (caused mainly by widening US deficits), Indian Rupee has steadily appreciated vis-vis US dollar. Though, this trend saw a brief reversal during may-august 2004. The latest Re/$ Exchange rate (March 2005) stood close to 44. Despite strengthening nominally against US $, Rupee depreciated against other major non-dollar currencies. Thus, the Real Effective Exchange rate of the Rupee depreciated and this trend continued until end 2004. A strong BOP position in recent years has resulted in a steady accumulation of foreign exchange reserves. The level of foreign exchange reserves crossed the US $100 billion mark on Dec 19, 2003 and was $142.13 billion on March 18, 2005. The capital inflows, current account surplus and the valuation gains arising from appreciation of the major non-US dollar global currencies against US dollar contributed to such a rise in Forex reserves. The current account of BOP having been in surplus since 2001-02, turned into deficit in the first half of the current year( April-September 2004-05). Such a reversal was observed on the back of rise in POL and non POL imports which overwhelmed the growth of exports in US dollar terms at over 23 per cent. Growth momentum in exports was maintained; India's exports during Apr-Nov registered a growth of 24% from the last period but India's position was down from 30th to 31st rank in the top exporting countries of the world. The main contributors to capital account surplus were the banking capital inflows, foreign institutional investments and other capital inflows. Alike current account, capital account too witnessed decline. The capital account surplus in April-September was also down by around US $ 1.5 million. Reserve money growth had doubled to 18.3% in 2003-04 from 9.2 in 200203, driven entirely by the increase in the net foreign exchange assets of the RBI. However, it declined to 6.4% in the current year to January 28, 2005. During the current financial year 2004-05, broad money stock (M3) (up to December 10, 2004) increased by 7.4 per cent (exclusive of conversion of non-banking entity into banking entity, 7.3 per cent) as compared with the growth rate of 10.3 per cent registered during the corresponding period of the last year.

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Real GDP (USD Billion) 600 500 400 300 3.0% 200 100 0 4.2% 60 1950 86 1960 3.2% 159 118 279 5.4% 473 5.8%

6.9% 548

586

1970
1950 1960

1980
Year 1970 1980

1990
1990 2000

2000
2003 2004

2003

2004

The downward trend in interest rates continued in 2004-05, with bank rate standing at 6% as on Dec 10, 2004. Banks recovery management improved considerably with gross NPAs declining from Rs 70861 crore in 2001-02 to Rs 68715 in 2002-03. During the current financial year (up to December 10, 2004) incremental gross bank credit increased by 20.5 per cent (exclusive of conversion, 16.6 per cent) as compared with a growth of 5.9 per cent in the same period of the previous year. Non-Food credit during the financial year so far, registered a growth of 20.5 per cent (exclusive of conversion, 16.5 per cent) as compared with an increase of 8.4 per cent during the same period of the last year indicated a positive outlook. Equity market return was 85% in 2003-04, second highest in Asia. With continued higher corporate earnings in 2004-05, the sensex crossed 6800 mark in March 2005 but high stock market volatility remained higher in India compared to other Asian countries. The expectation of sensex crossing 7 K mark is not yet realized. Fiscal deficit of states & center was decreasing in early 90s but due to rise in fiscal deficit in recent years, corrective measures have been adopted. The fiscal deficit decreased to 7.9% in 2004-05 from a 9.4% of
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GDP in 2003-04. According to recent estimates, fiscal deficit in AprilOctober 2004 is 45.2 per cent of BE compared with 56.0 per cent of BE in the corresponding period last year. We can conclude that over the years the economy of India has grown and GDP has also raised automobile sector has contributed a lot for it. Maruti has played a major role in it because due to high number of exports made by maruti to all over the world a high amount of money in terms of dollar has come to India which has raised the value of Indian rupee against dollar.The economy of India has been growing at a rate of around 8-9% in the past years but the growth of Maruti has been more than 20% which is very good. Hyundai which is the largest competitor of Maruti is growing at the same rate at which the economy is growing i.e. 9%.

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CONCLUSION: By the study of this report, we can conclude that Maruti is biggest and largest automobile manufacturer in Indian market. Marutis share in the passenger car segment is 54% which is almost 2.5 times of its biggest competitor Hyundai. Maruti is bigger as compared to all other automobile manufacturers operating in India. Today almost 50% cars which run on Indian roads are manufactured by Maruti Suzuki. The different basis on which the analysis is done shows that fixed assets of Maruti are highest and in terms of total income, sales and all other things Maruti is the leader. Hyundai has done well being a new organisation in the Indian market. Marutis profitability is 34% in the year FY2007-08 which is again very high. The liquidity is also very good. This profitability of Maruti is growing at a rate of 4% every year the reason behind this is different cost control measures which Maruti is undertaking like value Analysis and Value engineering, localization of parts and effective R & D. It has also trained suppliers and dealers to maintain Quality levels as well as reduce costs. Maruti is growing in all sectors may it be EBITDA, Fixed Assets, Profit After Tax etc. Coming to the growth of Maruti, it is more than double that of Hyundai. The GDP of India is growing at the rate of 9% whereas Maruti is growing at the rate of 22%. It has also helped Indian economy to grow a lot with the large number of exports which Maruti makes to all over the world. Even the Ford motors operating in China has more sales than Maruti in India but profit of Maruti is more. Hence, we can state that the Indians are proud of Maruti and INDIA COMES HOME IN A MARUTI SUZUKI.

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