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BUDGETARY CONTROL at Maruti Suzuki India Ltd.

SUBMITTED BY:

SUPERNVISED BY:
ANITA NANDI BARMAN

DEBASISH SAHA
BBA(H)
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NSHM COLLEGE OF MANAGEMENT


AND TECHNOLOGY DURGAPUR
REG NO. 121492010231

Department of Management Studies


This is to Certify that the Study Paper entitled is BUDGETARY CONTROL
at Maruti Suzuki India Ltd.
a bonfire work carried out by DEBASISH SAHA holding W.B.U.T. registration
number as 121492010231 and college registration number as 1272069 is a student
of NSHM College of Management and Technology, Durgapur, in fulfilment for
the award of Degree of Bachelor in Business Administration (BBA) under West
Bengal University of Technology.
This Study Paper has been approved as it satisfies the academic requirement in
respect of project work prescribed for the BBA (H) degree.
He has adhered to the guidelines chalked out during our consultation while
preparing this study paper.
The study paper has been found highly satisfactory.
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I wish him all the best in future.

SOUMEN CHATTERJEE
BARMAN
HOD OF MANAGEMENT STUDIES

ANITA NANDI
STUDY PAPER GUIDE

MAY 2, 2015

Declaration Of originality
DECLARATION
I DEBASISH SAHA student of NSHM College of Management & Technology,

Durgapur BBA (H) 3rdyear, batch-012, roll no.-14905012010 under WBUT hereby
declare that the project entitled BUDGETARY CONTROL at Maruti Suzuki
India Ltd.. Is an original work and same has not been submitted to any other
institution for the award of my any other degree...

DEBASISH SAHA

(Name and signature)

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ACKNOWLEDGEMENT
I am sincerely thankful to Professor Anita Nandi Barman (Project Faculty

Guide); under whose guidance I have successfully completed this project and time
spent with them had been a great learning experience. I think their constant
encouragement, warm responses and for filling every gap with valuable ideas has
made this project successful. They made it possible for me to put all my theoretical
knowledge to work out on the topic: BUDGETARY CONTROL at Maruti
Suzuki India Ltd.
A special thanks to the Head Of The Department , Mr. Soumen Chatterjee, who
has given his full effort in guiding as well as encouraging me to go that extra mile
and maintain my progress in track.
Last but not the least I would like to thank my friends & Google-The search
engine which has helped me a lot to assemble the journals and give suggestions
about the different analysis.

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ABSTRACT
The first project - BUDGETARY CONTROL FOLLOWED IN MARUTI
SUZUKI INDIA LIMITED involves the reviewing the whole process of budget
preparation and budgetary control followed in Maruti Suzuki India limited. The
budgetary system followed in Maruti Suzuki India limited is very unique and is
based upon a similar system followed in its parent company from Suzuki Motor
Corporation Japan. Annual budgeting exercise for Maruti Suzuki India limited
starts in December every year for next accounting year and gets finalized by
February end. This budgetary process followed by Maruti ensures proper
utilizations of funds by different departments of the company. There are over 350 +
departments in the company. So without effective budgetary control system in
place, it would be impossible for the company to ensure proper utilization of the
funds in the company.
The first step of this project is to understand and review how the different
departments prepare their budgets and how the budgeted balance sheet and
budgeted profit and loss account for the whole company is prepared. Every year
each department prepares a budget for their department on the basis of their
projected expenses. These budgets are sent to the budgeting and costing
department of the company, which on the basis of these budgets prepares budgeted
balance sheet and budgeted profit and loss account. After preparing budgeted
balance sheet and budgeted profit and loss account, budgeting department presents
these accounts in front of board of directors for their approval.

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The second step of this project is to understand and review the process of
budgetary control followed in Maruti Suzuki India limited. In Maruti Suzuki
budgetary control and budget monitoring is a continuous process, which involves
monitoring of the budgets of different departments by comparing the actual
expenses of the respective departments with their projected expenses and finding
out reasons for any deviations if any. The final step of this project is to suggest
measures to make this whole process more effective, less time consuming and error
proof.

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CONTENTS

SERIAL NO

CHAPTERS

PAGE NO

1.

INTRODUCTION

6-18

2.

REVIEW OF LITERATURE

19-25

3.

OBJECTIVES OF THE SRUDY

26

4.

RESEARCH OF METHODOLOGY

27-28

5.

SWOT ANALYSIS
BUDGET PREPARATION PROCESS
FOLLOWED IN MARUTI SUZUKI
INDIA LIMITED

29-32

37-40

8.

BUDGETORY CONTROL PROCESS


RATIO ANALYSIS

9.

RECOMMENDATION

10.

CONCLUSION

11.

BIBLIOGRAPHY

6.

7.

33-36

41-49
50
51
52

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MARUTI SUZUKI INDIA LIMITED

INTRODUCTION

Maruti Suzuki is one of indias leading automobile manufacturers and the


market leader in the passenger car segment, both in terms of volume of vehicles sold and
revenue earned. It is largely credited for bringing an automobile revolution to india. Maruti
Udyog Limited was established in Feb 1981 through an act of parliament, as a government
company with Suzuki Motor Corporation of japan holding 26 per cent stake.

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The joint venture agreement was signed between Goverment of India and Suzuki Motor
Company (now Suzuki Motor Corporation of Japan) on oct 1982. Suzuki Motor Company was
chosen from seven prospective patners worldwide.This was because of their undisputed
leadership in small cars and also because of their commitment to actively bring to MUL
contemporary technology and Japanese management practice (which had catapulted japan over
USA to the status of the top auto manufacturing country in the world).

Maruti udyog limited was renamed to Maruti Suzuki India limited(MSIL) on 17 september,
2007.

Until recently, 18.28% share of Maruti Suzuki, a subsidiary of Suzuki Motor Corporation Japan,
was owned by the Indian Goverment, and 54.2% by Suzuki of Japan. On May 10, 2007 Govt. Of
India sold its complete share to Indian financial institutions. With this, Govt. Of India no longer
has stake in Maruti Suzuki India Limited.
The company went into production in a record time of 13 months and the firsts car was rolled
out from Maruti Suzuki India Limited Gurgaon in December, 1983.
1
The company went into production in a record time of 13 months and first car was rolled out
from Maruti Suzuki India limited Gurgaon in December 1983.

In 2001, Maruti Suzuki india ltd became one of the first automobile companies anywhere in the
world to get an ISO 9001:2000 certificate. A V Belgium has rated the companys quality system
and practices as a BENCMARK FOR THE AUTOMOTIVE INDUSTRY WORLD WIDE,
global auditors For International organization for standardization.

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Since Inception , Maruti Suzuki produced and sold over 7.5 million vehicles, including
almost 500,000 units in Europe and other export market. In facts, every 22 seconds a car is rolled
out of Maruti Suzuki .It is Suzukis largest manufacturing facility, outside Japan offering 11
models in over 100 variants.

MANUFACTURING FACILITIES Maruti Suzuki have two manufacturing facilities


in India, one in Gurgaon and other in Manesar , North India.

Gurgaon plant- Maruti Suzukis Gurgaon plant 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 floors kaizens over the year have anabled the company to manufacture
nearly 650,000 cars per tear 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 shop employee have been trained in japan.

Manesar plant- Maruti Suzukis Manesar plant has been made to suit Suzuki Motor
corporation(SMC) and Maruti Suzuki india limiteds(MSIL) global ambitious. It is rated high
among Suzukis best plant worldwide the plant was inaugurated in February 2007.

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The plant has several in-built system and mechanisms to ansure 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 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 flexibile: diverse car model can be made here conveniently owing to
automatic tools changers, centralized weld control system and numerical control machines that
ensure high quality.

The plant at Manesar is the companys fourth car assembly plant and has started with an initial
capacity of 100,000 cars per year. This will be scalled up to 300,000 cars per year. A total
investment of Rs 2,500 crore is invested in this car plant in 2010.

Diesel engine plant- Suzuki powertrain india limited the diesel engine plant at Manesar is
Suzuki & Marutis first and perhaps the only plant designed to produced world class diesel
engine and transmissions for cars.
3
This plant is under joint venture company, called Suzuki powertrain india limited(SPIL) in which
SMC holds 70 per cent equity with the rest held by Maruti Suzuki.
The diesel engines manufactured at this plant will also be exported to SMC companies
across the world.

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This facility , too, has a high level of automation. Final insoection of components is done
through automatic measuring and making machines, which led to a uniform and error free
production.

Maruti Suzukis contribute as the engine of growth of the Indian auto


industry, indeed its impact on the lifestyle and psyche of an entire generation
of Indian middle class, widely acknowledged.

......Our Vision...................................................................................................

The Leader in The Automobile Industry,


Creating Customer Delight and Shareholders Wealth; A Pride of
India.

.........Our Core
Value...........................................................................................................
...........

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Customer Obsession
Fast, Flexible and First Mover
Innovations and Creativity
Networking and Patnership

Openness and Learning.

Udyog limited, a subsidiary of Suzuki Motors Corporation of Japan, has been the leader of the
Indian car market for about two decades Maruti. Its manufacturing plant, lacated some 25 km of
New delhi in Gurgaon, has an installed capacity of 3,50,000 units per annum, with a capacity to
produce about a half a million vehicles.
The company has a portfolio of 11 brands , including Maruti 800, omni, premium small car
Zen, international brands Alto and WagnoR, off-roader Gypsy, mid size Esteem, luxury car
baleno, the MPV, Versa, Swift and Luxury SUV Grand VitaraXL7.
In recent years, Maruti has made recent strides towards its goal of becoming Suzuki Motor
Corporations R and D hub for asia. It has introduced upgraded version of Wagon-R Zen and
Esteem, completely designed and styled in-house. Marutis contribution as the engine of growth
of the Indian auto industry, indeed its impact on the lifestyle and psyche of an entire generation
of Indian middle class, is widely acknowledged. Its emotional connect with the customer
continues.
Maruti tops customer satisfaction again for sixth year in arrow according to the J.D power
asia pacific 2005 India Customer Satisfaction Index (CSI) study. The company has also ranked
highest in sales satisfaction study.

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The companys quality systems and practices have been rated as a benchmark for the
automotive industry world wide by A V Belgium, global auditors for international Organization
for standardization.

Year of establishedment
Vision

Industry
Listing & its codes

Joint Ventures

Registered & Corporation Office


Works

Website

February 1981
The Leader in the Indian Automobile
Industry, creating Customer Delight and
Shareholders Wealth; A pride of india.
Automotive- Four wheelers
BSE- Code: 532500
NSE- Code: Maruti
Bloomberg: MUL@IN
Reuters: MRTI.BO
With Suzuki Motor company, now
Suzuki Motor Corporation , of Japan in
October 1982.
11 Floor, jeevan prakash 25, Kasturba
Gandhi Marg New Delhi- 110001, India
Palam Gurgaon Road
Gurgaon-122015
Haryana, India
www.marutiudyog.com

QUICK FACTS

In keeping with its leadership position , Maruti supports safe driving and traffic
management through mass media message and a state-of the art driving training.
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institute that it manages for the Delhi government.


7
The companys servise businesses including sale and purchases of pre owned cars (True Value),
lease and fleet management service for corporate(N2N), Maruti Insurance and maruti Finance
are now fully operational.These initiatives, besides providing total mobility to customer in a
convenient and transparent manner, have helped improved economic viability of the companys
dealership.

The company is listed on Bombay stock exchanged and National stock exchanged.

EXPORT OF MARUTI SUZUKI INDIA LIMITED


In march 2007 Maruti Suzuki India limited crossed
cumulative export figure of 450,000 vehicles since its firsts export in
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1986. It is Indias largest passenger car manufacturer and has a


global presence with a well established network in several countries
across asia, Europe, Africa, south and latin aamerica. Europe has
been the largest market wiyh export of over 280000 units. Even in
the highly developed markets of neitherland, UK, Germany, France &
Itly , Maruti has made a mark. The top ten destination of the
cumulative exports have been Neitherland, Itly, UK, Germany,Algeria,
Chile, Hungary,Srilanka, Nepal and Denmark in that order.
Maruti has also entered some unconventional market like Anglo,
Benin,Djibouti, Ethiopia, Morocco, Uganda, Algeria and costa rica and
witnessed sizeable growth. The Middle-east region has also opened up and is
showing good potential for growth. Some market in the region where Maruti
ha a good presence are Saudi Arabia, Jordan, Kuwait, Bahrain, Qatar, and
UAE. In Europe the number of unit sold is 280000 in 34 countries, in Africa it
is 45000 units, in Latin America it is 29000 units and Oceania the number of
units sold is 6300 units.

PRODUCT PORTFOLIO
The company has a product portfolio of 11
brands with over 100 variants, including Maruti 800, Alto,WagnoR, Maruti
Swift, Zen Estilo, Gypsy, DZire, Versa, SX4, Ritz, A- star and Grand Vitara.
Three Maruti Suzukis cars namely Maruti Zen Estilo, Maruti
Swift and Maruti SX4 walked away with 2007- India Automotive performance,
Execution and layput study awards in their respective categories.
In 2007 initial Quality study also, Maruti swift walked away with the
highest IQS in the premium compact car segments.

PRODUCTS OF MARUTHI SUZUKI :


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Starting Price
(Ex-showroom, Mumbai)

Available Car Models


Maruti Suzuki 800

Rs. 1,97,214

Maruti Suzuki Omni

Rs. 2,03,565

Maruti Suzuki Alto

Rs. 2,36,843

Maruti Suzuki Zen Estilo


Rs. 3,13,085

Maruti Suzuki Wagon R

Rs. 3,22,157

Maruti Suzuki Wagon R Duo

Rs. 3,39,532

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MILE STONES

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198
1

Maruti Udyog Ltd. was incorporated.

198
2

Steped into a JV with SMC of Japan.

198
3

Maruti 800, a 796 cc hatchback, India's first affordable car


was produced.

198
4

Installed capacity reached 40,000 units. Omni, a 796 cc


MUV was in production.

198
5

Launch of Maruti Gypsy (970cc, 4WD off-road vehicle).

198
6

Produced 100,000 vehicles (cumulative production).

198
7

Exported first lot of 500 cars to Hungary.

198
8

Installed capacity increased to 100,000 units.

199
2

SMC increases its stake to 50 per cent.

199
4

Produced the 1 millionth vehicle since the commencement


of production.

199
5

Second plant launched, the installed capacity reached


200,000 units.

199
6

Launch of 24-hour emergency on-road vehicle service.

199
7

Produced the 2 millionth vehicle since the commencement


of production.

199
8

Launch of website as part of CRM initiatives.

199
9

Launch of Maruti - Suzuki innovative traffic beat in Delhi


and Chennai as social initiatives.

200

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ACCOLADES 2008-2009
Maruti Suzuki was ranked first in customer satisfaction in an annual survey conducted by
JD Power for the seventh time in a row.
The company was ranked first in India for sales satisfaction for the third time in a row by
JD Power Asia Pacific.
The company won the Avaya Global Connect Customer Responsiveness award 2006.
The company was ranked 91among world`s most reputed companies reported by Forbes
magazine. Among automobile players, it ranked 5th in the world, ahead of many global
giants.
Business World ranked Maruti as Indias most respected automobile company.
Business today listed the company among Indias 10 best marketers.
Maruti Suzuki won the Asia Pacific PLM excellence award for 2006 from UGC Corp,
leading global provider of product life cycle management (PLM) software and services.
TNS Automotive ranked Maruti Suzuki first for Corporate Social Responsibility.
Manesar car assembly plant is ranked amongst the top two Japanese subsidiaries
overseas, by Nikkei (Nihon Keizai Shimbun), for the year 2007.

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BUDGET: A budget is a detailed plan expressed in quantitative terms that specifieshow an


organization will acquire and use resources during a particular period of time.In other words a
budget is a systematic plan for the efficient utilization of resources.Budget serves as a benchmark
against which actual results can be compared.What are the Key Purposes of Budget?

Planning: Preparing budgets forces organization to plan ahead.


Facilitate Co-ordination: To be effective, each department throughout the
organization must be aware of plans made by other departments.
Allocating Resources:
As resources are limited, budget provides one means of allocating resources among
competing uses. So, that resources can be used in a bestpossible manner.
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Exercising control:
Budgets helps in managing financial and operational performance,by comparing
actual performance against the planned performance.In a business organization, a
budget represents an estimate of future costs andrevenues. Budgets may be divided
into two basic categories:
1) Capital Budgets
2) Revenue Budgets

Capital budgets: are directed towards proposed expenditures for new


projects and oftenrequire special financing. For example ? installing a new
plant or expanding the productioncapacity.

Revenue budgets: are directed towards achieving short-term


operational goals of theorganization, for instance, production or profit goals
in a business firm. Operating budgetsmay be sub-divided into various
departmental of functional budgets.

Budgetary control:
No system of planning can be successful without having an effectiveand
efficient system of control. Budgeting is closely connected with control. The
exercise of control in the organization with the help of budgets is known as
budgetary control. The process of budgetary control includes:
1. Preparation of various budgets..
2. Continuous comparison of actual performance with budgetary performance..
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3. Revision of budgets in the light of changed circumstances.

REVIEW OF LITERATURE

Although there was an earlier intention to produce light commercial vehicles and
medium sized-cars, the idea of producing a fuel efficient small car prevailed. In 1981, Marutis
board of directors decided that the vehicle to be manufactured would be a small car and that the
engine size should be kept below one liter (Venkataramani, 1990). The decision was driven by
the rationale that the Maruti project could only succeed if mass production was realized. This, in
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turn, was tightly linked to the cars affordability and cost of operation. The decision was further
supported by market research findings as listed below. The survey of potential purchasers drawn
from nine cities which then accounted for 60% -70% of the country's car owning population
revealed that 90% of car use was within a city, the individual car owner travels 800 km a month
on an average and that the average number of passengers in a car was four because cars were
largely used for office-going purposes. Also, only 20%-30% of the respondents indicated a desire
to purchase a car in the next two years at the existing prices, but for a new price range of
between Rs.40.000 to Rs.55,000 the proportion of likely buyers went up to 43%-45%. Finally,
the survey revealed that the two most important factors considered while purchasing a car were
fuel efficiency and initial capital cost. Of the total sample, 37% preferred a small car and only
18% preferred a medium-sized car. "This strengthened our belief that the earlier decision to go in
for a medium-sized family car was wrong.
So we decided to manufacture a small car," says Bhargava. In the light of these requirements,
Japanese manufacturers turned out to be the more attractive partners: Once the Japanese entered
the race, the Europeans were almost automatically eliminated. The Peugeot and Volkswagen
offers were reportedly over 50% more expensive than the Japanese offers. Apart from the
obvious Japanese superiority in small-car technology, a related reason for the Maruti Udyog team
concentrating on Japanese offers was that they had derivatives such as vans, a pick-up truck and
a four-wheel drive jeep all using the same engine and transmission as the car.
This offered Maruti Udyog the prospect of catering to a larger market and made possible mass
production and economies of scale since the cars and derivatives could be made with the same
engine. But the factor which decisively swung the balance in favor of the Japanese was the
promise that Indo-Japanese collaboration offered achance to introduce the work culture and
management. (Shirali, 1984: p.5).
Ultimately, the Indian Government selected Suzuki as a partner because the company convinced
with its small car experience and product portfolio particularly Suzuki's 796cc, SS80F model
(see table given below) the projected manufacturing cost and product price, and its flexible
approach in the negotiations.
For Maruti-Suzuki, this situation created a particularly protective and conducive environment.
On the one hand, the company could, with the help of international cooperation, adopt state-ofthe-art small car technology and out compete, its domestic rivals. On the other hand, the
company was shielded from international competition through the licensing system and
protectionism that remained in place (Becker-Ritterspach, 2007).
Although the deregulation of the Indian economy marked the beginning of a new policy for
passenger car production and foreign involvement, core themes remained unchanged and also
benefited the emergence of a small car path. One important aspect was the continued balance of
payment problem of the Indian economy. As the Indian economy was fully dependent on oil
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imports, the fuel efficiency of cars directly impacted Indias balance of payments. It was,
therefore, an ongoing national goal to keep fuel consumption low by promoting small car
production. The factor explaining the successful establishment of the small car was probably
related to the political will to render Sanjay Gandhis brain child of a peoples car a success. Not
only did the company benefit from the limited market reforms, but it also profited from
preferential treatment by the Indian Government who held a majority stake in the company. A
range of policy measures were specifically drafted to support the company. For example, in 1983
the Indian Government issued a special notification extending substantial reduction in customs
and excise duties to automobiles that had a capacity of no more than 1000cc . While this
notification strongly benefited Maruti-Suzuki, which was about to produce an 800cc vehicle, the
other two main competitors were put at a disadvantage by this measure. Maruti-Suzuki clearly
became a national champion whose development Indira Gandhi vowed in 1983 at the factory
inauguration would be her personal interest. It is probably precisely the politicized origin that
also allowed Maruti-Suzuki to develop without too much direct political interference in its
operations. Although Maruti-Suzuki benefited from economic reforms and preferential treatment
as a public sector company, its relation to the government diverged from earlier modes
Government government largely abstained from influencing operative decisions in the company
to render the project a success . Thus, it was essentially this interplay of an emerging market
demand for small, fuel efficient cars, economic deregulation and political support that shaped the
emergence of Indias small car path. Its emergence was inextricably linked with the Government
Company Maruti Udydog and players Hindustan Motors (HM) and Premier Automotive Limited
(PAL) lost their market share and were outperformed by Maruti. From the 1980s onward, Indian
passenger car sales were dominated by Maruti cars I of its introduction, the Maruti 800 not only
offered superior product technology, but also sold at a substantially lower price than the cars of
the main competitors HM and PAL. Until the market liberalization in the 1990s ,Maruti that
absorbed in the early 1990s about 62.4 % of the market share. Remaining market share was
shared by Premier Automobiles Limited Motors with 13.9% share. The Emergence of India as a
Worldwide Research and Production Hub for Small Cars. Economically, the small car path in
India has reached a sustainable level. In the past this sustainability was largely driven by the
nature of domestic demand. However, the Indian government envisions this path growing even
stronger by turning India into a worldwide R&D and production hub. The Automobile Mission
Plan states in this context that- Export opportunities for four wheelers would lie primarily in the
small car segment as Indian companies have gained expertise in manufacturing vehicles in this
segment and enjoy an advantage over other low cost countries. India should capitalize on this
expertise and target becoming a manufacturing hub for A/B class vehicles. This is already being
leveraged by OEMs like Hyundai with Santro, Suzuki with Maruti 800/Alto and TATA Motors
with Indica. (Ministry of Heavy Industries & Public Enterprises, 2006. Concrete measures
recommended or in the process of being implemented included the following1. Investment support (deduction on R&D expenditure,
2. Excise duty concessions, tax/levy exemption, research grants)
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3.

Introduction of stiffer emission standards; infrastructure investment (ports, roads, rail,

energy/power)
4. Setting up of testing-, certification and homologation facilities.
5. Development of centers of excellence in the area of: noise (at Mansear), vibration
& harshness, auto components (at Mansear); engine and material testing (at Pune); automotive
safety and crash testing (at Chennai); testing track and vehicle dynamics (at Indore) development
of focused lab facilities at the Indian Institutes of Technology and Management (Ministry of
Heavy Industries & Public Enterprises, 2006). While the National Automotive Testing and R&D
Implementation Project (NATRIP) ,is envisioned to play a coordinating role, different States
have also taken individual initiatives with regard to providing R&D facilities. The government of
Maharashtra, for example, has set up what it calls an Auto Cluster providing testing facilities
for OEM and their suppliers (Interview MCCI). While the political initiative is there, the
question is to what extent the Indian automobile industry actually moves beyond being a mere
technology adopter and producer for the domestic markets? In terms of exports, the 2000s show
a new trend pointing towards rising exports in the passenger car sector. What is more, most of the
vehicle exports do focus on the lower market segments with Hyundai being the dominant
exporter. With regard to R&D there was an emerging trend of using and developing local
capability. On the one hand there is a general development of increasing R&D expenditure in the
Indian automobile industry, which has also been stimulated recently by more stringent emission
regulations (Shastry, 2004). On the other hand, there is an increasing small car R&D focus
among some manufacturers, who seek to develop India into their corporate hub for car R&D. A
case in point is Maruti-Suzuki that is in the process of developing the Indian operation into a
R&D hub for small cars. Similarly, Tata has invested substantially in small car R&D in recent
years (Venugopal, 2005) and Hyundai and Fiat have also established regional R&D centers in
India (The Economist Intelligence Unit Limited, 2006). The Tata Nano is probably the most
recent and prominent example of Indias rising local R&D capability in the small car segment.
While Tata strongly relies on local partners/suppliers (most of which have international
involvement like Bosch, Freudenberg, Continental, Johnson 103 Controls, Denso, Delphi,
Ficosa, EDAG, Taco Visteon, INA, FAG, Mahle, Tenneco (Lamparter, 2008; Lang, 2008)) to
develop the Nano and its components, it is to a large degree Indian engineers who has done the
actual development. Interviews held in May 2008 underline that it is not only the low cost of
engineers that make India a highly attractive location for small car development. More important
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than this is the Indian engineers intimate understanding as to what is essential and what is not
with regard to building a vehicle that has to satisfy developing country requirements and
conditions (Interview with Managing Director Mercedes-Benz India). 3.6 Conclusion:
Challenges to the Sustainability of the Small Cars in Future Looking at a host of factors
including Indias demographic development (a young and fast growing population), upwards
social mobility (rising per capita income from a low level), low vehicle density (8 per 1000 in
2004 (Statistisches Bundesamt, 2006)), rising oil prices, infrastructure bottlenecks and pollution
problems, a small car path seems to be only economically a sustainable path for Indias future
auto-mobilization.
At least, it appears to be the most sustainable path within the traditional ambit of massmotorization. Yet, the same conditions that suggest a small car path also pose limitations. For
example, rising oil prices and Indias dependence on oil pose a threat, as small car demand may
be more vulnerable in the face of financial crises than othersegments. This situation may not only
apply to domestic demand but also to exports. Another threat to the socio-economic
sustainability of the small car path is the poor road infrastructure in India (Haldea, 2008).
Clearly, small cars need less road space than large cars. However, as an interviewe
pointed out, if two wheeler owners migrate at a sudden and substantial rate to small car
segments, traffic will come to a virtual standstill. The current infrastructure development is
already now unable to keep pace with vehicle growth on Indias roads. This is also why the new
mini car producers (e.g. Tata Nano target markets) strongly eye rural areas, where road traffic is
still moderate. While rising oil prices 104 and infrastructural problems pose a threat to Indias
small car path in socio-economic terms, there are other problems of sustainability. The high
pollution in Indian cities poses already now a serious threat to air quality and human health. An
extensive growth of small car demand (replacing two wheelers) is, therefore, in environmental
terms not sustainable. It is the dependence on oil and the recognition of environmental problems
that has also pushed the Indian government towards creating incentives for alternative fuels and
engine technology (Ministry of Heavy Industries & Public Enterprises, 2002 and 2006). There is
finally the question of whether India can develop its automobile industry into a small car
production and research hub for the world. There are certainly some indications that India may
have a competitive edge in this segment, owing to its own national demand scenario, its past
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experience and policy measures supporting such an end. At the same time, there are factors that
work against the economic sustainability of such a path. Small car production relies above all on
low cost. India, however, has seen sharp rises in labour cost in the automobile industry and
suffered from low productivity, rigid labor laws and high infrastructure cost, despite some
improvements in this regard (Belzowski et al., 2007). A cost comparison study comparing the
Indian and Chinese industry found, for example, the cost of manufacture of passenger vehicles
in China is 23% lower than in India with the principle difference due to higher taxes and the
cascading impact in India (Ministry of Heavy Industries & Public Enterprises, 2006: p. 12).
Clearly, China has also seen increases in labor cost in recent years. However, there may be other
emerging economies that are more competitive than India and China in this regard. With regard
to R&D the situation may be slightly different. After all, India offers one of the largest pools of
well trained engineers in the world and the national and State governments are investing in R&D
facilities as well as human resource development that is specifically geared towards the
automobile Industry (Ministry of Heavy Industries & Public Enterprises, 2006). Here, it remains
to be seen if the Tata Nano is more than a one-off in setting the pace for global automobile
development.

OB JECTIVES OF THE STUDY


The objectives of the study are:

1) To narrate the profile of the company

Overview of Maruti and Suzuki

Building understanding of the car market in India and various segments


Page | 29

2) To gain experience & knowledge that how a company prepares budget &
control it.
3) The budget forms a base for a companys operations &
working.
4) To study the financial position of the company

Role of financing as a sales tool and the various financing options available

Ensuring Company effectiveness in implementing accounting standards

Analyzing companies financial statements .

5) To convert my theoretical knowledge into practical knowledge.

RESEARCH METHODOLOGY
RESEARCH DESIGN
The research method selected for the study is a combination of a survey and an industrial study.
The survey research method is described here under that:

Page | 30

(i) It is a design in which primary data is gathered from members of the sample that represents a
specific population
(ii) It is a design in which a structure and systematic research instrument like a questionnaire or an
interview schedule is utilized together with the primary data
(ii) It is a method in which the researcher manipulates no explanatory variables because they have
already occured and so they cannot be manipulated
(iii) Data are got directly from the subjects .The subjects give the data in the natural settings of their
workplaces

Observations
In addition to questionnaire and face-to face interviews, observation was also carried out. This
was to enable the researcher to witness by the officers of this firm and to interact with these
people.

Secondary data:
(1) Annual reports
(2) Company databases
(3) Auto journals
(4) Industry analysis reports
(5) Company websites

Page | 31

Budget preparation process followed in MARUTI SUZUKI


INDIA LIMITED

Production / sales target


finalized by top
management
Detailed
production
plan

Page | 32

Sales budget
From M&S
Domestic
sales
Export
sales
Spare

Manpow
er
budget

Revenue
expenditur
e budget
from
department

Consolidation
of divisional
budget

Discussion between
finance & other
departments

Capital
investme
nt plan

Indigenizati
on plan

Material cost
budget
Imported
components
Indigenous
components
Raw materials
Paints and
direct
consumables

Preparation of model
wise and month wise
unit standard statement
and consolidation

Consolidation of
divisional budget to
company budget

Page | 33

Budget presentation by
divisional heads to MD &
directors. Budgetary
targets for each division set
by directors.

Whether budget
target acceptable?

NO

REVIEW

YES
Preparation of cash
budget, projected
profit & loss a/c and
balance sheet

This chart shows the unique process of budget preparation followed in Maruti Suzuki,
which is based upon a similar process followed in its parent company Suzuki Motor Corporation
Japan.
Annual Budgeting exercise in Maruti Suzuki starts from December and gets finalized during
February. Every year top management decides the total number of cars to be sold or produced on
the basis of past trends, industry growth rate, feedback from marketing and selling department
and various other factors which effect the demand of cars. On the basis of the number of cars to
be produced, a detailed production plan is prepared. This production plan indicates the resources
required to produce the desired number of cars. On the basis this production plan every
Page | 34

department plans their expected requirements of funds for the next financial year. These
departments enter their respective requirements of funds in an online form sent by finance
department, on a monthly basis along with the purpose for which funds are required. When the
save button on this form is clicked this data gets stored in a central database. Similar expenses of
all the departments are stored in one place for example training expenses of all the departments
are stored in one and stationary expenses of all the departments are saved in one database.
Budgeting department prepares a master budget on the basis of these databases, which represents
an overall plan of the organization. Annual Budget is divided into quarterly budgets i.e. Q1, Q2,
Q3 and Q4.
Budget for Q3 and Q4 is revised based on actual expenditure up to July and expected
trends for the remaining year. This exercise starts on July and revised budget is finalized by
August.Budgeting department also prepares projected profit & loss account and balance sheet of
the company. This projected profit & loss account and balance sheet is presented before board of
directors for their approval. If the Board of directors are satisfied with the expected profit and
sales, then the budget is approved if not then the respective departments are told to reduce their
budget and the whole process is repeated.

Zero-based budgeting

In Maruti Suzuki, a zero based budgeting (ZBB) system is

followed. ZBB is a top-down budgeting system where resource allocation decisions are made
through a function-by-function assessment. No function is assumed to be necessary. The criteria
for evaluation are passed down from higher levels, enhanced and made more appropriate for
each area as the criteria are passed down to office and department heads. Department and office
heads develop justifications within these evaluation guidelines for each function and
justifications for increased resources. These pass back up through the organization with each
level setting priorities for resource allocations to individual functions from the levels below.

Page | 35

Budgetary control process followed in MARUTI SUZUKI


INDIA LIMITED
Maruti Suzuki follows a unique process of budgetary control, which ensures proper
utilizations of funds by different departments of the company. There are over 350 + departments
in the company. So without effective budgetary control system in place, it would be impossible
for the company to ensure proper utilization of the funds in the company.
Monitoring of the budget is done on the monthly basis by budgeting department, in which it
compares the actual expenses of the respective departments with the projected expenses and
finds out reasons for any deviations if any and presents the report to the board of the directors at
the beginning of each month.

Page | 36

Budget controlling is done on a quarterly basis at Maruti Suzuki India limited. For effective
control of the funds all the expenses are divided into 3 categories, according to their relative
importance.
A category expenses are very tightly controlled and monitored because of their relative high
degree of controllability. For example- Consultancy fees, Gifts, Seminar / Conference Exp, etc.
B category expenses are less closely monitored and controlled, because of their low degree of
controllability B category expenses can be controlled to a extent only. For example Travel,
Journals, Stationary, Phone, Conveyance, etc. and no control is exercised over C

i.e. Their

payment is not stopped even they shoot over their budget but for A and B category expenses
payment is allowed to the level of budget approved.
A Category Items of similar nature are grouped together (have same first 5 digit
a/c code), and control is exercised over the group budget. Budget control exists at a
parent level or 5 digit account code level.

For exampleA-P2110701-COMPUTER CONSUMABLES


A-P2110702- SOFTWARE PURCHASE EXPENSES
A-P2110703- SOFTWARE DEVELOPMENT EXPENSES
A-P21107- SOFTWARE RELATED EXPENSES

Account

Budget

Actual

Balance

Page | 37

A-P21229 01

500,000

A-P2122902

100,000

A-P2122903
Total

600,000

500,000
400,000

(300,000)

200,000

(200,000)

600,000

Nil

These A category expenses are monitored or controlled at 5 digit code (A-P21229) and not at
individual 7 digit item code level ie 2122901, which basically means that respective department
cannot spend more on SOFTWARE RELATED EXPENSES then the budgeted amount but it
can spend the whole amount on any of its components.

B category expenses are general expenses and are monitored at cost


center level i.e. expenses related to a particular department.
For example
B-P2111501- SNACKS EXPENSES
B-P2111501-LUNCH EXPENSES
B-P21115- SNACKS EXPENSES

B-P2113201-POSTAL STAMPS
B-P2113202-POSTAL EXPENSES

Page | 38

B-P2113203-COURIER CHARGES

B-P21132-POSTAL EXPENSES
Account

Budget

Actual

Balance

B-P2123401

50,000

5,000

45,000

B-P2123402

40,000

40,000

B-P2145665

40,000

(40,000)

B-P2645872

45,000

(45,000)

90,000

Nil

Total

90,000

These B category expenses are monitored and controlled at a cost center or departmental level
which means that expenses are not monitored on B-P21234-POSTAL EXPENSES or BP21115- SNACKS EXPENSES level but on total of all these expenses of that particular
department. For example in the above table expenses will not be monitored at individual account
code level but at a departmental level.
Maruti Suzuki India limited is using a financial module of Oracle for its financial function.
Special codes are assigned to all the entries that come in profit & loss account and balance sheet
(7 digit code), cost centers (every department is a cost center) 4 digit code and companies (2
digit code). Booking of expenses can only be done by entering specific codes.
My project in maruti Suzuki India limited involves understanding and analyzing this whole
process and to suggest ways to make this unique process more effective and free from any faults.

Page | 39

RATIO ANALYSIS
Meaning of Ratio Analysis:
Analysis can be defined as the study and interpretation of relationships between Ratio
various financial variables, by investors or lenders. It is a quantitative investment technique used
for comparing a company's financial performance to the market in general. A change in these
ratios helps to bring about a change in the way a company works. It helps to identify areas where
the management needs to change.

Steps in Ratio Analysis:


The firs task of the financial analyst is to select the information relevant to the decision
under consideration from the statements and calculates appropriate ratios.
The second step is to compare the calculated ratio with the ratios of the same firm
relating to past or with the industry ratios. This step facilitates in assessing success or failure of
the firm.
The third step involves interpretation, drawing of inferences and report-writing.
Conclusions are drawn after comparison in the shape of report or recommended course of action.
Importance:
Page | 40

Ratios are useful for the following reasons:

The ratios can be used by financial managers for future financial planning. Ratios
calculated for a number of years work as a guide for the future.

Ratios are useful in co-ordination which is very needed in business. The efficiency and
weakness of an enterprise if communicated properly will establish a better co-ordination
among areas of appreciation and control.
Ratios are used for communication of weak and good points to the concerned parties.

Ratios should be shown the better financial position of the firm. For example, better
solvency ratio speaks out good financial position.

The ratios are economic barometer useful to all mentioned above as they can know the
good and bad position of a company by making a comparative study of financial
statement.

PER SHARE RATIOS:


EPS is measured by dividing the net profits after taxes and preference dividend by the total
number of equity shares.
EPS = net profit after tax- preference dividend
Per share ratios
Adjusted EPS (Rs)
Adjusted cash EPS (Rs)
Reported EPS (Rs)
Reported cash EPS (Rs)
Dividend per share
Operating profit per share (Rs)
Book value (excl rev res) per share (Rs)
Book value (incl rev res) per share (Rs.)
Net operating income per share (Rs)
Free reserves per share (Rs)

2008
55.94
75.61
59.91
79.57
5.00
88.31
291.28
291.28
625.34
286.28

2008
53.69
63.09
54.07
63.46
4.50
76.30
237.23
237.23
512.49
231.89

2007
43.87
53.75
41.16
51.04
3.50
64.59
188.73
188.73
422.20
183.18

2006
28.85
45.23
29.55
45.92
2.00
54.35
151.56
151.56
382.34
144.13

2005
21.16
40.80
18.76
38.40
1.50
43.35
123.74
123.74
327.07
116.91

Page | 41

700
600
500
400
300
200

Adjusted EPS (Rs)

Adjusted cash EPS (Rs)

Reported EPS (Rs)

Reported cash EPS

Dividend per share

Operating profit per


share

Book value (excl rev res)


per share

Book value (incl rev res)


per

Free reserves per share


(Rs

100
0

Interpretation: Due To Incresing Profits And Market Sustainability The Per Share Value Of
Maruthi Suzuki Had Been In Incresing Trend From 2004-2009.
Analysis: As a result of that the per share value in the market is above 1100rs.

PROFITABILITY RATIOS:
Profitability is a ratio. Being a ratio profitability is a meaningful measure and reveals the
relation of different individuals items with sales of the concern. Profitability of a concern can be
known through the analysis of general and overall profitability.
Gross profit ratio=Gross profit (100) /Net sales
Gross profit ratio= net sales-cost of goods sold (100) / Net sales

Profitability ratios
Operating margin (%)
Gross profit margin (%)
Net profit margin (%)
Adjusted cash margin (%)

2008
2008
2007
2006
2005
14.12
14.88
15.29
14.21
13.25
10.97
13.05
12.95
10.08
8.01
9.34
10.29
9.53
7.57
5.61
11.79
12.01
12.45
11.59
12.21
Page | 42

Adjusted return on net worth (%)


Reported return on net worth (%)
Return on long term funds (%)

19.20
20.56
27.35

22.63
22.78
30.74

23.24
21.80
33.47

19.03
19.49
28.12

17.10
15.16
22.71

35
30
25
20
15
10

Operating margin (%)

Gross profit margin (%)

Net profit margin (%)

Adjusted cash margin

Adjusted return on net


worth (%)

Reported return on net


worth

Return on long term funds

5
0

Interpretation: The gross profit and net profit had increased initially from the year 2004-2007
from 8.01-13.05,5.61-10.29 and decreased in the year 2008 as 10.95 and 9.34.
Analysis: Due to the implementation latest organisational aspects company increased its
expenses in the year 2008.

LEVERAGE RATIOS:
Leverage ratios can be computed from the balance sheet items to determine the
proportions of debt in total financing. Leverage ratios can also be calculated from the income
statement items by determining the exact to which operating profits are sufficient to cover the
fixed charges.
Debt equity ratio =
Leverage ratios
Long term debt / Equity
Total debt/equity
Owners fund as % of total source
Fixed assets turnover ratio

Long term debit / Shareholders Equity


2008
2008
2007
2006
2005
0.05
0.08
0.01
0.06
0.08
0.10
0.09
0.01
0.07
0.08
90.33
91.57
98.70
93.43
92.00
2.48
2.41
2.46
2.19
2.07
Page | 43

Interpretation: The Debt Equity Ratio Is Expected To Be 2:1 Ratio But It Is In 1:2 Ratio
Analysis: This Situation Creates Insecurity To Creditors.

LIQUIDITY RATIOS:
Liquidity means the ability of a concern to meet its current obligations as and when these
become due. Thus the liquidity ratios indicate the ability of a concern to meet its short-term
obligations.
Quick ratio= Quick assets / Current liabilities
Current ratio =

Current assets / Current liabilities

Liquidity ratios
Current ratio
Current ratio (inc. st loans)
Quick ratio
Inventory turnover ratio

2008
2007
2006
2005
2004
1.03
1.42
1.77
1.68
1.17
0.91
1.40
1.77
1.67
1.15
0.66
1.13
1.31
1.25
0.85
22.93
28.76
18.78
22.97
30.43

Page | 44

35
30
25
Current ratio

20

Current ratio (inc


Quick ratio

15

Inventory turnover ratio


10
5
0
2008

2007

2006

2005

2004

Interpretation: The current ratio is in between 2:1 ratio, this is in increasing trend from initial
stage. From 2004-2007 and decreased in the year 2008 as 1.03.
Analysis: One way this trend shows the, balancing of current assets and liabilities. This trend is
continued even in quick ratio and liquid ratios.

PAYOUT RATIO:
This is the relationship between the returns belonging to the equity shareholders and the
dividend paid to them. Thus is calculated as:
Pay out ratio =

dividend per share / Earning per share

Payout ratios
Dividend payout ratio (net profit)
Dividend payout ratio (cash profit)
Earning retention ratio
Cash earnings retention ratio

2008
9.78
7.36
89.53
92.25

2008
9.72
8.28
90.21
91.67

2007
9.69
7.81
90.91
92.58

2006
7.73
4.97
92.09
94.95

2005
9.02
4.40
92.01
95.86
Page | 45

120
100
80

Dividend payout ratio (


Dividend payout ratio (cash

60

Earning retention ratio


Cash earnings retention
ratio

40
20
0
2008

2007

2006

2005

2004

Interpretation: The Dividend Pay Out Ratio And Retention Ratio Is Increasing From The Year
2004-2008.
Analysis: This Is Proseperous Trend To Share Holders And Company.

COVERAGE RATIOS
This ratio indicates the times-interest-earned. It is used to examine the firms debtservicing capacity. The interest coverage ratio is the sum of net profit before interest and taxes
dividend interest charges.
Coverage Ratio = sum of net profit before interest / Taxes dividend by interest charges
COVERAGE RATIOS
Adjusted cash flow time total debt
Financial charges coverage ratio

2008
2007
2006
2005
2004
0.41
0.34
0.04
0.23
0.26
50.46
68.23
104.61
49.70
32.32
Page | 46

Fin. charges cov.ratio (post tax)

39.57

49.76

73.28

37.85

25.71

120
100
80

Adjusted cash flow time


total

60

Financial charges coverage


ratio
Fin. charges cov.ratio (post
tax

40
20
0
2008

2007

2006

2005

2004

Interpretation: The Cash Balance Is Being Adjusted From 2004-2008 Between Creditors,
Debtors And Shareholders Dividend .
Analysis: This Is In Incresing Trend From 2004-2008.This Is Prosperous To Company And Its
Stake Holders

COMPONENT RATIOS:
This ratio ensures whether the capital employed has been effectively used or not. This is
also the test of managerial efficiency and business performance. High total capital ratio is always
required in the interest of the company.
Long term assets Turnover Ratio =

Sales(net) / Capital employed


Page | 47

Component ratios
Material cost component (% earnings)
Selling cost Component
Exports as percent of total sales
Import comp. in raw mat. consumed
Long term assets / total Assets
Bonus component in equity capital (%)

2008
77.25
3.10
4.10
10.84
0.74
-

2007
73.36
3.37
3.90
12.62
0.61
-

2006
77.25
2.91
4.78
18.75
0.49
-

2005
78.30
3.34
8.89
19.69
0.52
-

2004
74.47
7.05
9.96
20.40
0.62
-

90
80
70
60

Material cost component


(%

50

Selling cost Component


Exports as percent of total

40

Import comp. in raw mat.


consumed

30

Bonus component in
equity capital (%)

20
10
0
2208

2007

2006

2005

2004

Interpretation: The Material Cost Component Ratio Is Increasing From 2004-2008.


Analysis: As the Productivity is increasing simultaneously but the selling cost component
ratio decreased gradually from the year 2004-2008,which can decline the sales percentage of
company.

SWOT ANALYSIS OF MARUTI


SUZUKI
MAJOR STRENGHTS OF MARUTI SUZUKI INDIA LIMITED

Page | 48

1) LOW LABOR COST - Maruti Suzuki India limited is operating in a country in which
cost of labor is very low as compared to other developing and developed countries. This is a
major strength for Maruti Suzuki.

2) STRONG DISTRIBUTION AND SERVICE NETWORK - Maruti Suzuki has


the largest Distribution and Service Network in India
600 showrooms covering 393 cities
150 rural format sales outlets in 143 cities
620 dealer service stations &1900 Maruti Authorized Service Stations
Over 1190 cities covered by Service Network

3) STRONG PRODUCT PORTFOLIO - Maruti Suzuki has a large and strong product
portfolio Maruti Suzukis overall portfolio consists of 11 basic models & over 150 variants
spanning across all segments of the industry.

It has widest product range in India

Majority of new showrooms & workshops coming from existing dealers

Maruti Suzuki is Present in Gasoline, Diesel and LPG

6 models launched in last 30 months including Swift Diesel & Wagon R Duo.

4) EXCLUSIVE TIE UPS WITH AUTO FINANCE COMPANIES - In India, a


large proportion of cars about 75% are sold via finance. Company`s exclusive tie ups with
financers helps the customers to get their vehicles financed easily.

MAJOR WEAKNESSES FOR MARUTI SUZUKI INDIA LIMITED Page | 49

Diesel Segment
A3
Perceived as entry level car only

MAJOR OPPURTINITIES FOR MARUTI SUZUKI INDIA LIMITED


1)

India is among the few countries that are showing a growth rate of 30% in demand for
passenger cars as domestic automobile market is growing at a high rate. Automobile
industry expert predicts that by 2050 every sixth car in the world will be for Indians

2) There are about 700 million vehicles on road in the world today. It is estimated that this
vehicle population would grow to about 1.3 billion in the year 2030. Most of this increase of
600 million will come from developing countries.These markets will look for low-

cost automobiles.India has the opportunity to meet this need. And, in the process
create a huge export market. This presents a major opportunity for Maruti Suzuki as it is a
major player in Indian automobile sector.
3) By 2010, India is expected to witness over Rs 30,000 crore of investment.
4) According to estimation the compound annual growth rate (CAGR) of Indian automobile sales
will grow at 9.5% and will touch a mark of 13,008 million by 2010.
5) About 77 % of the Indian automobile sector is still owned by 2 wheeler manufacturers, which
can be a potential market for small car manufacturers.
6) Maruti Suzuki believes that there are millions of Indians who can afford a car but for various
reasons are not buying one. With focused marketing efforts, many of these people can be
persuaded to buy a car. This is a major opportunity for the company. The company also took
Page | 50

several initiatives like Special Schemes for certain sections of society like government
employees etc., Employee referral scheme where each employee was veiled as sales man.
Dealer and vendor scheme are some other examples of these initiatives.

7)

The above graph shows the positive correlation between GDP and the no. of
cars per 1000 people. GDP of India is growing at a very healthy rate and is
expected to grow between 6 to 8 %. Indias fast paced GDP growth and pent
up demand are expected to fuel growth in automotive sales. This presents a
great opportunity for automobile manufacturers.

8) Low car penetration, about 8 cars per 1000 Population in India.

Page | 51

9) By 2020 more than half of Indias population is expected to live in urban


areas this will bring about a dramatic growth in demand of passenger cars.

10) Indian rural market is on the verge of opening up, this will present a huge
growth opportunity for automobiles manufacturers.

MAJOR

THREATS

FOR

MARUTI

SUZUKI

INDIA

LIMITED -

1) TATA`S one lakh car NANO is a big threat to Maruti Suzuki as Maruti
Suzuki is a small car manufacturing company and its smallest and
cheapest car Maruti 800 is of approx 2 lakhs . Maruti 800 is also the
smallest and cheapest car in India right now. After the final launch of
TATA`S NANO it will become the cheapest car in the Indian automobile
sector
2) Wage rates in India are increasing at a very fast pace, this can be a
potential threat to the company.

CONCLUSION

Page | 52

When summarizing the financial results of MARUTI UDYOG LIMITED. I have observed that
their working is quite reasonable financial. It is very good company. There are no any debts of
long term liabilities of the company. To conclude, from of the overall analysis of financial
management of the company, I can say that it is financial sound and well managed three
consecutive years shows and applauding position. I was also able to well understand my
financial concepts.
The formal budgeting system has the following major benefits.
1. Budgeting due to its formal time table or schedule compels managers to think ahead apart
from taking care of their current activities.
2. Budgeting, due to its approval and authorizationby thesuperiors, provides definite
expectations that are the bestframework for judging subsequent performance.
3. Budgeting helps in coordinating the various departmentsof the organization. The budget
harmonizes the goals(objectives) of the individual departments into theorganization wide goals
(objectives).

RECOMMENDATION

Page | 53

We need to know that many financial reporting frauds havetheir genesis in overly optimistic
budgets that subsequentlylead to an environment of "cooking the books" to reachunrealistic
goals.These events usually start small, with theexpectation that time will make up for a
temporary problem.To maintain organizational integrity, senior-level managersneed to be careful
to provide realistic budget directives.Lower-level managers need to be truthful in reporting
"badnews" relative to performance against a budget, even if theyfind fault with the budget
guidelines.

BIBLIOGRAPHY

Page | 54

(1) Annual reports


(2) Company databases
(3) Auto journals
(4) Industry analysis reports
(5) Company websites
(6) Articles published by Society of Indian Automobile Manufacturers
(7) www.siam.in
(8) www.ibef.org
(9) www.google.com

Page | 55

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