Maruti Suzuki

N.R. Institute Of Business Administration GLS Campus, Maida plaza Lane,Off. C.G. Road Ellisbridge, Ahmedabad – 380 006.

Certificate This is to certify that the report based on 3 years published Annual Report of Maruti Suzuki ltd. Is submitted by Varasani Mahendra Devjibhai to the N. R. Institute Of Business Administration affiliated to the Gujarat University in a partial fulfillment requirement for the completion of “practical study” at the second year B.B.A. programme for the year 2007. 1

FINANCIAL REPORT

N.R.I.B.A.

---------

----------

Director’s sign charge Date : 22/02/2008

Prof. In

ACKNOWLEDGEMENT I am highly thankful to MARUTI SUZUKI for helping me in my Practical Studies at second year B.B.A. programme. It has provided me many details and enlightens me in preparation of this financial report. I take this opportunity to thanks our director A. B. Dixit and Pro. Seema Pandit for giving me an opportunity to prepare my financial project report. She also helped me in finding out the Ratios and some important aspects.

2

FINANCIAL REPORT

N.R.I.B.A.

PREFACE Finance management in India has substantially in scope and complexity in view of recent government policy. The modern approach to corporate finance is much more than traditional approach to financial management or with more procurement of funds. In present situational financial management is real with procurement of funds and maximum utilization of it. “Finance Is A Blood Of Any Business Body”. Less capital creates problems in the business and more capital is also creating problems. In this report, I am trying to explain how we can find out financial result with the help of ratio analysis and some more in portent graphs with the help of Ratio Analysis. We can easily understand the profitability of the business, efficiency of business, useful in inter comparison. It is also useful for budgeting control and decision-making. Ratio analysis helps interested parties like share holders, investors, creditors, government also and analysis to make an evaluation of a certain aspect of a firm’s performances.

3

FINANCIAL REPORT

N.R.I.B.A.

INDEX Sr. no.

1.

Title Certificate Acknowledgement Preface Company profile

Page No. 01 02 03 05

Name of the company Registered office address Status in the market Special achievement Finance highlights Meaning of analysis and objectives of study 2.

Results of operations

Profits of three years GP,NP,EBIT,EBT,EAT Importance of cash profit (theory) Cash flow statement Conclusion 3.

Ratio Analysis Meaning and importance of ratio and classification – traditional classification & functional classification PROFITABILITY RATIO Gross profit ratio

4

FINANCIAL REPORT

N.R.I.B.A.

Net profit ratio Expense ratio Operating ratio Return on investment Return on share holders fund Return on equity share capital Return on equity shareholders fund Earning per share Dividend per share Price earning ratio Dividend yield ratio Interest coverage ratio ACTIVITY / TURNOVER RATIO: Overall turnover ratio Fixed asset turnover ratio Debtor turnover ratio Creditors ratio Creditors turnover ratio Stock turnover ratio LIQUIDITY RATIO : Current ratio Liquid ratio Quick / acid ratio LEVERAGE RATIO: Proprietary ratio Debt equity ratio Capital gearing ratio OTHERS: Long term fixed fund to fixed asset 4.

Accounting policies and notes Notes of accounts Main policies pertaining the unit Implication

5.

Director’s Report

6.

Auditors Reports Name of the auditors To state weather reports is qualified or unqualified Implication 5

FINANCIAL REPORT

N.R.I.B.A.

Common sized statement

7.

P & L A/c – common size Balance sheet – common size Comparison

Conclusion

8.

Findings Conclusion suggestion

Maruti Udyog Limited 

REGISTERED

AND

CORPORATE

OFFICE:

11th Floor, Jeevan Prakash Building, 25, Kasturba Ganghi Marg, New Delhi – 110001

 Brief Introduction Of The Production Of The Business: Maruti Udyog does the make vehicle and also produces spares and accessories of the vehicle.

 States In The Market : No.1 car producer Company in the Indian market and runner up in foreign country.

 Special Achievement : MARUTI SUZUKI HAS WON OVER 50 AWARDS SINCE YEAR 2000

6

FINANCIAL REPORT

N.R.I.B.A.

 NO. 1 IN THE AUTOMOBILES SECTOR IN THE INDIA MOST RESPECTED COMPANIES SURVEY, 2006.  RANKED AMONG THE TOP 5 CAR COMPANIES IN THE 2006 WORLD’S REPUTED CSOMPSNIES LIST PUBLISHED BY FORBES MAGAZINE.

   

NO. NO. NO. NO.

 NO . 1 06.  NO . 1

1 IN CUSTOMER SATISFACTION, 7 TEARS IN ROW, 2000 – 06. 1 IN SALES SATISFACTION, 3 YEARS IN ARAW, 2004 – 06. 1 INITIAL QUALITY STUDY, 2006. 1 IN INDIA APEAL STUDY, 2006.

IN

TOTAL CUSTOMER SATISFACTION, 5

IN

GLOBAL CORPORATE SOCIAL RESPONSIBILITY STUDY, 2006.

 RANKED

AMONG TOP

 MANUFACTURER 7

MOST

3

OF THE

IN THE

YEARS IN A ROW,

2002 –

CORPORATE IMAGE MONITOR, 2005

YEAR, 2005 FINANCIAL REPORT

N.R.I.B.A.

FINANCIAL HIGHLIGHT: YEAR Net Sales

2005 – 06

2006 - 07

120,034

145,922

Profit Before Tax.

17,500

22,798

Profit After Tax.

11,891

15,620

41.16

51.12

EPS

MEANING OF ANALYSIS AND OBJECTIVE OF STUDY : Financial statement namely the statement of the profit & loss account and the balance sheet are indication of two signify-cant factors profitability and financial soundness analysis of statements means such a treatment of the information contained to afford a diagnosis of the profitability and financial statements analysis as the process of methodical classification comparison with other co-rising question and then seeking answer for them. Finance is the very typical aspect in course of management. The main objective behind the study is to get precisely. It also helps us to study the present finance scenario. The objective is such that company’s profitability, liquidity and capacity by such analysis we can interpret the position of the company. So it is very important to study.

8

FINANCIAL REPORT

N.R.I.B.A.

[ 2.1] Profit of 3 years : PARTICULARS

2004 – 05

2005 – 06

2006 - 07

8,536

11,891

15,620

19.93 %

20.51 %

24.59 %

EBIT

16.6%

17.1%

17.7%

EAT

8,536

11,891

15,620

EBT

17500

25888

20558

Net profit Gross Profit

[ 2.2 ] IMPORTANCE OF CASH PROFIT THEORY : MEANING Cash flow means inflows that is, sources of cash which are at the disposable at the firm and outflows of the fire that is the use of the firm. The difference between inflows and outflows is either net inflow or net outflow. A cash outflow statement deals with the cash fund flow, which excludes working capital movements. The Accounting standard (A53) classifies cash flows as under: 1) Cash from operating activities 2) Cash from investing activities 3) Cash from financing activities The operating activities include receipts from sale of goods or Rendering of services receipts from royalty, fees, commission etc. Outflow is the resulting from payment to creditors for goods and services, payment for expenses such as lighting, power, rent, wages salaries etc. Only cash from operating activities is included in this report.

9

FINANCIAL REPORT

N.R.I.B.A.

IMPORTANCE OF CASH PROFIT : The cash profit is an important measure of profitability as well as liquidity. When the cash profit differs from the profit is shown in the profit and loss account or profit and loss statement. Adjusting depreciation arrives at the cash profit, amortize action of capital expenses etc. The cash profit is much less or negative compared to the profit declared in the profit and loss account. It indicates liquidity and signals for appropriate cash management. The net cash from operations can be calculated through adjustment of non-cash items like depreciation, changes in inventory and receivable and payables , and or other items for which cash offers the investing and financing activities.

CASH FLOW STATEMENT FOR THE YEAR ENDED 31st MARCH 2007 (A)

Cash flow from Operating Activities :

Net Profit before Tax Adjustments for : Depreciation Interest Expense Interest Income Dividend Income Net Loss on Sale / discarding of fixed assets Profit on sale of Investments Debts / Advances Written back Provisions no longer required written off Opening Loss of MSAIL adjusted from opening surplus on amalgamation Impact of transition provision of Accounting Standard 15 Employee benefit Operating profit before Working Capital changes Adjustments for changes in Working Capital (increase) / decrease in sundry debtors (increase) / decrease in other current Assets, Loan & advances (increase) / decrease in Inventories increase / (decrease) in current Liabilities and Provisions Cash generated from Operating Activities Taxes / received (Net of TDS) Net cash from Operating Activities 10

FINANCIAL REPORT

Rs. In million 22,798 2714 376 1109 1528 4 389 22 459 84 5 22340 1035 1523 1680 5170 26632 6352 20,280

N.R.I.B.A.

(B) Cash flow from Investing Activities : Purchase of fixed assets Sale of fixed Assets Sale of investments Purchase of investments Interest received Dividend received Net cash from Investing Activities

13955 123 109253 122444 1127 1528 24368

(C) Cash flow from Financing Activities : Proceeds from Short term borrowings Proceeds from Long term borrowings Repayment of Short term borrowings Interest paid Dividend paid

233 5675 317 280 1011

Net Cash from Financing Activities

4300

Net Increase / (Decrease) in Cash & Cash Equivalents

212

Cash and Cash Equivalents as at 1st April (Opening Balance) Cash and Cash Equivalents as at 31st March (Closing Balance)

14016 14228

Cash and Cash Equivalents comprise Cash, Cheques & Drafts (in hand) Balance with Scheduled Bank in Current Account Balance with Scheduled Bank in Deposit Account

14228 946 202 13080

Interpretation Above cash flow of Maruti Suzuki Ltd. Is shown that year 2006 – 07 net profit is higher than 2005 – 06 and this is good condition for the company. Also investing as well as financing activities cash flow describes strong condition from the previous years cash flow activities.

11

FINANCIAL REPORT

N.R.I.B.A.

3.1 MEANING & IMPORTANCE OF RATIO : An idea the financial position can be had from the balance sheet. The director’s report and chairman’s speech would assist him in foresting the future prospects of the company. However, accurate conclusions cannot be drawn from the mass of figures included in these financial statements. Hence, they are to be analyzed and interpreted with the help of a number of devices. So let us at this stage, clarify the meaning of important terms useful in our study of analysis of accounts. Ratio is a figure showing, logical relationship between any two items taken from financial statement as prepared and presented annually are of little use for guidance of prospective investors, creditors and even management. If relationships between various related items in these financial statements are established, they can provide useful dues to garage accurately the financial health and ability of business to make profit. The relation between in two related items of financial statements is known ratio.

[ 3.2 ] UTILITY OF RATIO ANALYSIS : It is very important to find the ratio of liquidity, profitability etc. Because the ratio analysis provides useful data to the management, important uses of it are given as below:

 PROFITABLITY : Useful information about the trend of profitability is from profitability ratio. The gross profit ratio, net profit ratio and ratio of return on investment give a good idea of the profitability of the business. On the basic of this ratio, investors get an idea about overall efficiency of managers and bank as well as other creditors draw useful conclusion about repaying capacity of the borrowers.

 LIQUIDITY : In fact the use of ratio was made initially to ascertain the Liquidity of business. The current ratio, acid test ratio will tell whether 12

FINANCIAL REPORT

N.R.I.B.A.

the firm will be able to meet its current liabilities and when they nature. Banks and other leaders will be able to conclude from these ratios whether the firm will be able to pay regularly the interest and loan installments.

 EFFCIENCY : The turnover ratios are excellent guide to measure the efficiency of managers. All such ratio related to sales present a good picture of the success on the business.

 INTER FIRM COMPARION : The absolute ratios of a firm are not of much use, unless they are compared with similar ratios of other firms belonging to the same industry. This is a inter firm compared to other firms comparison, which shows the strength and weakness of the firm as compared to other firms and will indicate corrective measures.

 INDICATE TREND : The ratio of the last 3 to 5 years will indicate the trend in the respective fields. A particular ratio of a company , for one year may compare favorably with industry average, but its trend shows a deteriorating position, it is not desirable only ratio analysis will provide this information.

 USEFUL FOR BUDGETARY CONTROL : Regular budgetary reports are prepared in a business where the system of budgetary control is in use. If various ratios are presented these reports, it will give a fairly good idea about various aspects of financial position.

 USEFUL FOR DECISION MAKING : Ratio guide the management in making some of the important decision, suppose, the liquidity ratios shows an unsatisfactory position, the management may decide to get additional liquid funds. Even for capital expenditure decision, the ratio of investment.

13

FINANCIAL REPORT

N.R.I.B.A.

The efficiency of each department a thus be deter minded. Thus, the ratio are the most useful I financial statement.

[ 3.3 ] CLASSIFICATION OF RATIO : 1) Profitability ratio : These ratios indicate the profit generating capacity of Business. This category includes:  Gross Profit Ratio  Net Profit Ratio  Operating ratio  Return on Company Employee’s Ratio  Return on Shareholder’s Funds  Debt Service Coverage Ratio

2) Liquidity Ratios : These ratios indicate whether short – term assets are enough to meet short - term obligation from short assets. These categories include :  Current Ratio  Liquid Ratio  Acid Test Ratio

3) Leverage Ratios : These ratios indicate compensation of company’s capital and Its distribution into debt and equity. These categories include:  Proprietary Ratio  Debt Equity Ratio  Capital Gaining Ratio

 Fixed Capital to Fixed Assets Ratio 4) Activity Ratio : These ratios indicate the efficiency of investment in the organization. These categories include :  Creditor’s Turnover Ratio  Debtors Turnover Ratio  Fixed Assets Turnover Ratio 14

FINANCIAL REPORT

N.R.I.B.A.

 Total Assets Turnover Ratio

15

FINANCIAL REPORT

N.R.I.B.A.

[ 3.2.1 ] Gross Profit Ratio : Meaning :

It is a ratio expressing relationship between Gross Profit earned to sales. It is a useful indication of the profitability of business.

Implementation :  Gross profit is result of the relation between price, sales volume and costs. A change in the gross margin can be brought about by changes in any of these factors.  The gross profit ratio can also be used in determining the extent of loss caused by theft, spoilage, damage and so on in the case of those firms which follow the policy of fixed gross profit margin in pricing their product.  The gross margin represents the limit beyond which fall in sales price are outside the tolerance limit.

Formula : =

Gross profit Sales

X 100

TABLE OF THREE YEARS RATIO : PARTICULAR 2006–07 2005-06 2004-05 Gross profit

24.59

20.51

19.93

Calculation of three years :

[ Rs. In million]

PARTICULAR Gross Profit Sales

2005 – 06 24626 120034

2006 – 07 35880 145922

2004 - 05 21744 109108

INTERPRETATION : This ratio indicates relation between G/P and Sales. For the year 200405 it was 19.93 and 2005-06 was 20.51 and increase to 24.59 in 2006-07. 16

FINANCIAL REPORT

N.R.I.B.A.

[ 3.2.2 ] Net Profit Ratio : Meaning :

Net profit ratio is valuable for the purpose of ascertaining the over-all profitability of business and shows the efficiency of operating the business.

Implementation :  The net profit ratio is indicative of management’s ability to operate the business with sufficient success not only to recover from revenue of the period the cost of merchandise or services, the expenses of operating the business and the cost of the borrowed funds, but also to leave a margin of reasonable compensation to the owners for providing their capital at risk.  The ratio of net profit ratio to sales essentially expresses the cost price effectiveness of the operation.  A high net profit margin would ensure adequate return to the owners as well as enable a firm to withstand adverse economic conditions when selling price is declaiming, cost of production raising and a low net profit margin has the opposite implication.

Formula : = Net Profit Sales

X

100

TABLE OF THREE YEARS RATIO : PARTICULAR 2006–07 2005-06 2004-05 Net profit ratio 16.47 % 16.47 % 16.47 % CALCULATON : PARTICULAR Net Profit Sales

[ Rs. In million] 2006 - 07 15620 145922

2005 –06 11891 120034

2004 – 05 8536 109108

Interpretation :

17

FINANCIAL REPORT

N.R.I.B.A.

This ratio shows a better profitability of the firm as compared to the last year i.e. 2005 – 06. This suggests a satisfactory position. It is sound financial position to the company. Higher the ratio better for the company.

18

FINANCIAL REPORT

N.R.I.B.A.

[ 3.2.3 ] Expenses Ratio : Meaning : Dividing expenses compute expenses ratio by sales. The term ‘expenses’ includes (1) COGS (2) administrative expenses (3) selling expenses and (4) financial expenses but excludes taxes, dividends and extraordinary losses due to theft of goods, good destroyed by fire and so on.

Implementation :  Some accountants calculate expenses ratio in respected of raw – material consumed, direct wages and factory expenses.  It is closely related to the profit margin, gross as well as net.

Formula : =

Expenses Sales

X

100

TABLE OF THREE YEARS : PARTICULAR 2006–07 Expenses ratio

92.03

CALCULATION : PARTICULAR Expenses Sales Total

2005-06 2004-05 89.23

22.79

[ Rs. In million] 2006–07 100416 109108 209524

2005– 06

2004-05

107110 120034 227144

129349 145922 275271

INTERPRETATION :

This ratio shows relationship between expanses to sales. Above table shows that for the year 2004 – 05 it was 88.64 % the increase in 2005 – 06 up to 89.23% that indicates there is increase in operating expenses for the year 2006 – 07 it is 92.03% and it is higher than previous tear which shows increase in operating expenses.

19

FINANCIAL REPORT

N.R.I.B.A.

[ 3.2.4 ] OPERATING RATIO : Meaning : Operating Ratio is computed by dividing expenses by sales. The term ‘operating ratio’ includes (1) COGS (2) administrative expenses (3) selling expenses and (4) financial expenses but excludes taxes, dividends and extraordinary losses due to theft of goods, good destroyed by fire and so on.

Implementation :  Some accountants calculate expenses ratio in respected of raw – material consumed, direct wages and factory expenses.  It is closely related to the profit margin, gross as well as net.

Formula: =

C O G S + Operating expenses Net sales

TABLE OF THREE YEARS : PARTICULAR 2006–07 operating Ratio 87.33

2005-06 2004-05 86.90 83.89

Calculation : PARTICULAR Operating Expenses COGS Net sales TOTAL

X 100

[ Rs. In million] 2006-07

2005-06

7928 87364 145922 182556

8909 95408 120034 224351

2004-05 12370 110042 109108 232454

INTERPRETATION:

This ratio shows relationship between COGS + operating expanses to sales. Above table shows that for the year 2004 – 05 it was 87.33 % the increase in 2005 – 06 up to 86.90 % that indicates there is increase in operating expenses for the year 2006 – 07 it is 83.89 % and it is lower than previous year which shows increase in operating expenses. 20

FINANCIAL REPORT

N.R.I.B.A.

[ 3.2.5 ] Return on investment / Capital employed : Meaning :

The profitability ratio can be computed by relating the profits of a firm to its investment.

Implementation :  Return on investment indicates the profitability of business and is very much in use among financial analysis.  The ratio is an indicator of the measure of the success of a business from the owners’ point of view. The ultimate interest of any business is the rate of return on invested capital. It may be measured by the ratio of income to equality capital.  It determines whether a certain goal has been achieved or whether an alternative use of capital is justified.

Formula : = EBIT Capital employed

X 100

TABLE OF THREE YEARS : PARTICULAR Return on investment / capital employed ratio

2006 – 07 34.88 %

CALCULATION :

2005– 06 37.42 %

2004- 05 40.78 %

[ Rs. In million]

EBIT Earning before interest and tax

2006 - 07 25888

2005- 06 20558

2004– 05 18140

CAPITAL EMPLOYED Capital Reserve and surplus + long term loan

2006 - 07 1445 67094

2005- 06 1445 53081

2004– 05 1445 42343

INTERPRETATION:

21

FINANCIAL REPORT

N.R.I.B.A.

This ratio shows relationship between E B I T to CAPITAL EMPLOYED. Above table shows that for the year 2004 – 05 it was 22.19 % the increase in 2005 – 06 up to 26.54 % that indicates there is increase in E B I T for the year 2006 – 07 it is 24.60 % and it is higher than previous year which shows decrease in capital employed. Higher the ratio, it is better for the company.

[ 3.2.6 ] Return on shareholder’s fund: Meaning :

It is carries the relationship of return to the sources of funds yet another step further.

Implication :

 It expresses the profitability of a firm in relation to the funds

supplied by the creditors and owners taken to gather, the return on shareholders’ equity measures exclusively the return on the owners’ funds.

Formula : = Net profit Share holders fund

X

100

TABLE OF THREE YEARS : PARTICULAR

2006- 07 2005-06

2004– 05 21.90 %

Return on shareholder’s fund ratio

24.30 %

23.70 %

CALCULATION : Net Profit

2006 - 07

[ Rs. In million] 2005– 06 2004– 05

PAT

15620

11891

8536

Shareholders’ funds

2006 - 07

2005– 06

2004– 05

Capital Reserve and surplus Long term funds

1445 67094

1445 53081

1445 42343

INTERPRETATION:

The ratio indicates relationship between Net profits to share holders fund therefore higher the returns to shareholders. For the year 2004 05 it is 21.90 % that

22

FINANCIAL REPORT

N.R.I.B.A.

increase in the year 2005 – 06 up to 23.70.This ratio shows downward trend in the ratio in return on shareholders fund for this company.

[ 3.2.7 ] Return on Equity share capital : Meaning :

It is obtained by dividing net profit after tax deduction of performance dividing by his amount of ordinary share capital plus free reserve.

Implementation :  This is probably the single most important ratio to judge whether the firm has earned a satisfactory return for its equity – holders or not.  Its adequacy can be judge by : (1) comparing it with the past record of the same form, (2) comparisons with the overall industry average.

Formula : = Net profit after tax -- Preference dividend Equity capital

X

100

TABLE OF THREE YEARS : PARTICULAR

2006 - 07

Ratio of Return on Equity share capital

22.79 %

2005 – 06 21.81 %

CALCULATION : Net profit after tax EBIT (--)Interest EBT (--)PAT

2004 – 05 19.49 %

[ Rs. In million] 2006- 07 25888 3090 22798 15620

2005– 06 20558 3058 17500 11891

2004– 05 18140 5091 13049

509 1

Shareholders’ funds

2006-07

2005-06

2004-05

Capital

1445

1445

1445

23

FINANCIAL REPORT

N.R.I.B.A.

INTERPRETATION:

The ratio indicates relationship between Net profits to share holders fund therefore higher the returns to shareholders. For the year 2004 – 05 it is 19.49 % that increase in the year 2005 – 06 up to 21.81 %. This ratio shows downward trend in the ratio in return on shareholders fund for this company.

[ 3.2.8 ] Return on Equity share holders fund : Meaning :

It is obtained by dividing net profit after tax deduction of performance dividing by his amount of ordinary share capital plus free reserve.

Implementation :  This is probably the single most important ratio to judge whether the firm has earned a satisfactory return for its equity – holders or not.  Its adequacy can be judge by : (1) comparing it with the past record of the same form, (2) comparisons with the overall industry average.

Formula : = Net profit after tax -- Preference dividend Equity share holders’ funds

X

100

TABLE OF THREE YEARS : PARTICULAR Ratio of Return on Equity share capital

2006–07 22.79 %

CALCULATION : Net profit after tax EBIT (--)Interest EBT (--)PAT

24

2005-06 2004– 05 21.81 % 19.49 %

[ Rs. In million] 2006– 07

2005– 06

2004– 05

25888 3090 22798 15620

20558 3058 17500 11891

18140 5091 13049

FINANCIAL REPORT

509 1 N.R.I.B.A.

Shareholders’ funds

2006- 07

2005– 06

2004 –05

Capital Reserve and surplus

1445 67094

1445 53081

1445 42343

INTERPRETATION:

For the year 2004 – 05 it is 19.49 % that increase in the year 2005 – 06 up to 21.81%. These ratios shows downward trend in the ratio in return on shareholders fund for this company.

[ 3.2.9 ] Earning per share : Meaning : EPS measures the profit available to the equity shareholders on a per share basis, that is, the amount that they can get on every share head.

Implementation :  Earning per share is a widely used ratio. EPS s a measure of profitability

Formula : =

profit after tax – preference dividend No. of equity shareholders fund

X

100

TABLE OF THREE YEARS : PARTICULAR Ratio of Earning per share

2006 – 07 2005– 06 2004 – 05 54.06 41.06 29.55

CALCULATION : PARTICULAR PAT No. of shares

[ Rs. In million] 2006 - 07

2005 – 06

2004 – 05

15620 11891 8536 288910060 288910060 288910060

INTERPRETATION :

25

FINANCIAL REPORT

N.R.I.B.A.

This ratio indicates the earning per share for shareholders of company. In the year 2004 – 05 ratio is 29.55 % and 2005 – 06 it is 41.16 % and its increase on 54.06 %.therefore it is good for company as well as shareholders.

[ 3.2.10 ] Dividend per share : Meaning : DPS is the dividend paid to shareholders on a per share basis. In the other words, DPS is the Net distributed profit belonging to the shareholders divided by the No. of ordinary shares outstanding.

Implementation :  The DPS would be a better indicator than EPS as the former shows what exactly is received by the owners.  Like the EPS, the DPS is also should not be taken at its face

value as the increase DPS may not be a reliable measure of profitability as the equality base may have increase due to increase relation without any change in the number of outstanding shares.

Formula : =

total dividend declared No. of equity shares

TABLE OF THREE YEARS : PARTICULAR Ratio of dividend per share

2006 – 07 2005– 06 2004 – 05 4.50 3.50 2.00

CALCULATION : PARTICULAR

26

[ Rs. In million] 2006 - 07

2005 – 06 2004 – 05

FINANCIAL REPORT

N.R.I.B.A.

Dividend declared No. of shares

1300 1011 8536 288910060 288910060 288910060

INTERPRETATION : This ratio indicates the total dividend declared to no. of shares. For the year 2004 – 05 it is 2.00 % and 2005 – 06 is3.50 % and increase on 4.50 % in the year 2006 – 07.

[ 3.2.11 ] Price earning ratio : Meaning : It is closely related to the earning yield leanings price ratio. It is actually the reciprocal of the latter. Thus ratio is computed by dividing the market price of the shares by the EPS.

Implementation :  The price earning ratio reflects the price currently being paid by the market for each Rupee of currently reported EPS. In other words, the PIE ratio measures investors’ expectations and the market appraisal of the earnings. Therefore, only normally sustainable earning associated with the assets are taken into account.

Formula : =

market value per share Earning per share

TABLE OF THREE YEARS : PARTICULAR 2006-07 2005-06 2004–05 Ratio of price 17.58 21.95 29.55 earning ratio CALCULATION :

[ Rs. In million]

PARTICULAR

2006-07

2005-06

2004-05

Market value

856

933

950

27

FINANCIAL REPORT

N.R.I.B.A.

EPS

29.55

41.16

54.04

INTERPRETATION :

This ratio indicates the earning per share for shareholders of company. In the year 2004 – 05 ratio is 17.58% and 2005 – 06 it is 21.95% and it’s increase on 29.55%. Therefore it is good for company as well as shareholders.

[ 3.2.12 ] Dividend yield ratio : Meaning :

Dividend yield ratio is closely related to the EPS and DPS. While the EPS and DPS are based on the book value per share, the yield is expressed in terms of the market value per share. The earnings yield may be defined as the ratio of earnings per share to the market value per ordinary share.

Implementation :

 The dividend yield ratio is calculated by dividing the cash

dividends per share by the market value per share.

Formula : =

Dividend per share Market value share

TABLE OF THREE YEARS : PARTICULAR 2006-07 2005-06 2004– 05 Ratio of dividend 0.04 --yield CALCULATION :

[ Rs. In million]

PARTICULAR

2006- 07

Dividend per share Market value per share

4.50 950

28

2005– 06 2004– 05 ---

FINANCIAL REPORT

---

N.R.I.B.A.

Note: There is no information about dividend of 2004-05-06. INTERPRETATION :

This ratio indicates the earning per share for shareholders of company. In the year 2004 – 05 ratio is 29.55 % and 2005 – 06 it is 41.16 % and its increase on 54.06 %.therefore it is good for company as well as shareholders.

[ 3.2.13 ] interest coverage ratio : Meaning :

It is also known as ‘time interest – earned ratio’. This ratio measures the debt servicing capacity of a firm insofar as fixed interest on long term loan is concerned. It is determined by dividing the operating profit or earning before interest and taxes ( EBIT ) by the fixed interest changes on loans.

Implementation :  This ratio uses the concept of net profits before taxes because tax is calculated after paying interest on long term loan.  This ratio as the name suggests, show how many times the interest changes are covered by EBIT out of which they will be paid.

Formula : =

EBITD Interest

TABLE OF THREE YEARS : PARTICULAR Interest coverage Ratio

2006 – 07 2005 – 06 68.85 100.70

CALCULATION : PARTICULAR

29

2004 – 05 50.39

[ Rs. In million] 2006 - 07

2005 – 06

FINANCIAL REPORT

2004 – 05 N.R.I.B.A.

EBDIT Fix interest

25888 376

20558 204

18140 360

INTERPRETATION : This ratio indicates the EBDIT to interest. In the year 2004 – 05 ratio is 50.39 and 2005 – 06 it is 100.70 and it’s decrease on 68.85.therefore it is good for company as well as shareholders.

[ 3.3.1 ] Overall turnover ratio : Meaning :

The amount invested in business is invested in all capital employed and sales are affected through them to earn profits so in order to find relation between net sales to capital employed.

Implementation :

 The usefulness of the Du Pont analysis lies in the fact that it

presents the overall picture of the performance of a firm as also enables the management to identify the factors which have a bearing on profitability.

Formula : = Net sales Capital employed TABLE OF THREE YEARS : PARTICULAR 2006-07 2005-06 2004-05 Overall Ratio 2.08 2.37 2.75 CALCULATION :

[ Rs. In million]

PARTICULAR

2006-07

2005-06

2004–05

Net sales Capital employed

185922 69872

120034 50527

109108 39545

INTERPRETATION :

30

FINANCIAL REPORT

N.R.I.B.A.

This ratio indicates net sales to capital employed. In the year 2004 – 05 ratio is 2.75 and 2005 – 06 it is 2.37 and it’s decrease on 2.08 in the year 2006 – 07. Therefore it is bad for company.

31

FINANCIAL REPORT

N.R.I.B.A.

[ 3.3.2 ] fixed assets turn over ratio : Meaning :

It is based on the relationship between the sales and assets of the firm. A reference to this was made while working out the overall profitability of a form as reflected in its earning power.

Implementation :

 To ascertain efficiency and profitability of the business. The

higher the turnover ratio, the more efficiency is the management and utilization of the assets while low turnover ratios are indicative of underutilization of available resources.

Formula : = sales Fixed assets TABLE OF THREE YEARS : PARTICULAR 2006-07 2005-06 2004–05 Fixed assets 5.03 6.72 5.69 turnover Ratio CALCULATION :

[ Rs. In million]

PARTICULAR

2006-07

2005-06

2004-05

Net sales

145922

120034

109108

Fixed assets

28986

17872

19158

INTERPRETATION : Fixed turn over ratio indicates the turnover of the company in one year. In the year 2004 – 05 ratio is 5.69 and 2005 – 06 it is 6.72 and its decrease on 5.08 in the year 2006 - 07. Therefore, it is bad for company.

32

FINANCIAL REPORT

N.R.I.B.A.

[ 3.3.3 ] Debtor turn over ratio : Meaning :

It is allied and closely related to this is the average collection period. It is the test of the liquidity of the debtors of a firm.

Implementation :  This figure should be measured, as in the case of average inventory, on the basis of the monthly average. It suggests that number of times the amount of credit sale is collected during the year.

Formula : =

credit sales Avg. Debtors

TABLE OF THREE YEARS : PARTICULAR 2006-07 2005-06 Debtor turnover 20.94 19.19 Ratio CALCULATION :

2004– 05 16.90

[ Rs. In million]

PARTICULAR

2006-07

2005-06

2004-05

Sales Avg. Debtors

145922 6967.5

120034 6271.5

109108 6444.5

INTERPRETATION :

Debtor turnover ratio indicates credit sales to avg. debtors. In the year 2004 – 05 ratio is 16.90 and 2005 – 06 it is 19.19 and it’s increase on 20.94 in the year 2006 – 07. Therefore, it is good position for company. How efficiently the amount is collected from the customers from the credit sales. As compare to previous year the no. of days collection period increase which indicate inefficiency of collection department. Lower the collection period and higher debtor turnover ratio is advisable.

33

FINANCIAL REPORT

N.R.I.B.A.

[ 3.3.4 ] Creditor ratio : Meaning :

It is the no. of days within which we make payment to our creditors for credit purchases it obtained from creditor ratio.

Implementation :  The generally the longer credit period achieved means the operation of the payment being financial interest feels by supper funds.

Formula : = creditor + B / P Credit Purchases

X

365

TABLE OF THREE YEARS : PARTICULAR 2006-07 200506 Creditors Ratio 30.64 20.77 CALCULATION :

2004–05 18.82

[ Rs. In million]

PARTICULAR

2006 -07

2005– 06 2004– 05

Creditors Credit purchases

9096 108362

5551 97554

4637 89632

INTERPRETATION :

Creditor ratio indicates creditor to credit purchase. In the year 2004 – 05 ratio is 18.82 and 2005 – 06 it is 20.77 and its decrease on 18.88 in the year 2006 – 07. Therefore, it is good position for company.

34

FINANCIAL REPORT

N.R.I.B.A.

[ 3.3.5 ] creditor turn over ratio : Meaning :

It is the no. of days within which we make payment to our creditors for credit purchases it obtained from creditor ratio.

Implementation :

 The generally the longer credit period achieved means the

operation of the payment being financial interest feels by supper funds.

Formula : = No. of days in a year Creditor’s ratio TABLE OF THREE YEARS : PARTICULAR 2006-07 2005-06 2004-05 creditor turnover 11.91 17.57 19.33 Ratio CALCULATION :

[ Rs. In million]

PARTICULAR

2006-07

2005-06

2004-05

Days Creditors ratio

365 30.64

365 20.77

365 18.88

INTERPRETATION :

Creditor ratio indicates creditor to credit purchase. In the year 2004 – 05 ratio is 19.33 and 2005 – 06 it is 17.57 and its increase on 11.91 in the year 2006 – 07. Therefore, it is good position for company.

35

FINANCIAL REPORT

N.R.I.B.A.

[ 3.3.6 ] stock turnover ratio : Meaning :

It is the no. of times the average stock is turned over during the year is known as stock turnover ratio. It measures the relationship between COGS and inventory level.

Implementation :  This approach has the advantage of being free from bias as it smoothens out the fluctuations in the inventory level at different period.  It is measures how quickly inventory is sold. it is a test of efficient inventory management.  To judge whether the ratio of a firm is satisfactory or not.

Formula : = cost of good sold Average stock TABLE OF THREE YEARS : PARTICULAR Stock turnover Ratio

2006 – 07 2005 –06 2004 – 05 13.80 12.33 15.80

CALCULATION :

[ Rs. In million]

PARTICULAR

2006-07

2005-06

2004-05

COGS Avg. stock

110042 7972

45408 7737

87364 5532

INTERPRETATION :

Stock turnover ratio indicates cost of goods sold to average stock. In the year 2004 – 05 ratio is 15.80 times and 2005 – 06 it is 12.33 times and it’s increase on 13.80 times in the year 2006 – 07. Therefore, it is good for company. How efficiently stock rate in the year Higher the ratio, better position of the company as well as efficiency.

36

FINANCIAL REPORT

N.R.I.B.A.

[ 3.4.1 ] Current Ratio : Meaning :

The current ratio is the ratio of total current assets to total current liability. It is calculated by dividing current assets by current liability.

Implementation :

 The current ratio of a firm measures its short term solvency.

That is a measure of margin of safety to the creditors. The fact that a firm can rarely count on such an even flow requires that the size of the C.A. should be sufficiently larger than C.L. so that the firm would be assured of being able to pay its current maturing debts as and when it becomes due.

Formula : = current Assets Current liability TABLE OF THREE YEARS : PARTICULAR Current Ratio

2006–07 1.54 : 1

CALCULATION :

2005-06 2004– 05 1.52 : 1 1.84 : 1

[ Rs. In million]

PARTICULAR

2006-07

2005-06

2004-05

Current assets Current liability

38459 25015

37407 198771

29720 16080

INTERPRETATION :

Current ratio indicates current assets to current liability. In the year 2004 – 05 ratio is 1.84 : 1 and 2005 – 06 it is 1.89 : 1 and it’s decrease on 1.54 : 1 in the year 2006 – 07. Therefore, it is good for company. Mainly 2 : 1 is good. It indicates, repaying condition of the company to the current liabilities. The standard current ratio must be 2:1.

37

FINANCIAL REPORT

N.R.I.B.A.

[ 3.4.2 ] liquidity Ratio : Meaning :

It is obtained by dividing the liquid assets by liquid liabilities. It liquid ratio is designed to show the amount of cash available to meet immediate payments.

Implementation :

 The importance of adequate liquidity in the sense of the ability of

a firm to meet short term obligations when they become due for payment can hardly be overstressed.  In fact liquidity is a prerequisite for the very survival of a firm. It measures ability of a firm to meet its short term obligations and reflect the short term finance strength of a firm.

formula : =

liquid assets Liquid liability

TABLE OF THREE YEARS : PARTICULAR Liquid ratio

2006 – 07 2005– 06 2004 – 05 1.27 : 1 1.52 : 1 1.53 : 1

CALCULATION :

[ Rs. In million]

PARTICULAR

2006-07

2005-06

2004-05

Liquid assets Liquid liability

31327 24575

28597 18825

23054 15095

INTERPRETATION :

Liquid ratio indicates liquid assets to liquid liability. In the year 2004 – 05 ratio is 1.53 : 1 and 2005 – 06 it is 1.52 : 1 and it’s decrease on 38

FINANCIAL REPORT

N.R.I.B.A.

1.27 : 1 in the year 2006 – 07. Therefore, it is good for company. How effectively the liability paid off. The standard liquidation must be 1:1.

[ 3.4.3 ] Quick / acid test ratio : Meaning :

The measure of absolute liquidity may be obtain by comparing only cash and bank balance as well as readily marketable securities with liquid liabilities.

Implementation :  This ratio is the most rigorous and conservative test of a firm’s liquidity position. Further, it is suggested that it would be useful for the management.

formula : =

Quick assets Liquid liability

TABLE OF THREE YEARS : PARTICULAR Quick / acid test ratio

2006 – 07 2005– 06 2004 – 05 0.79 1.17 1.13

CALCULATION :

[ Rs. In million]

PARTICULAR

2006–07

2005–06

2004-05

Quick assets Liquid liability

23853 24575

22136 18825

17059 15095

INTERPRETATION :

Quick / acid test ratio is indicates quick assets and liquid liability. In the year 2004 – 05 ratio is 1.13 : 1 and 2005 – 06 it is 1.17 : 1 and it’s decrease on 0.97 : 1 in the year 2006 – 07. Therefore, it is good for company.

39

FINANCIAL REPORT

N.R.I.B.A.

[ 3.5.1 ] Proprietary ratio : Meaning :

The ratio shows the proportion of proprietors’ funds to the total assets employed in known in the proprietary ratio.

Implementation :  Proprietary ratio helps to known how many proprietary funds to total assets.

Formula : = Proprietary fund Net asset TABLE OF THREE YEARS : PARTICULAR 2006-07 2005-06 2004–05 Proprietary fund ratio

63.22 %

CALCULATION :

66.12 %

60.65 %

[ Rs. In million]

PARTICULAR

2006-07

2005-06

2004-05

Proprietary fund Total asset

64198 101537

50127 75793

38845 64044

INTERPRETATION :

This ratio indicates the proprietary funds to total assets. For the year 2004 – 05 it is 60.65 %and 2005– 06 is 66.12 % and decrease in 2006 – 07 it is 60.65 %. This is a bad for company.

40

FINANCIAL REPORT

N.R.I.B.A.

[ 3.5.2 ] Debt equity ratio : Meaning :

The relationship between borrowed funds and owner’s capital is a popular measure of the long term financial solvency of a firm. This relationship is shown by the debt – equity ratio.

Implementation :  This ratio reflects the relative claims of creditors and shareholders against the assets of the firm. Alternatively this ratio indicates the relative proportions of debts and equity in financing the assets of a firm.  The D/E ratio is an important tool of financial analysis to appraise the financial structure of a firm. It has important implication from view point of the creditors, owners and the firm itself.

Formula : = long term liabilities Shareholders fund TABLE OF THREE YEARS : PARTICULAR Debt – equity ratio

2006 – 07 2005– 06 2004 – 05 8.84 0.79 22.19

CALCULATION :

[ Rs. In million]

PARTICULAR

2006-07

2005–06

2004–05

Debt Equity

5674 64198

400 50127

700 38845

INTERPRETATION : 41

FINANCIAL REPORT

N.R.I.B.A.

This ratio indicates the debt to equity ratio. For the year 2004 – 05 it is 1.80 %and 2005– 06 is 0.79 % and decrease in 2006 – 07 it is 8.84%. This is a bad for company as compare to 2005-06 year is more debt ratio which indicate the more realize on debt fund rather owned fund. The good impact is interest burden will be more indirectly.

[ 3.5.3 ] capital gearing ratio : Meaning :

This ratio expresses the proportion of preference capital and ordinary capital the higher ratio, the greater propos ion of preference capital and debenture to ordinary capital.

Implementation :  Capital gearing ratio is helps to preference share and dividend to equity share and helps to know about company’ s capital and overall growth.

Formula : = fixed investment barring capital Ordinary capital TABLE OF THREE YEARS : PARTICULAR Capital gearing ratio

2006 – 07 2005– 06 2004 – 05 4.36 0.50 2.13

CALCULATION :

[ Rs. In million]

PARTICULAR

2006-07

2005-06

2004-05

Deb. + preference capital Ordinary capital

6308

717

3076

1445

1445

1445

INTERPRETATION :

This ratio indicates the debenture and preference capital to ordinary share. For the year 2004 – 05 in4.13% and 2005 – 06 is 0.50%and increased in 2006 – 07 is 2.13. This is bad for the company.

42

FINANCIAL REPORT

N.R.I.B.A.

ACCOUTING POLICIES 1)BASIS OF PREPARATION OF ACCOUNTS These accounts have been prepared in accordance with the historical. Cost convention, the applicable accounting Standards issued by the institute charted accounts of India and the relent provisions of the companies act, 1956.

2) FIXED ASSETS

Fixed Assets (except freehold lamed which is carried at cost) are carried at cost of acquisition or construction or at manufacturing cost. [in case of own manufactured assets ] in the year of capitalization less accumulated depreciation. Assets required under finance lease are capitalized at the lower of their fair value and present value of minimum lease payments.

3) DEPRECIATION Fixed assets excepts for lease hold land are depreciated on the straight line method on a prorate basis from the month in which each asset is put, to use, at the following rates :

1.

Assets capitalized before 02/04/1987. Depreciation has been provided at the rates computed in accordance with sation 205 (2) (b) of the companies act, 1956, in terms of circular no.1186 dated 21/05/86 of the government of India.

2. Assets capitalized on or after 02/04/1987. Depreciation has been provided at the rates. Prescribed in schedule x/v to the companies act 1956.except for certain fixed Assets. Where based 43

FINANCIAL REPORT

N.R.I.B.A.

on the managements estimates of the useful life of the assets , higher depreciation has been provide on the straight line method. a) Lease- hold land is amortized over the period of lease.

b)

In case historical cost of an asset undergoes a change due to an increase or decrease in related long term liability. On account of foreign exchange fluctuations, change in duties etc, the depreciation on the revised unamortized despicable amount is provided prospectively over the residues useful life of asset.

4) INVESTMENTS • •

Investments to be held for period exceeding one year, are classified as long term investments. Long term investments are valued at cost, provision for domination in the value of such investment is made. Only if such a decline is, other then temporary on individual investment basis.

5) INVENTORIES a) Inventories are valued of lower of cost determined on the weighted average basis and net realizable value. b) Tools are written off over a period of three years except for tools valued at Rs.5000/- or less individually which are charged off to revenue in the year of purchase.

c)

Machinery spares (other than those supplied along with main plant and machinery, which are capitalized and depreciated accordingly) are charged to revenue on consumption. Except those valued at Rs. 5000/- or less individually, which are charged off to revenue in the year of purchases.

6) INVESTMENTS Current investments are valued at the lower of cost and fair value. Long term investments are valued at cost except. In the case of a permanent diminution in their value, in which case the necessary provisions made.

44

FINANCIAL REPORT

N.R.I.B.A.

7) RESEARCH AND DEVELOPMENT Revenue expenditure on research and development is charged off against the profit of the year in which it is incurred. Capital expenditure on research and development is shown as an addition to fixed assets depreciated accordingly.

8) RETIREMENT BENIFITS COSTS The company has Defined contribution plans for post employment benefits’ namely Provident Fund and Superannuation Fund which are recognized by the income tax authorities. These funds are administered through trust and the company’s contributions thereto are charged to revenue every year. The company also maintains insurance policy to fund post employment medical assistance scheme, which is Defined contribution plan administered by New India Insurance Company (NIIC). The company’s contribution to state plans namely Employee state insurance fund and Employee Pension Scheme 1995 are charged to revenue every year. The company has Defined benefits plans namely leave Encashment / compensated absence. Gratuity and Retirement Allowance for employees, the liability for which is determined on the basis of an actuarial valuation at the end of the year. The Gratuity Fund is recognized by the income tax authorities and is administered through trusts. Termination benefits are recognized as an expense immediately. Gains and losses arising out of actuarial evaluations are recognized immediately in the Profit and Loss account as income or expense.

9) DIFERRED TAXES Tax expense of the period, comprising current tax, fringe benefits tax and deferred tax, is included in determining the net profit / (loss) for the year. Current tax is recognized based on assessable profit Compute in accordance with the income tax act and at the prevailing tax rate. Deferred tax is recognized for all timing differences. Deferred 45

FINANCIAL REPORT

N.R.I.B.A.

tax assets are carried forward to the extent it is reasonably/ virtually certain that future taxable profit will be available against which such deferred tax assets can be realized. Deferred tax assets are reviewed at each balance sheet date and written down /written up to reflect the amount that is reasonably / virtually certain to be realized. Deferred tax assets and liabilities are measured at the tax rates that have been enacted or substantively enacted at the balance sheet date.

10) PROVISION AND CONTINGENCIES The company creates a provision when there is a present obligation as a result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation. A disclosure of contingent liability is made when there is a possible obligation or a present obligation that will probably not require out flow of resources or where a reliable estimate of the obligation can not be made.

46

FINANCIAL REPORT

N.R.I.B.A.

NOTE S OF ACCOUNTS 1) C0NTINGENT LIABILITIES : a) Claims against the Company disputed and not acknowledged as debts :

1)

Sales tax demands of Rs. 50 million( previous year Rs. 50million ). Against this, the company has deposited a sum of 2) Rs. 2 million( previous year Rs. 2 million )under protest. 3) Excise duty demands / showcases – cause notices of Rs.2,592 million ( previous year Rs. 1,790 million ). Against this, the company has deposited a sum of Rs. 27 million ( previous year Rs. 29 million ) under protest.

4)

Customs duty demands of Rs. 118 million ( previous year Rs. 118 million against this the company has deposited a sum of Rs. 22 million ( previous year Rs. 22 million ) under protest.

5) Income tax demands of Rs. 8,157 million (previous year Rs. 7,620 million) against this the company has deposited a sum of Rs. 4,869 million ( previous year Rs. 2,756 million ) under protest.

6)

Service tax demands of Rs. 8,157 million (previous year Rs. 7,620 million).

a.

Guarantee given to HDFC Limited for term loan of Rs.300million (previous year Rs. 300 million (previous year Rs. 300 million)givenbyHDFC Limited to employees coOperative House Building SocietyLimited, Bonds, Against this, the contingent liability as at the year – end is Rs. Nil ( previous year Rs. 34 million ).

b.

As co-lessee in agreements entered into between various vendors of the company, as lessee, and banks as

47

FINANCIAL REPORT

N.R.I.B.A.

lessors for leasing of dies and moulds of certain models aggregating Rs. 2,000 million ( previous year Rs. 15 million )

c.

A Guarantee given to HDFC Bank against non-fund based facilities granted by the Bank to a group company Suzuki Powertain India Limited of Rs. 2,000 million(previous year Rs.2,000 million).Against this the contingent liability as at the year end is as Rs. 26 million.

• •

•

•

•

48

Outstanding commitments under letters of credits established by the company aggregate to Rs.1,050 million. Cotimated value of contracts on capital account , excluding Capital advances, remaining to be executed and not provided for, amount to Rs. 8,076 million. Consumption of Raw material and components includes a provision of Rs. 56 million and is net of Rs. Nil for earlier years, on account of estimated reversal of tax benefit on quantity differences on inputs. The company was granted sales tax benefit in accordance with the provisions of rule 28C of Haryana General Sales Tax Rules, 1975 for the period from 1st August, 2001 to 31st July, 2015. The ceiling amount of concession to be availed of during entitlement period is Rs. 5,644 million. Till 31st March 2007, the company has availed of sales tax benefits amounting to Rs. 1,469 million(previous year Rs.1150 million ). The company is primarily in the business of manufacture, purchase and sale of Motor Vehicles and spare parts (“ automobile ”). The other activities of the company comprise facilitation of Pre-owned Car sales, Fleet Management Car FINANCIAL REPORT

N.R.I.B.A.

Financing. The income from these activities, which are incidental to the Company’s business is not material, in financial terms but contribute significantly ingenerating the demand for the products of the company. Accordingly segment information has not been disclosed.

FINANCIAL RESULTS : Maruti’s performance during the year as compared with that during the previous year is summarized below :

Gross Total Income Profit before Tax Provision for taxation ( Incl. Prev. Year ) Profit after tax Balance brought forward MSAIL (Maruti Suzuki Automobiles India Limited ) Loss : Adjusted On Amalgamation & Transition Adjustment for employee benefits Profit available for appropriation Appropriations : Debenture Redemption Reserve General Reserve Proposed Dividend Corporate Dividend tax Balance carried forward to balance sheet

Figures in Rs. Million 2006 - 07 2005 – 06 178,043 151,823 22,798 17,500 7,178 15,620 43,939

5,609 11,891 34,421

88 59,471

0 46,421

17 1,562 1,300 219 56,373

31 1,189 1,011 142 43,939

DIVIDEND : The Board recommends a dividend of 90% (i.e. Rs.4.50 Per equity share of Rs. 5 each ) for the year ended 31 st March 2007 amounting to Rs. 1,300 million as against a dividend of 70% amounting to Rs.1,011 million , paid for the year ended 31st March 2006.

49

FINANCIAL REPORT

N.R.I.B.A.

NETWORK : The record sales performance was effected through Maruti‘s vast dealership network. The new car sales network grew from 375 outlets to 500 during the year. These outlets covered 312 cities across the country. In addition to this, there are 223. Maruti true value outlets spread across 148 cities , which are engaged in the sale , purchase and exchange of pre owned cars. Maruti true value is the largest organized pre-owned car sales network in India. The service network had a total of 2445 service outlets, covering 1172 cities.

DIRECTORS : As per Articles of Association of the company and relevant provisions of the companies act, 1956,Mr. R.C.Bhargava ,Mrs. Pallavi Shroff and Mr. Shuji Oishi are liable to retire by rotation at the ensuing Annual General Meeting and, being eligible, offer themselves for reappointment, During the year, Mr. Tsuneo Kobayashi was elevated as Senior Joint Managing Director with effect from 13th November 2006. Pursuant to the promotion and transfer to Suzuki Motor Corporation, japan, Mr. Shinichi Takeuchi has resigned with effect from close of hours of 26th May 2007, from the post of Director and joint Managing Director. The Board records its appreciation for the invaluable contribution made by him during his tenure. Mr. Masayuki Osada was appointed as Director and whole-time Director designated as Director (Research & Development) w.e.f26th July 2007 to fill the casual vacancy caused by the resignation of Mr. Takeuchi. All the above appointments/ re-appointments are subject to the approval of the members in the ensuing Annual General Meeting. The brief resume/ details relating to the Directors who are to be appointed/re-appointed as stipulated under listing Agreement executed with the stock exchanges are furnished in the explanatory statement of the notice of the ensuing Annual General Meeting. DIRECTORS’ RESPONSIBILITY STATEMENT

:

As required under section 217(2AA) of the companies Act, 1956, your Directors confirm having :

50

FINANCIAL REPORT

N.R.I.B.A.

a) Followed in the preparation of the Annual Accounts, the applicable accounting standards with proper explanation relating to the material departures. b) Selected such accounting policies and applied them consistently and made judgment and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your company at the end of the financial year and of the profit of your company for that period. c) Taken proper and sufficient care for the maintenance with the provisions of the Companies Act, 1956, for safeguarding the assets of your company and for preventing and detecting fraud and other irregularities ; and

d)

Prepared the Annual Accounts on a going concern basis.

51

FINANCIAL REPORT

N.R.I.B.A.

AUDITORS’ REPORT TO THE MEMBERS OF MARUTI UDYOG LIMITED 1.. We have audited the attached balance sheet of maruti udyog limited, as at 31st March 2007 and the related profit and loss account and cash flow statement for the year ended on that date annexed thereto, which we have signed under reference to this report. These financial statements are the responsibility of the company’s management. Our responsibility is to express an option on these financial statement statements based on our audit. 2.. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on test basic, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management presentation. We believe that our audit provides reasonable basic for our opinion. 3.. As required by the companies order, 2003, as amended by the companies order,200, issued by the central government of India in terms of sub – section of section 227 of the ‘The companies Act, 1956’ of India and on the basic of such checks of such checks of the books and according to the information and explanations given to us, we further report that: 1) a) The company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets. b) The fixed assets are physically verified by the management according to a phased programme designed to cover all the items , except furniture and fixtures, office application and certain other assets aggregating to Rupees 339 million , over a period of three years, which in our opinion, is reasonable having regard to the size of its assets have been physically verified by the material discrepancies between the book records and the physical inventory have been noticed. 52

FINANCIAL REPORT

N.R.I.B.A.

c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assts has not been disposed off by the company during the year. 2) a) The inventory (excluding materials lying with vendors has been physically verified by the management during the year. Confirmations have been received for materials lying with vendors at the year end. In our opinion, the frequency of verification is reasonable. b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relating to the nature of its business. c) On the basis of our examination of the inventory records, In our opinion, the company is marinating proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material. 3) The company has not taken or granted any loans, secured or unsecured from/ to companies, firms or other parties covered in the register maintained under Section 301 of the act. 4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and nature of its business for the purchase of inventory, fixed assets and for the sale of goods and service. Further, on the basis of our examination of the books and records of the company, and according to the information and explanation given to us, we have neither come across nor have been informed of any continuing failure to correct major weakness in the aforesaid internal control procedure. 5) In our opinion and according to the information and explanation gives to us, there are no transactions made in pursuance of such contracts or arrangements and exceeding the value of Rupees five lakes in respect of any party during the year, which have been made at prices which are not reasonable having regard to the prevailing market prices at the relevant time. In respect of purchase of goods and materials including components from the holding company, the prices paid for these items are not comparables these are of special nature.

53

FINANCIAL REPORT

N.R.I.B.A.

6) The company has not accepted any deposits from the public with in the meaning of section 58A and 58AA or any other relevant provisions of the act and the rules framed there under. 7) In our opinion, the company has an internal audit system commensurate with its size and nature of its business. 8) We have broadly reviewed the books of account maintained by the company in respect of products where , pursuant to the rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub section (i) of section 209 of the act and are of the opinion that prima facie, the prescribed account and records have been made and maintained . We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete. 9) According to the information and explanations given to us and the records of the company examined by us, in our opinion, the company is regular in depositing undisputed statutory dues in respect of provident fund, investor education and protection fund, employee’s state insurance, income tax, sales tax, service tax, customs duty, excise duty, less and other material statutory dues as applicable with the appropriate authorities. 10)

The company has no accumulated losses as at March 31,2007 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

11) According to the records of the company examined by us and the information and explanations gives to us, the company has not defaulted in repayment of dues to any bank or debenture holders as at the balance sheet date. 12) The company has no granted any loans and advances on the basic of security by way of pledge of shares, departures and other securities. 13) The provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund /societies are not applicable to the company. 14) In our opinion, the company is not a dealer or trader in shares, securities, debentures and other investments.

54

FINANCIAL REPORT

N.R.I.B.A.

15) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantee given by the company, for loans taken by others from banks or financial institutions during the year, are no prejudicial to the interest of the company. 16) In our opinion, and according to the information and explanations given to us, on an overall basic, the term loans have been applied for the purpose for which they were obtained. 17) On the basic of an overall examination of the balance sheet of the company, in our opinion and according to the information and explanations given to us , there are no funds raised on a short-term basic which have been used for long term investment. 18) The company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the act during the year. 19) The company has created security and charge in respect of debentures issued and outstanding to the year-end. 20) The company has not raised any money by public issue during the year. 21) During the course of our examination of the books and records of the company , carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the company, noticed or reported during the year, nor have we been informed of such case by the management.

Audit committee: Mr. Amal Ganguli Mr. Shinzo Nakanishi Mrs. pallavi Shroff Mr. D. S. Brar

55

chairman member member member

FINANCIAL REPORT

N.R.I.B.A.

INTRODUCTION A part from ratio analysis another useful way of analyzing financial statements to convert them into percentage when this method is pursued the income statement exhibits each expenses item or group of expenses as a percentage of net sales, and net sales are taken at 100%. Similarly each individual assets and liability classification is shown as percentage of total liabilities. Respectively statements prepared in this way are referred to as common size statements prepared for one firm over the years would highlight the relative changes in each group of expenses, assets and liabilities. This statements can be equally useful for absolute figures of the same industry are not comparable.

COMMAN SIZE PROFIT & LOSE ACCOUNT PARTICULARS

2006 - 07 Amount ( Rs. in million )

INCOME Net Sales Income from Services Other Income Total EXPENDITURE Raw materials Purchase of trade Goods. Stores Employee’s Remuneration and Benefits Manufacturing ; Administrative & Other Expenses. Selling and Distribution Expenses.

56

2005 - 06 %

Amount ( Rs. in million )

%

Per cent (%)

145,922 617

100 0.42

120,034 488

100 0.40

100 0.02

5984 152,523

4.10 104.52

4292 124,814

3.57 103.9

0.53 0.53

101,374 6,159

69.47 4.22

88,766 4,644

73.96 3.69

(4.49) 0.53

1,097 2,884

0.75 1.98

824 2,287

0.69 1.90

0.06 0.08

8,258

5.66

6,226

5.19

0.47

4,999

3.42

3560

2.97

0.45

FINANCIAL REPORT

N.R.I.B.A.

Total Less: vehicles/dies for own use Add: increase / Decrease in work Progress, finished, Goods and spares Total

124,771 143

85.50 0.09

106,320 67

88.58 0.05

(3.08) 0.04 224

1.67

(0.30)

86.86

(0.07)

17.12

0.62

1.37 2,007 2,150

EARNING BEFORE ABOVE

86.74

1,997 2,064

17.74

Interest Depreciation Differed revenue Expenditure charged off Total Profit Before Tax Less : Tax Expense Current Tax Deferred Tax Fringe Benefits Tax Previous years Total Profit after Tax Brought forward From previous year allount Total Less: Appropriation Debenture Redemption Reserve General Reserve Proposed Dividend Tax Corporate Dividend Tax Total

57

367 2,714 -

0.26 2.11 -

204 2,854 -

0.16 2.37 -

0.1 (0.51) -

3,090 22,798

2.11 15.63 4.17

3,058 17,500

2.54 14.58 4.89

(0.43) 1.05 (0.72)

0.26 0.04 -

0.35 0.08

9.91 28.68

0.79 1.43

6,089 897 67 125 7,178 15,620 43,851

1.17 30.11

5,873 321 57 6,251 11,891 34,421

59,471

40.76

46,312

17

0.01

31

0.02

(0.01)

562 1,300

1.07 0.89

1,189 1,011

0.99 0.89

0.08 0.05

219 3,098

0.15 38.63

142 2,373

0.15 36.60

0.04 2.03

0.61 0.04 0.08

2.17

FINANCIAL REPORT

N.R.I.B.A.

COMMAN SIZE BALANCE SHEET PARTICULARS

2006 - 07 Amount ( Rs. in million )

SOURCES OF FUND Capital Reserve and Surplus LOAN FUNDS Secured Loans Unsecured Loans DEFFERRED TAX Deferred Tax Liability TOTAL APPLICATION OF FUNDS FIXED ASSETS Net Block Capital Work in Progress INVESTMEENTS CURRENT ASSETS LOANS AND ADVANCES Inventories

2005 – 06 Amount ( Rs. in million )

%

%

2004 - 05 Amount ( Rs. in million )

%

1445 67094

1.89 87.68

1445 53081

2.58 94.75

1445 42343

3.01 88.28

635 5673

0.83 7.41

717

1.28

3076

6.42

1675 76,522

2.19 100

7791 56,022

1.39 100

1100 47,964

2.29 100

26,597 2389 34092

42.17 3.79 54.04

16,952 920 20,512

44.16 2.40 53.43

18,737 421 15.166

54.59 1.23 44.18

7132

18.54

8812

23.50

6666

22.43

Sundry debtors

7474

19.43

6548

17.46

5995

20.17

Cash and bank Other Current Assets Loans and Advances CURRENT LIABILITIES AND PROVISIONS Current liabilities Provisions Net Current Assets TOTAL

14228 384 9241

37 1.01 24.02

14016 458 7662

37.38 1.23 20.43

10294 683 6082

34.64 2.30 20.46

20110 4905 13444 76,522

80.39 19.62 17.57

15058 4800 17638 56,022

75.83 24.17 31.48 100

12188 3892 13640 47964

75.80 24.20 28.44 100

58

FINANCIAL REPORT

N.R.I.B.A.

COMPARISION OF BALANCE SHEET COMMAN SIZE BALANCE SHEET PARTICULARS

2006 - 07 Amount ( Rs. in % million )

SOURCES OF FUND Capital Reserve and Surplus LOAN FUNDS Secured Loans Unsecured Loans DEFFERRED TAX Deferred Tax Liability TOTAL APPLICATION OF FUNDS FIXED ASSETS Net Block Capital Work in Progress INVESTMEENTS CURRENT ASSETS LOANS AND ADVANCES Inventories

2005 – 06 Amount ( Rs. in % million )

2004 - 05 Amount ( Rs. in % million )

difference

1445 67094

1.89 87.68

1445 53081

2.58 94.75

1445 42343

3.01 88.28

2.57 13.07

635 5673

0.83 7.41

717

1.28

3076

6.42

0.44 7.41

1675 76,522

2.19 100

7791 56,022

1.39 100

1100 47,964

2.29 100

0.07 0.73

26,597 2389 34092

42.17 3.79 54.04

16,952 920 20,512

44.16 2.40 53.43

18,737 421 15.166

54.59 1.23 44.18

8.12 12.61 7.94

7132

18.54

8812

23.50

6666

22.43

6.41

Sundry debtors

7474

19.43

6548

17.46

5995

20.17

1.77

Cash and bank Other Current Assets Loans and Advances CURRENT LIABILITIES AND PROVISIONS

14228 384 9241

37 1.01 24.02

14016 458 7662

37.38 1.23 20.43

10294 683 6082

34.64 2.30 20.46

6.41 0.32 6.41

Current liabilities Provisions Net Current Assets TOTAL

20110 4905 13444 76,522

80.39 19.62 17.57

15058 4800 17638 56,022

75.83 24.17 31.48 100

12188 3892 13640 47964

75.80 24.20 28.44 100

0.60 2.01 31.91

59

FINANCIAL REPORT

N.R.I.B.A.

CONCLUSION 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 year’s shows and applauding position. I was also able to well understand my financial concepts. It was a tough task to make this project but at last I able to complete the project report of analysis of annual report of the company “MARUTI UDYOG LIMITED”.

60

FINANCIAL REPORT

N.R.I.B.A.

FINDINGS:  Annual Report of “MARUTI UDOG LIMITED” of 3 Years 1) 2004 – 05 2) 2005 – 06 3) 2006 – 07



Financial Management by khan & jain information about ratios and accounting policy.



B. S. SHAH

 On the web site.

61

FINANCIAL REPORT

N.R.I.B.A.