Chapter 1 EXECUTIVE SUMMARY

As every business concern irrespective of its size, nature and age need fund to carry out business operations such as purchase of Raw material, Payment of Wages and other day to day expenses. Financial Analysis becomes an important and integral part of business. Financial analysis in business is the life blood and never center of any business. Thus, the effectiveness of an organization depends on the strength of its financial position as it is core to the whole system. In the context of Indian Automobile Industry, Financial analysis holds a greater significance because automobile which forms as one of the important part of any infrastructural facility, in recent years has become more crucial for achieving rapid economic growth of our country. Conducted a project to analyze and understand the financial positions of automobile industry for the period of five years. The data that was collected for this project is secondary data and the financial analysis has been prepared through analysis for the period of five years. Keeping the background in view, an attempt is made to examine the financial analysis practices of Indian Automobile industries. The project contains the basic postulates of financial analysis and impact of shortcomings in the management of it. All it has been done to get a clear view of the techniques of financial analysis of Indian Automobile Industry.

Chapter 2
INTRODUCTION 2.1 Introduction to the Financial Analysis
Definition of 'Financial Analysis' The process of evaluating businesses, projects, budgets and other finance-related entities to determine their suitability for investment. Typically, financial analysis is used to analyze whether an entity is stable, solvent, liquid, or profitable enough to be invested in. When looking at a specific company, the financial analyst will often focus on the income statement, balance sheet, and cash flow statement. In addition, one key area of financial analysis involves extrapolating the company's past performance into an estimate of the company's future performance. What is Financial Analysis? One of the most common ways of analyzing financial data is to calculate ratios from the data to compare against those of other companies or against the company's own historical performance. For example, return on assets is a common ratio used to determine how efficient a company is at using its assets and as a measure of profitability. This ratio could be calculated for several similar companies and compared as part of a larger analysis. Financial analysts often assess the following elements of a firm: 1. Profitability - its ability to earn income and sustain growth in both the shortand long-term. A company's degree of profitability is usually based on the income statement, which reports on the company's results of operations; 2. Solvency - its ability to pay its obligation to creditors and other third parties in the long-term; 3. Liquidity - its ability to maintain positive cash flow, while satisfying immediate obligations; Both 2 and 3 are based on the company's balance sheet, which indicates the financial condition of a business as of a given point in time. 4. Stability - the firm's ability to remain in business in the long run, without having to sustain significant losses in the conduct of its business. Assessing a company's stability requires the use of both the income statement and the balance sheet, as well as other financial and non-financial indicators etc. 2

Financial analysts often compare financial ratios (of solvency, profitability, growth, etc.): Past Performance - Across historical time periods for the same firm (the last 5 years for example), Future Performance - Using historical figures and certain mathematical and statistical techniques, including present and future values, This extrapolation method is the main source of errors in financial analysis as past statistics can be poor predictors of future prospects. Comparative Performance - Comparison between similar firms. These ratios are calculated by dividing a (group of) account balance(s), taken from the balance sheet and / or the income statement, by another, for example: Net income / equity = return on equity (ROE) Net income / total assets = return on assets (ROA) Stock price / earnings per share = P/E ratio Comparing financial ratios is merely one way of conducting financial analysis. Financial ratios face several theoretical challenges: They say little about the firm's prospects in an absolute sense. Their insights about relative performance require a reference point from other time periods or similar firms. One ratio holds little meaning. As indicators, ratios can be logically interpreted in at least two ways. One can partially overcome this problem by combining several related ratios to paint a more comprehensive picture of the firm's performance. Seasonal factors may prevent year-end values from being representative. A ratio's values may be distorted as account balances change from the beginning to the end of an accounting period. Use average values for such accounts whenever possible. Financial ratios are no more objective than the accounting methods employed. Changes in accounting policies or choices can yield drastically different ratio values.

Financial analysts can also use percentage analysis which involves reducing a series of figures as a percentage of some base amount. For example, a group of items can be expressed as a percentage of net income. When proportionate changes in the same figure over a given time period expressed as a percentage is known as horizontal analysis. Vertical or common-size analysis, reduces all items on a statement to a common size as a percentage of some base value which assists in comparability with other companies of different sizes. As a result, all Income Statement items are divided by Sales, and all Balance Sheet items are divided by Total Assets. Another method is comparative analysis. This provides a better way to determine trends. Comparative analysis presents the same information for two or more time periods and is presented side-by-side to allow for easy analysis.

2.2

Introduction to the Automobile Industry

History of Automobile Industry The first car ran on India's roads in 1899. Until the 1930s, cars were imported directly, but in very small numbers. An embryonic automotive industry emerged in India in the 1940s. Mahindra & Mahindra was established by two brothers in 1945, and began assembly of Jeep CJ3A utility vehicles. Following the independence, in 1947, the Government of India and the private sector launched efforts to create an automotive component manufacturing industry to supply to the automobile industry. However, the growth was relatively slow in the 1950s and 1960s due to nationalization and the license raj which hampered the Indian private sector. Total restrictions for import of vehicles was set and after 1970 the automotive industry started to grow, but the growth was mainly driven by tractors, commercial vehicles and scooters. Cars were still a major luxury. Eventually multinational automakers, such as, though not limited to, Suzuki and Toyota of Japan and Hyundai of South Korea, were allowed to invest in the Indian market ultimately leading to the establishment of an automotive industry in India. A number of foreign firms also initiated joint ventures with Indian companies. Automobile Industry in India As of 18 March 2013 global brands such as Proton Holdings, PSA Group, and Geely Holding Group are shelving plans for India due to the global economic crisis Automotive industry is the key driver of any growing economy. It plays a pivotal role in country's rapid economic and industrial development. It caters to the requirement of equipment for basic industries like steel, non-ferrous metals, fertilizers, refineries, petrochemicals, shipping, textiles, plastics, glass, rubber, capital equipments, logistics, paper, cement, sugar, etc. It facilitates the improvement in various infrastructure facilities like power, rail and road transport. Due to its deep forward and backward linkages with almost every segment of the economy, the industry has a strong and positive multiplier effect and thus propels progress of a nation. The automotive industry comprises of the automobile and the auto component sectors. It includes passenger cars; light, medium and heavy commercial vehicles; multi-utility vehicles such as jeeps, scooters, motor-cycles, three wheelers, tractors, etc; and auto components like engine parts, drive and transmission parts, suspension and braking parts , electricals, body and chassis parts; etc. 5

In India, automotive is one of the largest industries showing impressive growth over the years and has been significantly making increasing contribution to overall industrial development in the country. Presently, India is the world's second largest manufacturer of two wheelers, fifth largest manufacturer of commercial vehicles as well as largest manufacturer of tractors. It is the fourth largest passenger car market in Asia as well as a home to the largest motor cycle manufacturer. The installed capacity of the automobile sector has been 9,540,000 vehicles, comprising 1,590,000 four wheelers (including passenger cars) and 7,950,000 two and three wheelers. The sector has shown great advances in terms of development, spread, absorption of newer technologies and flexibility in the wake of changing business scenario. The Indian automotive industry has made rapid strides since delicensing and opening up of the sector in 1991. It has witnessed the entry of several new manufacturers with the state-of-art technology, thus replacing the monopoly of few manufacturers. At present, there are 15 manufacturers of passenger cars and multi-utility vehicles, 9 manufacturers of commercial vehicles, 16 of two/ three wheelers and 14 of tractor, besides 5 manufacturers of engines. The norms for foreign investment and import of technology have also been liberalised over the years for manufacture of vehicles. At present, 100% foreign direct investment (FDI) is permissible under the automatic route in this sector, including passenger car segment. The import of technology for technology upgradation on royalty payment of 5% without any duration limit and lump sum payment of USD 2 million is also allowed under automatic route in this sector. The Indian automotive industry has already attained a turnover of Rs. 1,65,000 crore (34 billion USD) and has provided direct and indirect employment to 1.31 crore people in the country. The Automobile Industry in India is one of the largest and is the fastest growing industry, world-wide. There has been a dramatic development and change in Automobile industry, particularly for the last couple of years. With many companies now concentrating more on customer needs and price factors, there has been a sharp rise The reason behind this is simple; foremost, there is an increase in demand for more and more usage of automobiles and second, there is a sharp rise in the percentage of profit that the Automobile manufacturers make, contributing a considerable income to the Indian economy as well. The Indian Automobile Industry manufactures over 1.1 Crores of vehicles and exports about 15 lakhs each year. The dominant products of the automotive industry are two-wheelers that occupy a market share of around 75%. Passenger cars have a market share of 6

about 16% while commercial vehicles and three-wheelers share about 9% between them. The economic scenario is also encouraging for the buyers to buy more vehicles and thus the demand is likely to increase. But will 2013 be a good year for Automobile industry in India? Our expert Astrologers has analyzed the planetary positions for the year 2013 to forecast the future of Automobile industry in India.

2.3

Introduction to the Ambition Financial Planner

Ambition Financial Planner Ambition Financial Planners is a fee-based Professional Financial Planning and investment advisory services firm in India, guiding its clients to fulfill their dreams and achieve financial goals. Company offers advisory and executioner platform for the entire range of financial services ranging from Direct Equity, Insurance, Mutual Funds. The Financial Planning services are tailored to meet client's needs as determined through the process of Financial Planning. It helps create a financial path to help them meet their life goals based on a deep understanding of their needs The company follows its unique process to create a financial plan for its clients, conduct a portfolio review and then to ensure asset allocation being maintained through active review and monitoring of financial plan The client-centric Financial Planners are committed to help our clients with diverse backgrounds achieve their financial & life goals through proper management of various components of personal finances. We are dedicated to provide competent Financial Planning services and maintain the necessary knowledge; skill and advice based on established Body of Knowledge and client requirements.

Ambition Learning Solution: Ambition Learning Solutions is headquartered at Mumbai and lead by two young entrepreneurs Mr. Kirtan Shah and Mr. Vishal Gada who bring with them immense ability, skill and experience in the field of Education and Corporate Trainings. The duo was a part of the board as Executive Directors to set up an independent education division for a Bombay Stock Exchange (BSE) listed Non-Banking Finance Company. After successfully scaling up that venture 6 folds, now they have moved ahead to start afresh. Bradley Anawalt, a spokesman with the Endocrine Society and chief of medicine at the University of Washington Medical Center in Seattle Canadian Metabolized principally by CYPA buy Cialis online professional. g kg equivalent to approximately ounces of -proof vodka in an -kg male consumed in minutes in study subjects, providing blood alcohol numbers of buy Cialis online professional. Ambition Learning Solutions Bridges the gap between Students & Corporate We assist corporate by providing qualified human resources for their operation and expansion requirement. We train their existing staff to furnish them with the latest updates and techniques in their respective domains. We equip individuals with the domain knowledge of Financial Planning and Capital Markets to make them employable. Our institute is aiming to become the one stop education facilitator for all the professional financial courses, and getting into full fledge Employability Training for the youth. We at Ambition Learning Solutions emphasize the relationship between theory and practice in providing you with the conceptual foundations and practical skills.

2.4

Introduction to the Companies

TATA MOTORS Tata Motors Limited is India's largest automobile company, with consolidated revenues of INR 1,88,818 crores (USD 34.7 billion) in 2012-13. It is the leader in commercial vehicles in each segment, and among the top in passenger vehicles with winning products in the compact, midsize car and utility vehicle segments. It is also the world's fourth largest truck and bus manufacturer. The Tata Motors Group's over 60,000 employees are guided by the mission "to be passionate in anticipating and providing the best vehicles and experiences that excite our customers globally." Established in 1945, Tata Motors' presence cuts across the length and breadth of India. Over 7.5 million Tata vehicles ply on Indian roads, since the first rolled out in 1954. The company's manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand), Sanand (Gujarat) and Dharwad (Karnataka). Following a strategic alliance with Fiat in 2005, it has set up an industrial joint venture with Fiat Group Automobiles at Ranjangaon (Maharashtra) to produce both Fiat and Tata cars and Fiat powertrains. The company's dealership, sales, services and spare parts network comprises over 3,500 touch points. Tata Motors, also listed in the New York Stock Exchange (September 2004), has emerged as an international automobile company. Through subsidiaries and associate companies, Tata Motors has operations in the UK, South Korea, Thailand, Spain, South Africa and Indonesia. Among them is Jaguar Land Rover, acquired in 2008. In 2004, it acquired the Daewoo Commercial Vehicles Company, South Korea's second largest truck maker. The rechristened Tata Daewoo Commercial Vehicles Company has launched several new products in the Korean market, while also exporting these products to several international markets. Today two-thirds of heavy commercial vehicle exports out of South Korea are from Tata Daewoo. In 2005, Tata Motors acquired a 21% stake in Hispano Carrocera, a reputed Spanish bus and coach manufacturer, and subsequently the remaining stake in 2009. Hispano's presence is being expanded in other markets. In 2006, Tata Motors formed a 51:49 joint venture with the Brazil-based, Marcopolo, a global leader in

10

body-building for buses and coaches to manufacture fully-built buses and coaches for India - the plant is located in Dharwad. In 2006, Tata Motors entered into joint venture with Thonburi Automotive Assembly Plant Company of Thailand to manufacture and market the company's pickup vehicles in Thailand, and entered the market in 2008. Tata Motors (SA) (Proprietary) Ltd., Tata Motors' joint venture with Tata Africa Holding (Pty) Ltd. set up in 2011, has an assembly plant in Rosslyn, north of Pretoria. The plant can assemble, semi knocked down (SKD) kits, light, medium and heavy commercial vehicles ranging from 4 tonnes to 50 tonnes. Tata Motors is also expanding its international footprint, established through exports since 1961. The company's commercial and passenger vehicles are already being marketed in several countries in Europe, Africa, the Middle East, South East Asia, South Asia, South America, CIS and Russia. It has franchisee/joint venture assembly operations in Bangladesh, Ukraine, and Senegal. The foundation of the company's growth over the last 68 years is a deep understanding of economic stimuli and customer needs, and the ability to translate them into customer-desired offerings through leading edge R&D. With over 4,500 engineers, scientists and technicians the company's Engineering Research Centre, established in 1966, has enabled pioneering technologies and products. The company today has R&D centres in Pune, Jamshedpur, Lucknow, Dharwad in India, and in South Korea, Spain, and the UK. It was Tata Motors, which launched the first indigenously developed Light Commercial Vehicle in 1986. In 2005, Tata Motors created a new segment by launching the Tata Ace, India's first indigenously developed mini-truck. In 2009, the company launched its globally benchmarked Prima range of trucks and in 2012 the Ultra range of international standard light commercial vehicles. In their power, speed, carrying capacity, operating economy and trims, they will introduce new benchmarks in India and match the best in the world in performance at a lower life-cycle cost. Tata Motors also introduced India's first Sports Utility Vehicle in 1991 and, in 1998, the Tata Indica, India's first fully indigenous passenger car.

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In January 2008, Tata Motors unveiled its People's Car, the Tata Nano. The Tata Nano has been subsequently launched, as planned, in India in March 2009, and subsequently in 2011 in Nepal and Sri Lanka. A development, which signifies a first for the global automobile industry, the Nano brings the joy of a car within the reach of thousands of families. Tata Motors is equally focused on environment-friendly technologies in emissions and alternative fuels. It has developed electric and hybrid vehicles both for personal and public transportation. It has also been implementing several environment-friendly technologies in manufacturing processes, significantly enhancing resource conservation. Through its subsidiaries, the company is engaged in engineering and automotive solutions, automotive vehicle components manufacturing and supply chain activities, vehicle financing, and machine tools and factory automation solutions. Tata Motors is committed to improving the quality of life of communities by working on four thrust areas - employability, education, health and environment. The activities touch the lives of more than a million citizens. The company's support on education and employability is focused on youth and women. They range from schools to technical education institutes to actual facilitation of income generation. In health, the company's intervention is in both preventive and curative health care. The goal of environment protection is achieved through tree plantation, conserving water and creating new water bodies and, last but not the least, by introducing appropriate technologies in vehicles and operations for constantly enhancing environment care

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Maruti Suzuki
aruti uzuki India imited maruti suzuki , commonly referred to as aruti and formerly known as Maruti Udyog Limited, is an automobile manufacturer in India. It is a subsidiary of Japanese automobile and motorcycle manufacturer Suzuki. As of November 2012, it had a market share of 37% of the Indian passenger car market. Maruti Suzuki manufactures and sells a complete range of cars from the entry level Alto, to hatchback Ritz, A-Star, Swift, Wagon R, Zen and sedans DZire, Kizashi and SX4, in the 'C' segment Eeco, Omni, Multi Purpose vehicle Suzuki Ertiga and Sports Utility vehicle Grand Vitara. The company's headquarters are on Nelson Mandela Road, New Delhi. In February 2012, the company sold its ten millionth vehicle in India. Originally, 18.28% of the company was owned by the Indian government, and 54.2% by Suzuki of Japan. The BJP-led government held an initial public offering of 25% of the company in June 2003. As of May 2007, the government of India sold its complete share to Indian financial institutions and no longer has any stake in Maruti Udyog. Maruti Udyog Limited (MUL) was established in February 1981, though the actual production commenced in 1983 with the Maruti 800, based on the Suzuki Alto kei car which at the time was the only modern car available in India, its only competitors- the Hindustan Ambassador and Premier Padmini were both around 25 years out of date at that point. Through 2004, Maruti Suzuki has produced over 5 Million vehicles. Maruti Suzukis are sold in India and various several other countries, depending upon export orders. Models similar to those made by Maruti in India, albeit not assembled or fully manufactured in India or Japan are sold by Pak Suzuki Motors in Pakistan. The company exports more than 50,000 cars annually and has domestic sales of 730,000 cars annually.[citation needed] Its manufacturing facilities are located at two facilities Gurgaon and anesar in Haryana, south of Delhi. aruti uzukis Gurgaon facility has an installed capacity of 900,000 units per annum. The Manesar facilities, launched in February 2007 comprise a vehicle assembly plant with a capacity of 550,000 units per year and a Diesel Engine plant with an annual capacity of 100,000 engines and transmissions. Manesar and Gurgaon facilities have a combined capability to produce over 14,50,000 units annually. About 35% of [8] all cars sold in India are made by Maruti. The company is 54.2% owned by the Japanese multinational Suzuki Motor Corporation per cent of Maruti Suzuki. The rest is owned by public and financial institutions. It is listed on the Bombay Stock Exchange and National Stock Exchange of India.[citation needed] 13

During 2007 and 2008, Maruti Suzuki sold 764,842 cars, of which 53,024 were exported. In all, over six million Maruti Suzuki cars are on Indian roads since the first car was rolled out on 14 December 1983. Maruti Suzuki offers 15 models, Maruti 800, Alto, Maruti Alto 800, WagonR, Estilo, A-star, Ritz, Swift, Swift DZire, SX4, Omni, Eeco, Gypsy, Grand Vitara, Kizashi and the newly launched Ertiga. Swift, Swift DZire, A-star and SX4 are manufactured in Manesar, Grand Vitara and Kizashi are imported from Japan as completely built units(CBU), remaining all models are manufactured in Maruti Suzuki's Gurgaon Plant.[citation needed] The company is believed to be moving towards introduction of a new version of Maruti 800 by November 2012, which will be more fuel efficient, though slightly costlier than Alto and existing Maruti 800. The Suzuki Motor Corporation, Maruti's main stakeholder, is a global leader in mini and compact cars for three decades. uzukis strategy is to utillise light-weight, compact engines with stronger power, fuelefficiency and performance capabilities. Nearly 75,000 people are employed directly by Maruti Suzuki and its partners. It has been rated first in customer satisfaction among all car makers in India from 1999 to 2009 by J D Power Asia Pacific. Maruti Suzuki will be introducing new 800 cc model by Diwali in 2012.The model is supposed to be fuel efficient, hence more expensive

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Mahindra & Mahindra

Mahindra & Mahindra Limited (M&M) is an Indian multinational automobile manufacturing corporation headquartered in Mumbai, Maharashtra, India. It is one of the largest vehicle manufacturers by production in the Republic of India. It is a part of Mahindra Group, an Indian conglomerate. The company was founded in 1945 in Ludhiana as Mahindra & Mohammed by brothers K.C. Mahindra and J.C. Mahindra and Malik Ghulam Mohammed. After India gained independence and Pakistan was formed, Mohammed emigrated to Pakistan. The company changed its name to Mahindra & Mahindra in 1948. It is ranked #21 in the list of top companies of India in Fortune India 500 in 2011. Major competitors in the Indian market include Maruti Motors (a 60% owned subsidiary of Suzuki Motors from Japan), Tata Motors (fully owned by Tata Sons; Owner of British Jaguar Land Rover), Toyota, Mercedes-Benz (Merc) (Based in Poona, Maharastra in India; A subsidiary of Daimler AG fromMahindra & Mahindra was set up as a steel trading company in 1945. It eventually saw business opportunity in expanding into manufacturing and selling larger MUVs, starting with assembly under licence of the Willys Jeep in India. Soon established as the Jeep manufacturers of India, the company later commenced upon the task of expanding itself, choosing to utillize the manufacturing industry of light commercial vehicles (LCVs) and agricultural tractors. Today, Mahindra & Mahindra is a key game player in the utility vehicle manufacturing and branding sectors in the Indian automobile industry with its flagship UV Scorpio and swiftly exploits India's growing global market presence in both the automotive and farming industries to push its products in other countries. Over the past few years, the company has taken interest in new industries and in foreign markets. They entered the two-wheeler industry by taking over Kinetic Motors in India. M&M also has controlling stake in REVA Electric Car Company and acquired South Korea's SsangYong Motor Company in 2011. The US based Reputation Institute once ranked Mahindra amongst the top Ten Indian companies in its 'Global 200: The World's Best Corporate Reputations' list Germany) and others Mahindra & Mahindra, branded on its products usually as 'Mahindra', produces SUVs, saloon cars, pickups, commercial vehicles, and two wheeled motorcycles and tractors. It owns assembly plants in Mainland China (PRC) and the United Kingdom, and has three assembly plants in the United States.

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M&M has a global presence and its products are exported to several countries. Its global subsidiaries include Mahindra Europe Srl. based in Italy, Mahindra USA Inc., Mahindra South Africa and Mahindra (China) Tractor Co. Ltd. Mahindra started making passenger vehicles firstly with the Logan in April 2007 under the Mahindra Renault joint venture. M&M will make its maiden entry into the heavy trucks segment with Mahindra Navistar, the joint venture with International Truck, USA. Mahindra produces a wide range of vehicles including MUVs, LCVs and three wheelers. It manufactures over 20 models of cars including larger, multi-utility vehicles like the Scorpio and the Bolero. It formerly had a joint venture with Ford called Ford India Private Limited to build passenger cars. At the 2008 Delhi Auto Show, Mahindra executives said the company is pursuing an aggressive product expansion program that would see the launch of several new platforms and vehicles over the next three years, including an entry-level SUV designed to seat five passengers and powered by a small turbodiesel engine. True to their word, Mahindra & Mahindra launched the Mahindra Xylo in January 2009, and as of June 2009, the Xylo has sold over 15000 units. Also in early 2008, Mahindra commenced its first overseas CKD operations with the launch of the Mahindra Scorpio in Egypt, in partnership with the Bavarian Auto Group. This was soon followed by assembly facilities in Brazil. Vehicles assembled at the plant in Bramont, Manaus, include Scorpio Pik Ups in single and double cab pick-up body styles as well as SUVs

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Chapter 3
Project Details 3.1 Objectives off the Project
To Study the comparative financial analysis of three automobile companies viz. TATA Motors, Maruti Suzuki and Mahindra and Mahindra.

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3.2

Methodology
The Project is based on secondary data and covers the period of last five years ranging from 2008 to 2012. Secondary data has been collected from annual reports, newspapers and websites of companies. Three automobile companies have been selected on random basis viz. Mahindra and Mahindra and Tata Motors Pvt. Ltd with that of Maruti Suzuki India Limited. Different financial ratios had been calculated and further graphs, charts and table have been used for the study.

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3.3

Limitations
The study is restricted to three companies only. Suggestions and conclusions are based on the limited data of five years. The study is limited to the companies having equities.

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Chapter 4
Analysis & Findings 4.1 Inventory Turnover Ratio:
This ratio tells the story by which stock is converted into sales. Usually a high inventory turnover ratio revel the liquidity of the inventory that is how many times on an average inventory are sold during the year. Needless to say that if a firm maintains minimum stock level in order to maximum the sales by quick rotation of inventory no doubt the profit will be maximum since the holding cost of inventory will be minimum. Inventory Turnover Ratio = Cost of goods sold Average inventory Table 4.1

Inventory Turnover Ratio

Tata Motors M&M Maruti 2008 14.44 12.49 22.93 2009 13.47 14.56 30.46 2010 13.5 17.91 30.47 2011 13.86 15.64 33.33 2012 13.37 14.99 22.8

Chart 4.1

Inventory Turnover Ratio

35 30 25 20 15 10 5 0 Tata Motors M&M Maruti

2008 14.44 12.49 22.93

2009 13.47 14.56 30.46

2010 13.5 17.91 30.47

2011 13.86 15.64 33.33

2012 13.37 14.99 22.8

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Interpretation 4.1: From the table 4.1 Maruti Suzuki has decent inventory turnover ratio in last five years. They maintain consistency in stock turnover. In the year 2008 and 2012 the ratio was same i.e. 13.37. As compare to the Mahindra & Mahindra and Tata Motors has low turnover ratio in last five years. In the year 2008 it was lowest inventory turnover of M&M i.e. 12.49. Tata Motors has shown some improvement in inventory turnover. A low turnover implies poor sales and, therefore, excess inventory. A high ratio implies either strong sales or ineffective buying. High inventory levels are unhealthy because they represent an investment with a rate of return of zero. It also opens the company up to trouble should prices begin to fall.

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4.2

Fixed Asset Turnover Ratio

A financial ratio of net sales to fixed assets. The fixed-asset turnover ratio measures a company's ability to generate net sales from fixed-asset investments specifically property, plant and equipment (PP&E) - net of depreciation. A higher fixed-asset turnover ratio shows that the company has been more effective in using the investment in fixed assets to generate revenues. Fixed asset turnover = Net sales Average net fixed assets Table 4.2

Fixed Asset Turnover Ratio

Tata motors M&M Maruti 2008 2.69 3.22 2.48 2009 1.88 2.84 2.38 2010 1.95 3.85 2.82 2011 2.22 4.08 3.13 2012 2.65 4.32 2.46

Chart 4.2

Fixed Asset Turnover Ratio

10 9 8 7 6 5 4 3 2 1 0 Maruti M&M Tata motors 2008 2.48 3.22 2.69 2009 2.38 2.84 1.88 2010 2.82 3.85 1.95 2011 3.13 4.08 2.22 2012 2.46 4.32 2.65

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Interpretation 4.2: From the table 4.2, Maruti Suzuki has maintained the consistency of Fixed Asset Turnover as from 2008 to 2012 it was 2.48, 2.38, 2.82, 3.13, and 2.36 respectively. M&M shows some improvement from 2008 to 2012 it was 3.22, 2.84, 3.85, 4.08 and 4.32 respectively. Tata Motors had fallen down in the year 2009 it goes to 1.88 and after that it was stable. If a company can generate more sales with fewer assets it has a higher turnover ratio which tells it is a good company because it is using its assets efficiently. A lower turnover ratio tells that the company is not using its assets optimally. Total asset turnover ratio is a key driver of return on equity as discussed in the DuPont analysis. Asset turnover ratio should be looked at together with the company's financing mix and its profit margin for a better analysis.

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4.3

Solvency Ratio:
One of many ratios used to measure a company's ability to meet long-term obligations. The solvency ratio measures the size of a company's after-tax income excluding non-cash depreciation expenses, as compared to the firm's total debt obligations. It provides a measurement of how likely a company will be to continue meeting its debt obligations. Debt Equity Ratio: The debt-to-equity ratio (debt/equity ratio, D/E) is a financial ratio indicating the relative proportion of entity's equity and debt used to finance an entity's assets. This ratio is also known as financial leverage. Debt-to-equity ratio is the key financial ratio and is used as a standard for judging a company's financial standing. It is also a measure of a company's ability to repay its obligations. Debt-to-equity ratio = Debt / Equity Table 4.3

Solvency Ratio
Tata motors M&M Maruti 2008 0.8 0.6 0.11 2009 1.06 0.77 0.07 2010 1.12 0.37 0.07 2011 0.8 0.23 0.02 2012 0.57 0.26 0.07

Chart 4.3

Debt Equity Ratio

2 Axis Title 1.5 1 0.5 0 Maruti M&M Tata motors 2008 0.11 0.6 0.8 2009 0.07 0.77 1.06 2010 0.07 0.37 1.12 2011 0.02 0.23 0.8 2012 0.07 0.26 0.57

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Interpretation 4.3: A high debt/equity ratio generally means that a company has been aggressive in financing its growth with debt. This can result in volatile earnings as a result of the additional interest expense. The debt to equity ratio is a financial metric used to assess a company's capital structure, or "capital stack." Specifically, the ratio measures the relative proportions of the firm's assets that are funded by debt or equity. The Debt equity ratio of Tata motor had drastically fallen down after the year 2010 was 0.8. But, Mahindra and Mahindra had a intense rise in its Debt Equity ratio in the year 2009 it has gone to 0.77. After analyzing the above figure we can say that Maruti Suzuki had increased in its debt equity ratio. The debt/equity ratio also depends on the industry in which the company operates.

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4.4

Earning Per Share (EPS) Ratio

The debt to equity ratio is a financial metric used to assess a company's capital structure, or "capital stack." Specifically, the ratio measures the relative proportions of the firm's assets that are funded by debt or equity Earning Per Share (EPS) Ratio = Net Income Dividend on Preferred Stock Average Outstanding Shares Table 4.4

Earning Per Share (EPS) Ratio

Tata motors M&M Maruti 2008 52.63 30.69 59.91 2009 19.48 36.89 42.18 2010 39.26 45.33 86.45 2011 28.55 48.88 79.21 2012 3.91 56.8 56.6

Chart 4.4

Earning Per Share Ratio

180 160 140 120 100 80 60 40 20 0 Maruti M&M Tata motors 2008 59.91 30.69 52.63 2009 42.18 36.89 19.48 2010 86.45 45.33 39.26 2011 79.21 48.88 28.55 2012 56.6 56.8 3.91

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Interpretation 4.4: Earnings per share are generally considered to be the single most important variable in determining a share's price. It is also a major component used to calculate the price-to-earnings valuation ratio Earnings per share are generally considered to be the single most important variable in determining a share's price. It is also a major component used to calculate the price-to-earnings valuation ratio. The above figure shows that Maruti Suzuki was performing well in 2008 its ratio was 59.91and later in 2009 it has fallen down to 42.18. And, M&M had also had down fall in 2009 which is 30.89. And Tata motors declined after the recession phase of the country. It is important not to rely on any one financial measure, but to use it in conjunction with statement analysis and other measures.

27

4.5

Dividend per share (DPS) Ratio

The sum of declared dividends for every ordinary share issued. Dividend per share (DPS) is the total dividends paid out over an entire year (including interim dividends but not including special dividends) divided by the number of outstanding ordinary shares issued. Dividend per share = D SD S D - Sum of dividends over a period (usually 1 year) SD - Special, one time dividends S - Shares outstanding for the period Table 4.5

Dividend Per Share (DPS) Ratio

Tata motors M&M Maruti 2008 15 11.5 5 2009 6 10 3.5 2010 15 9.5 6 2011 20 11.5 7.5 2012 4 12.5 7.59

Chart 4.5

Dividend Per Share

45 40 35 30 25 20 15 10 5 0 Maruti M&M Tata motors

2008 5 11.5 15

2009 3.5 10 6

2010 6 9.5 15

2011 7.5 11.5 20

2012 7.59 12.5 4

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Interpretation 4.5: Dividends over the entire year (not including any special dividends) must be added together for a proper calculation of DPS, including interim dividends. Special dividends are dividends which are only expected to be issued once so are not included. The total number of ordinary shares outstanding is sometimes calculated using the weighted average over the reporting period. The above figure shows that Mahindra & Mahindra have consistent Dividend per share ratio is slightly down in the financial years 2010 to 2012 which are 9.5, 11.5, and 12.5 respectively. And, Maruti Suzuki had also a drastic increase after 2009. And Tata motors declined after the recession phase of the country. Dividends per share are usually easily found on quote pages as the dividend paid in the most recent quarter which is then used to calculate the dividend yield. Dividends are a form of profit distribution to the shareholder. Having a growing dividend per share can be a sign that the company's management believes that the growth can be sustained.

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4.6

Market per share

Market price per share is never found on the financial statements. Rather you can find it from stock market reports. Some companies mention average market price over the year based on stock market reports. Earnings per share are always reported on the Income Statement. It is calculated by dividing the earnings after tax by the number of shares issued and outstanding at the year end. Table 4.6

Market Per Share

Tata motors M&M Maruti 2008 159.5 274.85 520.1 2009 792.6 1080.8 1559.65 2010 1306.3 777.55 1420.6 2011 178.4 683.05 920.05 2012 312.4 930 1488.95

Chart 4.6

MPS
4000 3500 3000 2500 2000 1500 1000 500 0 Maruti M&M Tata motors 2008 520.1 274.85 159.5 2009 1559.65 1080.8 792.6 2010 1420.6 777.55 1306.3 2011 920.05 683.05 178.4 2012 1488.95 930 312.4

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Interpretation 4.6: There are several steps you must take in order to calculate the market price per share. The first step is to determine the date on which you want to calculate the market price per share. The second step is to find the price on that particular date. You can look at the company's monthly, quarterly, or annual report to get the stock price on that particular date .Third you must consider the preferred stock, if any, that this company owns. The Market per share ratio of M&M had drastically fallen down after the year 2010 which came down to 777.5 and later in 2012 it again increased to 930. But, Maruti Suzuki had a intense rise in its Market per share ratio. After analyzing the above figure we can say that Maruti Suzuki had increased in its Market per share ratio

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4.7

Price Earning Ratio

PE" uses net income for the most recent 12 month period, divided by the weighted average number of common shares in issue during the period. This is the most common meaning of "PE" if no other qualifier is specified. Monthly earnings data for individual companies are not available, and in any case usually fluctuate seasonally, so the previous four quarterly earnings reports are used and earnings per share are updated quarterly. Note, each company chooses its own financial year so the timing of updates will vary from one to another Price Earning Ratio = MPS Annual Earning Per Share Table 4.7

Price Earning Ratio

Tata motors M&M Maruti 2008 3.03 8.95 8.68 2009 40.68 29.29 36.97 2010 33.27 17.15 16.43 2011 6.24 13.97 11.61 2012 79.89 16.37 26.3

Chart 4.7

Price Earning Ratio

140 120 100 80 60 40 20 0 Maruti M&M Tata motors 2008 8.68 8.95 3.03 2009 36.97 29.29 40.68 2010 16.43 17.15 33.27 2011 11.61 13.97 6.24 2012 26.3 16.37 79.89

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Interpretation 4.7: By comparing price and earnings per share for a company, one can analyze the market's stock valuation of a company and its shares relative to the income the company is actually generating. The automobile industry above mentioned except M&M has been declined from the financial year 2008 to 2012 which are 8.95, 29.29, 17.15, 13.97, 16.37. But both the other companies Tata motors and Maruti Suzuki are efficient in converting their stocks into sales. Maruti Suzuki is consistent in their ratios as compared to last few year ratios. The P/E is sometimes referred to as the "multiple", because it shows how much investors are willing to pay per dollar of earnings. If a company were currently trading at a multiple (P/E) of 20, the interpretation is that an investor is willing to pay Rs 20 for Rs 1 of current earnings.

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4.8

Return on Net Worth

The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability by revealing how much profit and company generates with the money shareholders have invested Return on Equity = Net Income/Shareholder's Equity

Table 4.8

Return on Net Worth

Tata motors M&M Maruti 2008 25.98 20.61 19.2 2009 8.09 18.49 13.23 2010 15.15 26.23 20.29 2011 9.06 24.33 16.08 2012 6.42 22.41 10.75

Chart 4.8

Return on Net Worth

70 60 50 40 30 20 10 0 Maruti M&M Tata motors 2008 19.2 20.61 25.98 2009 13.23 18.49 8.09 2010 20.29 26.23 15.15 2011 16.08 24.33 9.06 2012 10.75 22.41 6.42

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Interpretation 4.8: The above table 8 data shows that Maruti Suzuki was performing well in 2008 its ratio were 19.2 but later in 2009 its ratio declined to13.23 and again in 2010 it increased to 20.29 which was the highest figure in the above table. And later in 2011 and 2012 it started falling to 16.08 and 10.75 respectively. M&M was stable from 2008 to 2012 and its ratio was 20.61, 18.49, 26.29, 24.33, and 21.41 respectively. The Tata Motors was performing well till 2008 where he hit the highest ratio of 25.98 and later in 2009 it started falling drastically. Return on equity may also be calculated by dividing net income by average shareholders' equity. Average shareholders' equity is calculated by adding the shareholders' equity at the beginning of a period to the shareholders' equity at period's end and dividing the result by two

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4.9

Quick Ratio
An indicator of a company's short-term liquidity. The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets. The higher the quick ratio, the better the position of the company. The quick ratio is calculated as: Quick Ratio = (Current Assets - Inventories) / Current Liabilities Table 4.9

Quick Ratio
Tata motors M&M Maruti 2008 0.66 0.74 0.66 2009 0.58 0.83 1.26 2010 0.44 0.86 0.68 2011 0.54 0.61 1.14 2012 0.4 0.66 0.89

Chart 4.9

Quick Ratio
3 2.5 2 1.5 1 0.5 0 Maruti M&M Tata motors 2008 0.66 0.74 0.66 2009 1.26 0.83 0.58 2010 0.68 0.86 0.44 2011 1.14 0.61 0.54 2012 0.89 0.66 0.4

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Interpretation 4.9: The above table 9 data shows that M&M was performing well in 2008 its ratio were 0.74 but later in 2010 its ratio declined to 0.61 in 2011 and again in 2012 it fallen down to 0.66 which was the lowest figure in the above table.. Maruti Suzuki was stable from 2008 to 2012 and its ratio was 0.66, 1.26, 0.68, 1.14, and 0.89 respectively. The Tata Motors was performing well till 2011 and after that in 2012 it had fallen down to 0.4. The quick ratio is more conservative than the current ratio, a more well-known liquidity measure, because it excludes inventory from current assets. Inventory is excluded because some companies have difficulty turning their inventory into cash. In the event that short-term obligations need to be paid off immediately, there are situations in which the current ratio would overestimate a company's short-term financial strength.

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4.10 Return on Asset

An indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. Calculated by dividing a company's annual earnings by its total assets, ROA is displayed as a percentage. Sometimes this is referred to as "return on investment". The formula for return on assets is: NET INCOME TOTAL ASSET

Table 4.10

Return on Asset
Tata motors M&M Maruti 2008 203.2 181.39 291.28 2009 241.09 191.9 323.45 2010 259.63 138.15 409.65 2011 315.31 175.04 479.99 2012 61.03 205.32 525.68

Chart 4.10

Return on Asset
1200 1000 800 600 400 200 0 Maruti M&M Tata motors 2008 291.28 181.39 203.2 2009 323.45 191.9 241.09 2010 409.65 138.15 259.63 2011 479.99 175.04 315.31 2012 525.68 205.32 61.03

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Interpretation 4.10 From the above table 10 the data shows that Return on Asset of Maruti Suzuki increasing every year from 2008 to 2012 the ratio was 291.28, 323.45, 409.65, 479.99, and 525.68 respectively. The M&M was very much consistent in its ratio as the company was performing well every year because of which the company maintained its consistency. The Tata Motors was performing well till 2011 but later in 2012 it fallen down drastically to 61.03 as shown in the figure. ROA tells you what earnings were generated from invested capital (assets). ROA for public companies can vary substantially and will be highly dependent on the industry. This is why when using ROA as a comparative measure, it is best to compare it against a company's previous ROA numbers or the ROA of a similar company.

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Chapter 5
Conclusions & Recommendations 5.1 Conclusions
Maruti Suzuki had lots of fluctuation in the entire financial ratio but other firms like TATA Motors and Mahindra & Mahindra showed growth in various areas as well as in rate of return which help to boost the Automobile Sector. Maruti Suzuki and Mahindra & Mahindra financial performance is much better than the TATA motors.

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5.2

Recommendations
By analyzing the automobile industry with the help of fundamental analysis, it has been revealed that this industry has a lot of potential to grow. So recommending investing in Automobile industry with no doubt is going to be a good and smart option because this industry is booming like never before not only in India but all over the world. The three giants of Indian Automobile industry viz. TATA Motors, Maruti Suzuki and Mahindra and Mahindra have outperformed in the industry. Investing in Maruti Suzuki for long time could be a good option whereas in TATA motors there is a chance of getting correction, as it already went on high side in a very short period of time and is experiencing a downfall from2010 Investment rules Invest for long term in equity markets Align your thought process with the business cycle of the company. et the purpose for investment. ong term goals should be the objective of equity investment. Disciplined investment during market volatility helps attains profits. Planning, Knowledge and Discipline are very crucial for investment.

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5.3

Bibliography BooksI.M. Pandey - Financial Management M.Y. Khan & P.K. Jain - Financial Management

Websiteshttp://www.moneycontrol.com/company-facts//shareholding-pattern/TIS http://www.equitymaster.com/ http://www.investopedia.com/terms/e/eps.asp http://en.wikipedia.org/wiki/ http://www.bse.com http://www.nse.com

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